Bidvest Foodservice

General performance was highly satisfactory, with trading profit up 28,0% to R3,2 billion (2013: R2,5 billion). Turnover rose 23,6% to R102,3 billion (2013: R82,7 billion). Currency effects partially contributed to the increase. Asia Pacific continued to perform well and the contribution from the UK and Europe improved meaningfully. Several small acquisitions were completed during the year, as well as our first foray into the Brazilian market.

Asia Pacific

Bidvest Asia Pacific continued its growth trajectory. Turnover was up 16,9% to R33,5 billion (2013: R28,6 billion) with trading profit up 23,8% at R1,5 billion (2013: R1,2 billion). Rand weakness was beneficial, however the Australian dollar was only 5% stronger on average during the year.

Bidvest Australia achieved strong sales and trading profit growth on the back of an exceptional fourth quarter. Mining activity slowed, but tourism picked up. Growth was driven by new business gains as food inflation remained close to zero and the company exited low-margin accounts and carried on the rebalancing of its customer portfolio. Expenses and margins were well controlled. Growth was underpinned by a strong Foodservice result. Hospitality showed improvement as its route to market was simplified. Logistics performance was disappointing and will see further rationalisation. The Fresh components of the business continued to perform well and present much opportunity for future growth, as we enhance our national fresh produce and meat offerings. Two small Fresh Produce businesses were acquired, as well as a Meat operation in Perth. Investment in facilities continued, with new premises being built in Perth, Tamworth, Lismore and Sydney Fresh.

Bidvest New Zealand continued its strong performance. Sales growth was above expectation. Trading profit was also up significantly. Foodservice and Fresh performed strongly, Logistics was in line with expectations. Auckland Foodservice moved into new premises, our largest investment to date in the New Zealand business. Processing (Meat and Produce) was under pressure as we opened new plants. Strong e-commerce gains continued. Further growth is projected in the core business, with free trade a point of focus. Our niche retail business has proven more difficult than anticipated, action has been taken with management changes and a focus on profitable stores.

Angliss Greater China performed strongly. Hong Kong business was marginally below expectation but results were lifted by a strong showing from mainland operations. Our four major Chinese branches in Beijing, Shanghai, Shenzen and Guangzhou performed strongly. Tourism from the mainland underpinned a solid performance by the Hong Kong foodservice business. Several major brand introductions are planned in the new year.

At Angliss Singapore, sales fell on the planned exit from commodity trading, though profit levels were maintained as a result of rigorous expense management. Foodservice made strong gains in the hotel, club and restaurant segments. Focus on better margin business rewarded with increased penetration in key product segments, and we are very confident that this business has now been substantially and successfully restructured and refocused.

Bidvest Chile achieved strong growth on the acquisition of Comon in January 2014, a business considerably larger than Deli Meals, the existing Chilean operation. Infrastructure includes a wholesale distribution centre and bakery in Santiago and a distribution centre to the south. The merged business is Chile’s second largest foodservice wholesaler, and has been renamed Bidvest Chile.

Bidvest Brazil (a 60% stake in Irmãos Avelino acquired January 2014) achieved satisfactory sales and profit growth. Based in Sao Paolo and primarily an ambient wholesaler, this is the first step in our expansion into the very large Brazilian market. This business has revenues of around US$80 million per annum.

Bidvest Procurement Company (BPC), based in Hong Kong and Shanghai, increased sales to our Global businesses, widened its product range and continued to add to the number of certified suppliers as we leverage our scale.

Europe

Signs of recovery were evident across European markets, though improvement was subdued in the Netherlands and Belgium. UK businesses did well. Rand translation was very positive, underlying results were pleasingly positive. Turnover rose 29,1% to R62,2 billion (2013: R48,2 billion), while trading profit moved 40,4% higher to R1,3 billion
(2013: R936,2 million).

Bidvest 3663 performed ahead of expectations, with strong profit and sales growth. Working capital was well controlled. Range rationalisation contributed to efficiencies. The infrastructure programme remained on track. Two new depots opened. Another opens in the first half of the new year. Bidvest Logistics performed in line with budget, with case volumes at record levels. In July 2014 we purchased PCL, a specialist UK Chilled distributor, which will enable us to maximise our asset utilisation in Logistics. Bidvest Fresh UK put in another strong performance. A London fish business was bought out of bankruptcy. A further acquisition enabled Fresh to enter the meat market and strengthen its Scottish operations. Solid growth from all three of our UK businesses is expected as the economy gains momentum.

Netherlands delivered trading profit above prior year levels. Margin management improved on better buying conditions. Catering volumes grew, but decline accelerated in the institutional market. Focus continues on growing in the correct target markets. Belgium performed somewhat below expectation, though catering and Horeca sales held up well. Institutional business faced challenges and margin pressure mounted. Cash generation remained robust.

At Bidvest Czech Republic and Slovakia, sales recovered on the back of a stronger Foodservice performance and a new ordering system. An uptick in tourism bolstered hotel and restaurant sales. Retail pressure intensified. Demand for chilled firmed. The first Nowaco/Bidvest retail store opened in Prague, to test the concept. In July we acquired a Fresh produce wholesaler, our first in this market.

Farutex Poland grew sales and profit significantly. Margin management improved and overheads were well controlled. Wholesale volumes rose and food and wine sales contributed to the recovery. Infrastructure is in place for significant growth.

Bidvest Baltics achieved good sales gains, driven by Foodservice growth. Retail volumes remain under pressure. Margins were well managed. Trading losses narrowed to an almost breakeven, and profitability is anticipated this year.

Bidvest Middle East began the expansion into Bahrain, Lebanon and Oman. Horeca Trade in the UAE grew profit and sales. Margins were well protected. The Cherrypik retail business achieved steady sales growth, but is still loss-making in its set-up phase. The Saudi Arabia business increased volumes and acquired the McCain Products distributorship after losing the Lamb Weston agency. Turkish operations continued to expand. Early Bahrain results were promising.

Bidvest Spain recorded a small anticipated trading loss in its first six months, as we study and understand this large and potentially interesting market. We also announced our expansion into Italy in July 2014 with our 60% acquisition of DAC, based near Milan, but offering Italian wide distribution. This acquisition is also significant in that it gives our global business greater direct access to the important category of Italian sourced product.

Southern Africa

Overall sales were in line with expectation and some market-share growth was secured. Turnover was up 11,5% to R6,6 billion (2013: R5,9 billion). Trading profit rose 9,0% to R371,0 million (2013: R340,5 million). Net margin narrowed as trading conditions deteriorated in the second half of the year. Bidvest Foodservice grew in the industrial catering segment. Crown grew across most categories, with especially strong growth in the independent and dairy channels. Bakery Solutions performed strongly in the independent craft market. Patley’s acquired new brand principals. Exports showed good growth and Crown Foods, in collaboration with local partners, began Zambian operations. Rollout of Foodservice’s multi-temp strategy continued and new sites went into operation at Polokwane and Bloemfontein. Investment in information technology was maintained and online ordering showed excellent continued growth. Plant investment focused on factory upgrades at Crown in Cape Town and Bakery Solutions in Johannesburg.