Bidfood Europe
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Product segmentation |
Market segmentation |
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Revenue rose 4,0% to R32,2 billion (2016: R31,0 billion) while trading profit rose 11,5% to R1,2 billion (2016: R1,1 billion). In constant currency terms trading profit rose 20,5%. Eastern European businesses continued to deliver good growth, bolstered by the buoyant economic conditions.
Netherlands' trading profit and revenue met expectation as the national economy showed some growth and unemployment fell. Performance was driven by a strong showing in the hospitality sector. In the national accounts, institutional and catering channels, sales and margins are generally under pressure.
Free trade within the hotel, restaurant and catering channels has become a significant driver of the business. Particularly strong growth was seen in the south and west of the country. Further restructuring of the cost base is required to align activities with the focus on the free trade sector. Rebranding as Bidfood was successfully launched.
Belgium teams optimised sales opportunities as economic growth ticked higher and unemployment fell. Trading profit was also above budget. Margin pressure persisted, but was generally well managed. Cash generated from operations was up significantly due to good working capital management.
Revenue growth was driven by a strong performance in the horeca channel, assisted by the contribution of Bestfood, whose acquisition was completed in September 2016.
The institutional wholesale business exceeded expectations, boosted from October by strong volumes on the back of a new contract win. Logistics sales were also above expectation. Numerous contract renewals were achieved; in particular, a major QSR customer contract for five years.
The Bidfood identity was successfully implemented across the business during the latter part of the financial year.
Development of a new agile and scalable IT platform to support the business and its evolution is well on track.
Iberia was established with the newly acquired Spanish business, (Guzmán) (in April 2017) witnessed pleasing gains in the independent sector in both Madrid and Barcelona. Gross margins were impacted by product price increases caused by frosts during the early part of the calendar year. However, these are normalising. Attention will be focused on efficiency gains through new IT upgrades and corporate structure streamlining.
Bidfood Spain failed to meet its objective of breaking even by year-end as mainland sales volumes stalled in the last two months of the year. Integration of our existing Bidfood Spain operation into Guzmán is a priority in the coming year. Specific initiatives include the integration of the Guzmán warehouse in Alicante with the nearby Bidfood Spain warehouse.
Acquisition of a niche Portuguese horeca business was completed early in the new financial year.
DAC Italy benefited from the Italian economy's continued gradual improvement and our team optimised opportunities. Trading profit exceeded budget and sales growth was seen in all product categories – ambient, frozen, chilled and non-food.
Frozen made pleasing gains, but the ambient category still accounts for the biggest slice of sales volumes while independent/street sales are the biggest customer category. Strong growth was maintained in this channel, which now represents about 81% of total sales volumes.
Own-brand growth continued and export sales moved higher.
Sales to sister companies in the Bidcorp group increased substantially, confirming the broad appeal of an authentic "Made in Italy" proposition in the global food business.
Cash from operations showed good improvement.
The newly acquired Quartiglia Food Service performed in line with expectations in its first year and made a small overall contribution to the pleasing results.
Czech Republic and Slovakia Bidfood teams put in another strong performance. Revenue and trading profit were well up on the prior year and again exceeded budget, driven by a buoyant final quarter. June was one of the best trading months on record. Sunny skies and high temperatures underpinned pleasing growth in ice cream volumes and value-added products.
High productivity levels were achieved at our factories (ice cream, sous vide meat, ready meals, red meat and vegetables), but at one stage sales demand exceeded production and reserve stock was run down. Frozen fish processing capacity has been increased.
Sales into the retail channel were pleasing, particularly in the fresh produce, red meat and frozen bakery product segments. Strong interest was also evident in fresh and frozen fish, frozen ready meals, potato products and frozen vegetables.
Export volumes – notably meat and game – also moved higher. Good demand was seen from both EU and non-EU countries.
Return on funds employed achieved pleasing improvement, driven by good asset management and improved profitability.
Additional investment in new factories, depots and distribution capacity is envisaged in the coming year.
Farutex Poland recorded excellent increases in sales volumes as the Polish economy remained buoyant, significantly ahead of the comparative period. Trading profit also exceeded expectations.
Particularly pleasing growth was achieved in the free trade market. Sales of fresh produce and meat were particularly strong. Volumes in the national accounts channel also rose.
Margins remained stable, cash generation from operations was strong and return on funds employed moved higher. Staff numbers rose to cater for higher growth. Working capital was well managed and overall cash flow generation was robust.
Operational efficiency gains included an ERP system upgrade and continued investment in plant and machinery. The vehicle fleet was expanded.
Plans are well advanced for the expansion of depots in Gdansk and Poznan. Successful relocation and expansion of the Lublin depot is complete.
Baltics revenue rose on prior year, though the business overall recorded a small loss. Restructure of the smaller Estonian operations is under way to stem losses. The Lithuanian business is profitable.
Foodservice volumes were significantly up across the business. Growth is largely driven by broadening of our product portfolio. The foodservice client base showed continued growth. Foodservice now represents 51% of total revenue.
