Bidvest Asia Pacific

ANGLISS SINGAPORE

The national economy was severely affected by the world financial crisis. In the final quarter of 2008, the economy shrank by an estimated 10%. All key sectors of the economy were affected, including tourism. Unemployment and retrenchments rose. The food industry was hit by a surplus of frozen poultry, pork and beef.

The business enjoyed an excellent first quarter, optimising trading opportunities while drawing benefit from food inflation. The rapid change in macro-conditions and the surplus in key food lines created a major challenge. The view was taken that the market had undergone a fundamental change and that it was necessary to take a loss on inventory rather than maintain stocks at prices 30% above the prevailing rate. The view proved to be valid as market weakness continued well into 2009.

As a result of early action, sales volumes were maintained and a modest trading profit was achieved by year-end following a strong rebound in the fourth quarter. It was disappointing, however, that inventory write-downs and volatile exchange rates contributed to a 90% decline in profitability. Close to break-even was achieved on the greenfields operation launched in Kuala Lumpur, Malaysia, in August 2008. This is highly satisfactory as the business began from a zero base.

Macro-conditions remain challenging in the island nation, but inventory problems have been dealt with and a return to historical levels of profitability is forecast for 2010.

ANGLISS HONG KONG AND CHINA

As a major trading and financial centre, Hong Kong was badly hit by the global downturn and entered recession. Our local team did well to maintain stable sales volumes and trading profit. Overall results were satisfactory, despite the fact that our businesses in China and Macau came under increasing pressure. On the Chinese mainland we now have operations in Beijing, Shanghai, Guangzhou and Shenzhen. The mainland did not enter a recession, but GDP growth fell, as did demand for Western-style foods. Overall profitability was down 7,7% from HKD45,7 million to HKD42,2 million, a commendable achievement in a very tough market.

The environment was particularly difficult for our start-up operation in Macau. The Chinese government tightened visa requirements for Chinese citizens wishing to visit the city while the fall in global tourism curtailed demand from restaurants and hotels.

 

The Chinese government’s have an effect in the last quarter. Spending on infrastructure results in an influx of foreign engineers and specialists and is generally positive for suppliers of Western-style foods. Improved volumes and a return to profitability are projected for the coming year.