BIDVEST AUSTRALIA
Sustainable development

Customer awareness and legislative trends drive sustainability concerns, encouraging us to think creatively about our obligations.

The staff complement remained stable. Recruitment of suitably qualified personnel became less of a challenge as national unemployment levels moved higher. Efforts to improve energy efficiency and environmental sensitivity were maintained.

We are reducing the environmental impact of our computing systems. Server virtualisation has cut electricity use by 132 000kWh while e-commerce options help customers cut paperwork.

We upgraded food quality management, achieving ISO 9001:2008 certification while addressing HACCP (food safety), OHS, environmental sustainability and corporate governance issues.

Our Caterer’s Choice brand has entered the sustainable products market. The brand offers a range of biodegradable chemicals.

Use of E10 (a 10% ethanol fuel blend) is up from 54 000 to 112 000 litres. LPG use has fallen in three years from 108 000 to 13 000 litres. Despite continuing expansion, overall fuel use is only up 1,8% since 2007. We plan to upgrade our fleet with the most fuel-efficient vehicles. Truck refrigeration is becoming quieter and more efficient.

Certificate training programmes are now administered by the Bidvest Academy in Australia. Certificate courses, being taken by 369 staff, have been updated and comply with the National Vocational Standard TL107 for transport and logistics.

Policies in support of local produce suppliers are well established. The development of our paperless warehouse system was a point of focus.

Performance

Results were pleasing in the context of falling national growth and brittle consumer confidence for most of the period. Revenue rose 12% to AUD1,6 billion (AUD1,4 billion) while trading profit increased by 18,4% to AUD66,2 million (AUD55,9 million). Cash flows improved as a result of tighter inventory control and rigorous expense management. Return on funds employed was at an all time high of 57,2%.

In view of the magnitude of the challenge, the performance by our teams was probably the best in our 13-year history.

Benchmarks

Performance is benchmarked against history and budget. Year-on-year revenue and trading profit growth was generally in line with divisional expectations.

Strategic dynamics The global financial crisis caught up with Australia in the final quarter of calendar 2008, when the economy shrank by 0,6% and recession was widely forecast. Instead, the economy grew by 0,4% in the next quarter, avoiding a technical recession. The federal government increased its spending and interest rates were cut (to 3% by May). Unemployment rose steadily, however. By June 2009, both business and consumer confidence had recovered slightly. The emergence of China as the engine of economic growth across much of the region was showcased when appetite for commodities revived, with almost immediate beneficial effects in Australia in the second quarter of 2009.

Industry dynamics

Official inflation averaged about 3% for the year, but ran at about 4% for our basket of products. Food inflation moderated from a year earlier and volatility eased considerably, curtailing trading opportunities. Job insecurity affected consumer spending and down-trading ensued, a development of some benefit to our QSR (quick service restaurant) division.

The strongest trend was toward at-home eating. Outlets dependent on tourist traffic and top-end hotels and restaurants were especially hard hit by consumer belt-tightening. Eating out did not stop, but the number of eating-out occasions dropped.

Brand dynamics

The business has always operated under the Bidvest identity. China’s Sustained growth and our status as national foodservice company underpin positive perceptions. The Bidvest name means reliability, quality and value.

The value-for-money position is increasingly supported by the growth of our house brands which are marketed as quality products at competitive, value-for-money price points.

Operational dynamics

The chief challenge was how best to react to significant changes in trading conditions at various stages of the year.

From July to September, volumes remained high and the main pressure related to high fuel prices and the difficulty of attracting staff with appropriate skills in a full employment economy.

Between October and March, economic growth faltered, consumer and business confidence plummeted and consumers cut back. After March, the position became more stable and a measure of confidence returned.

Early action was taken to control expenses and improve efficiency. Some labour practices were streamlined, with full buy-in by employees as it was clear that redundancies and cutbacks were being avoided by seeking volume growth with a stable staff complement.

The trading environment underlined our value-add as the solution-finding partner of our customers. We grew market-share at the expense of competitors as our clients adopted just-in-time ordering (made possible by the breadth of our range and efficient distribution systems).

FindFoodFast (FFF), our online ordering tool, continued to grow and by year-end accounted for a third of our business by value. Customers increasingly see the benefit of real-time 24/7 stock availability and an open window on the full product range at their local Bidvest warehouse. Even the estimated time of arrival date on incoming warehouse stock is available to the customer via FFF.