In the retail channel, our Nowaco exclusive branded frozen fish and seafood did well, as did chilled fish from our Riga fish processing plant. Good progress is apparent with our strategy of achieving wider distribution of our own brands.
Germany and Austria markets were added to the Bidfood European footprint post-year-end with an acquisition of 70% of Pier 7 Foods, a small foodservice business based in Munich, Germany, incorporating five locations within Germany and one in Austria.
Sustainability
Consistency in sustainability activities have been achieved across our European geographies against an operating background of increased sales, and a trading profit improvement of 20,5%. This performance is indicative of stable management and operational processes in the region.
LABOUR
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SOCIAL
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ENVIRONMENTAL
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Diesel (litres) | Petrol (litres) | LPG (kg) | LNG (kg) | Biodiesel (litres) |
| 11 905 247 | 793 347 | 9 500 | 1 003 418 | 0 | |
| 2016: 11 527 852* | 2016: 791 305 | 2016: 17 941* | 2016: 976 920 | 2016: 0 |
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* Restated.
NR = not reported.
Environmental commitment
Most of our environmental efforts in Europe have focused on energy efficiency at our sites of operation and fuel optimisation in our vehicle fleets through driver behaviour, and the routes they travel.
Driving skills are central to improved fuel efficiency. In the Netherlands driver training with regards to improved fuel efficiency has been a core focus, and a fleet telematics system has been introduced into 50% of the fleet. This is undoubtedly resulting in improved fuel consumption patterns. Account managers within the inner Amsterdam city limits utilise scooters instead of cars, and cycle-powered "bubble post" is used for local deliveries.
Our Belgium operations have also focused on driver behaviour and optimisation of routes travelled, generating confidence within the operation that fuel consumption will decrease by 5% by the end of 2019.
Electricity usage has also received attention in Belgium with LED lighting and motion detection systems being introduced into various sites; photovoltaic (PV) solar systems being installed in Thuin and Kruibeke; and employee awareness being encouraged to target a 6% decrease in consumption by the end of 2019.
Our Czech and Slovakian operations have been replacing warehouse lighting with LED solutions, and have converted one factory with an electricity-efficient microprocessor. A depot has installed a full photovoltaic (PV) solar energy system, allowing it to be completely independent of the national electricity grid.
Water availability, cost and quality are increasingly an area of concern. Our Belgium operations have introduced various water saving initiatives including the installation of rainwater harvesting tanks at its Flanders plant, which is used for the change room facilities. In the Netherlands, two sites (Ede and Schiedam) have introduced waterless washing processes for their truck fleet.
Employee development
Employee numbers have increased during 2017. The Netherlands has a specific focus on hiring employees living with disabilities, and has set itself a 2025 target of 5% of staff to be "distanced from the labour market" due to disabilities.
In Poland, a labour social fund has been established for direct benefit to employees with R8,3 million being directed towards this during 2017.
Expenditure on employee training and learnerships has increased to R17,2 million with most of this taking place within our Netherlands operations.
Although stable, our lost time injury frequency rate (LTIFR) remains a management focus area.
Community and social support
Expenditure on social projects increased significantly in 2017.
The nature of the supported projects are similar across all our European operations. This is characterised mostly by support to local sports teams, such as the Czech sponsorship of "Kralupy nad Vltavou" ice hockey team; unsold food donated to charitable food banks; and direct support to local charities, hospitals and hospices.
In addition to its support of sports clubs, the Netherlands continues to sponsor an annual "Ouderendag" (Day of the Elderly) in which staff and residents of local old age homes visit the Ouwehands Dierenpark wildlife sanctuary in Rhenen.
Community projects
Guzmán |
Belgium |
Czech Republic |
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The Group newcomers at Guzmán Gastronomia are known for their community spirit. They target their assistance at areas of greatest need. For example, they donate to food banks that assist disadvantaged people, provide fruit and vegetables to the homeless and at Christmas time give gifts of toys and sporting goods to children in hospital.  |
Bidfood Belgium provides wide-ranging support in various areas of need. The business assists foodbanks across the country and, in partnership with suppliers, provides food and coffee for the homeless. The business is also a sponsor of Médecins sans frontiers and La ligue Braille (a charity focused on help for the blind). Staff participate in the annual 20km Brussels run – which becomes a vehicle for raising money for good causes, while the business is known for laying on "discovery visits" to its premises, thereby giving unemployed young people an insight into job opportunities. |
Our business in the Czech Republic and Slovakia assists in various areas of need. A major project in Czech Republic is support for the national Lunches4Kids project that ensures children from low-income homes receive filling, nutritional meals in their school canteens. Various local charities, schools, nursery schools and sports clubs also receive assistance, sometimes financial and sometimes donations of food. The hockey club of the city Kralupy nad Vltavou, (where the Czech business is based) also receives support, with the focus on young hockey players, who wear apparel branded with our Nowaco logo. Cultural support is given as well. The business is a long-time partner of the National Theatre in Prague. |
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The Netherlands continues to sponsor an annual "Ouderendag" (Day of the Elderly) |
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