Bidcorp Australasia
Operating in Australia and New Zealand our businesses offer a full end-to-end national distribution service. Australia and New Zealand offer customers the industry’s most comprehensive range, wide market coverage, economies of scale and one-stop solutions. The division is an innovator and leads its industry in the development of e-commerce solutions. Sustained investment in training and technology ensure high levels of service efficiency, quality and accreditation.
Australia
The economy sent out some mixed signals, though GDP growth remained robust and the unemployment rate remained steady at 5,7%. The downturn in the mining sector hurt Western Australia and some parts of Queensland, but growth in the tourism industry gave a boost to popular holiday destinations.
Our teams took a pragmatic approach. They cannot control the national economy, but they can control how they respond to macro opportunities and challenges. This attitude underpinned a very pleasing overall performance.
The Australian business recorded trading profit growth of 8,8%, a pleasing result as sales fell by 7%. The sales decline was foreseen and is in line with the strategy of exiting
low-margin logistics contracts while concentrating on higher margin independent business.
Gross contribution was up on the prior year, driven higher by the changing mix of business.
Margins were well managed. Expenses moved higher, in line with management expectations as higher margin segments like Fresh and Meat typically involve higher costs and wages. Cash generation remained strong.
The Hospitality division was sold in July 2015. We acquired Pacific Providores, a small Fresh produce specialist, and merged it into our Sydney Fresh business.
Foodservice profits were up by 10,5%. The Meat and Fresh businesses underperformed. The Logistics result was as expected.
The Foodservice divisional result comes off the back of no real sales growth in a zero food inflation environment. Strong growth was again evident in the free trade customer segment. Out of 30 Foodservice branches, 25 made or exceeded their targets. All opportunities for further organic and acquisitive growth in the Foodservice space will be pursued in 2017.
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The Imports division registered a good sales result and maintained rigorous expense control. The potential for local packing of the division’s own products is being explored. Opportunities for closer synergies with BPC and DAC Italy are also being considered.
Fresh division results were extremely disappointing. Six of the nine operations made losses. Focused management attention is being applied to all areas of underperformance.
Meat division achieved year-on-year profit growth, but results were significantly below expectation. Branches have adopted the direct-to-customers business model and substantial improvement is expected in the coming year. Closer collaboration with Foodservice will be a focus area.
Logistics registered a small loss as the strategy of exiting low-margin business continued. The Sydney operation was closed and the Adelaide Logistics business merged with its local Foodservice branch. Melbourne and Brisbane Logistics are preparing for similar integration into their local Foodservice branches.
In 2017, the Bidvest Australia strategy of developing the higher margin free trade market segment is expected to gain further momentum. The vision is to become a focused “food” business rather than a low-cost carton-mover.
In line with this strategy, we are putting new Foodservice depots in metropolitan centres that we believe have strong growth potential and where our performance can significantly improve, given the right infrastructure. Cities such as Melbourne, Sydney and Brisbane have been targeted. It is clear that depots need to be large enough to be economically viable yet small enough to be agile and customer focused. The new depots have been specified accordingly.
Own brands will receive strong focus going forward.
Further growth is expected in the new year.
E-commerce is an important part of this modern infrastructure and is constantly evolving, with experiences and know-how shared throughout the company, the key objective being the enhancement of customer service experiences..
New Zealand
The national economy remained steady, though food deflation set in following a drop in dairy prices. However, strong growth in retail spending and tourism were beneficial for our business.
All divisions put in a strong performance and maximised opportunities in a buoyant final quarter.
Revenue grew 12,8%, with trading profit topping the NZ$50 million milestone (21,0% increase).
The strong result was driven by focused application of the core strategies of category development and specialisation. At the same time, timely infrastructure investment created the capacity to maximise market potential in key areas such as Auckland, Tauranga, Whangarei and Queenstown.
Margins and working capital were generally well managed. The dollar value of inventories rose, a function of the growth of higher value categories such as meat.
Debtors management and collections were focus areas. Returns, excluding the effect of property investments, rose to record highs.
In the final quarter we disposed of our retail operations and acquired two businesses.
The first acquisition, Freshex, is a Hamilton-based small produce wholesaler. The other, Fire ’n Ice, is the New Zealand manufacturer of the NaturalAZ range of sous vide products.
Several land purchases were made during the year, creating capacity for expansion in Hamilton, Timaru, Invercargill and Hobsonville. In addition, a move is planned into a new purpose-built distribution centre in Nelson.
At divisional level, Foodservice put in a highly pleasing performance with strong results at all branches. The strategy of developing key centre-of-plate and fresh produce categories paid dividends.
The Fresh division also performed strongly. Despite market volatility, margins were generally steady. Expense management was rigorous. The export team achieved good sales growth.
At Logistics, the strong performance was driven by good ice cream sales, heightened focus on the route trade and exceptional growth by a key customer in the QSR space.
Processing more than doubled its profit and the Christchurch Butchery showed substantial improvement.
In the year ahead, New Zealand will strive to maintain momentum. The focus on the free trade market will intensify, specifically in specialist centre-of-the plate categories. Steps will be taken to further improve the processing business. Development of our new sous vide product range and our range of repack products is envisaged.
Further acquisition opportunities will be explored.