Operational Review – Bidvest Electrical review
Bidvest South Africa
Bidvest Electrical |
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Stanley Green: Chief executive
Eric Immermann: Financial director |
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| Bidvest Electrical is a leading distributor of a
comprehensive range of electrical, cable and allied
products and services. The division’s infrastructure
includes one of South Africa’s most extensive networks
of electrical distribution outlets, serving the distribution,
industrial, mining, contractor, construction, engineering
and retail sectors. |
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Left to right: Stanley Green – Chief executive, Rodney Stanley – Head office
accountant,
Eric Immermann – Financial director |
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Highlights
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Despite a difficult business environment, turnover is up by 8,6% while trading
profit rose by 14,9% |
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Margins well maintained in the face of customer resistance to price increases |
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Efficient inventory management in volatile conditions as
strikes distort previous trading patterns |
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Successful rebranding of products and renaming of
branches |
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Voltex transmission and distribution business integrated into Atlas group |
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Expansion of national distribution footprint following a
small bolt-on acquisition |
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Gauteng east and west operations integrated with Atlas group
under a unified management structure
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Continued evolution of the Voltex brand |
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New investment and training spend significantly higher as
division invests in the future |
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Solar geyser developed by Solid State Power receives SABS approval |
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Continued development of succession
planning and associated processes. |
2015 targets, objectives and factors
affecting future results
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Securing double-digit revenue and trading profit growth |
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Achieving ROFE of over 20% |
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Further growth into niche areas – a strategy reinforced by
the acquisition of RAD, a business strongly positioned in the
electrical connectors and relays sector |
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Expansion into smart metering, energy management and street
lighting solutions |
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Continued growth of the product line-up and national footprint |
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Creation of new career opportunities for young and
ambitious team members on the back of new growth and the
development of new niche products and services |
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Reinvigoration of the mining customer base |
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Growth of export business into Africa. |
Material issues and performance
Innovation and new investment |
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R9 million acquisition of the Electri City businesses, extending reach into Kuruman, Kathu and Postmasburg |
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Launch of Voltex MVLV JV to drive growth in the high-tech transformer, generator and substation space |
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Roll-out of Invirohub JV to spearhead growth into smart metering solutions and energy management |
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Opened Voltex Smart Solutions after identifying street pole solutions and open-area lighting as growth points |
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Opening of new stores in Soweto, Makhado and Mt Frere |
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Successful introduction of new Voltex Lighting and associated products |
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Investment in power-factor correction and power-enhancement products |
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Ongoing people investment. |
Disappointments and challenges |
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Lower-than-expected volumes at Voltex Lephalale as a result of delays to the Medupi power station project |
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Collapse of a major supplier and customer, with resultant losses and disruption |
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Low volumes at all branches serving the mining industry following major mining industry strikes |
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Soft construction sector, leading to lower demand and price increase resistance by distressed customers |
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Failure of some contractor businesses, despite efforts to assist these customers |
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Debt write-offs resulting from high attrition rate in the contractor sector |
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Lack of significant infrastructure projects, with low activity levels across both the public and private sectors as business confidence
plummeted |
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Challenge of matching inventory with likely demand in a volatile market impacted by labour unrest |
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Margin pressure intensified across all divisional activities |
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Volatile conditions made strategic planning challenging |
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Criminal activity within our business and at some customer businesses – sometimes involving managers and supervisors – led to losses
and undermined morale |
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Implementation of e-tolling in Gauteng added approximately R1 million to transport costs. |
Changes in operational environment |
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Mining industry strikes necessitated constant review of stocking, distribution, pricing and margin management |
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Activity in the retail industry necessitated constant vigilance and some changes in strategy as competitors moved into new product
categories in response to weak demand in their traditional areas of focus. |
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Industrial relations a key risk area following strikes and disruption within several industrial sectors – addressed by constant
communication and strong management focus on labour issue |
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Business failure became a significant risk following the insolvency of a major corporate and numerous small contractors – calling for
improved business intelligence, management vigilance and rigorous debtor control |
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Criminal activity – addressed by stepped-up internal audit systems and a vigorous management response as the business does not
hesitate to prosecute |
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Vulnerability of key customer groups to strike action and disruption – addressed by efforts to constantly diversify the product offering |
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Currency risk – addressed by forward cover and management policy never to speculate or engage in market timing |
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Growing difficulty of correctly identifying areas of growth in soft, volatile trading conditions – addressed by the employment of highly
skilled specialists with insights into technical demands and needs in specific industries. |
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