Divisional reviews
Financial capital
| Revenue +2,0% |
Trading profit +0,8% |
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Manufactured capital
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Own brand 16% of 2018 divisional revenue Pictured: an example of New Zealand’s |
Chief executives
Rachel Ruggiero |
Phil Struckmann |
| Australia | New Zealand |
The region performed strongly, in spite of growth tracking below trend, and both Australia and New Zealand set new records. “Financial capital” remained robust. Revenue moved 2,0% higher to R30,0 billion (2017: R29,4 billion). Trading profit rose marginally by 0,8% to R2,0 billion (2017: R2,0 billion). Results reflect continued focus on the successful freetrade strategy and the management mission to remain ‘all about the food’. Human capital remained a focus area. We continued to grow jobs and skills investment rose. The future continues to look bright.
Australia put in a strong performance, supported by a domestic economy that is still “cooking”. Interest rates remained low and business investment in non-mining activities outweighed declining mining investment. Unemployment is at 5,4%, wage growth is 2,1% and inflation 1,9%.
Trading profit lagged the prior year at the half-year mark, but by year-end was up 2,5%. This was an outstanding result in a year of transformation and some internal disruption.
Revenue rose 4,7%, though this included the sales contribution from recent small acquisitions. The sales effort was exceptional as three of the biggest branches went through major changes during the year.
Margins were maintained, despite pressures in Foodservice. As expected, expenses increased as new branches bedded in, further strengthening manufactured capital. Payroll costs were well contained.
Robust metropolitan representation is a key ingredient of the growth strategy going forward and meaningful progress was made in the review period. Strong bases were established in Australia’s most densely populated cities – Melbourne, Sydney and Brisbane – creating platforms for long-term gains. Benefits are already apparent.
Foodservice performed reasonably well. The number of Foodservice branches rose to 39, all of which were profitable. Melbourne’s branches made outstanding gains in the throes of their restructure. The new alcohol category was poured out to Foodservice branches. “Decanting” continues in the new period. Freetrade sales again grew.
Supply Solutions made big progress. New product development was the key feature of the year with over 100 new product lines introduced.
The team also began the processing of an own-brand cheese. Customer response has been highly favourable.
Fresh sales fell, but margins were well managed. Meat continues to gain traction as we refine our route-to-market model. Overall both the Fresh and Meat divisions were profitable, but still not at desired levels. The new Festival acquisition performed below expectation and will improve in the future once fully integrated.
Social and relationship capital was not neglected. Donations were made to the Daniel Morecombe Foundation and Kick Start for Kids while many branches supported local charities.
Human capital in our high-employment economy remains a focus area. An employee assistance programme was launched, offering free counselling sessions to any employee or family member going through a difficult time. The intervention addresses a growing need as the number of Australians diagnosed with depression continues to climb.
New Zealand did well to grow revenue and trading profit in a sluggish market. Business confidence dipped and GDP growth slowed. Lower unemployment added to wage pressures while higher fuel costs impacted all markets.
The business’s investment in new distribution centres to handle continued growth demonstrated our sustained commitment to the development of our manufactured capital. This spending added to the cost base.
Foodservice performed solidly and Imports put in another stellar performance. Hamilton moved to a new distribution centre, as did Nelson, Timaru and Invercargill.
Fresh had a challenging year as extreme weather conditions disrupted supply and impacted pricing. Processing results were mixed. Newly acquired Prepared Foods failed to meet initial expectations and additional investment was required. The Auckland logistics operation did well, taking on additional QSR volumes while ice cream sales went up.
IT served up new order entry and scales projects, now in use at most branches. The latest version of the Progress database was upgraded.
Sustainability
Sustainability and social outreach are important components of the work we do in Australasia. Our suppliers, customers and the communities within which we work are environmentally and socially aware and expect the highest standards from us.
Natural capital
Fuel consumption, energy, water and waste are the key focus areas that drive our environmental initiatives. They are the foundation of our environmental management procedures, which include the implementation of the ISO 14001 environmental management system at all our Australian sites.
A 5% increase in fuel consumption was recorded in a year in which revenue was dampened by investment activities relating to the expansion of our presence in major cities. There was a change in fleet mix, with investment into smaller, more fuel-efficient vehicles for better inner-city reach. The full benefit of fleet spending, in revenue and fuel efficiency terms, will become evident in the year ahead.
Installed in all vehicles are GPS fleet monitoring systems that enable efficient route planning and accurate data capture of road usage and related tax and fuel rebates, as incentivised by the Australian government. New Zealand has begun trials of hybrid cars in the sales fleet. Efforts to ensure optimum fuel efficiency are ongoing.
In total, 80% of New Zealand grid-electricity is generated from hydro, wind and solar renewable sources. The applied emissions factor does account for this in calculating the carbon footprint. Deployment of various energy-efficiency technologies is at the forefront of our drive to reduce electricity consumption across both New Zealand and Australia. Smart LED lighting and motion sensors have been installed in all our Australian branch warehouses. Solar panel arrays have been installed at selected sites.
New Zealand has committed to a trial of solar panels at the Hobsonville distribution centre (DC). This is currently under construction and is due to be completed in June 2019. In addition, New Zealand intends that all future depots and warehouses will be equipped with solar power as upgrades and expansion occur. LED lighting and motion sensors have been fitted in existing DCs and are standard in all new DCs.
Australia has committed to the installation of efficient refrigeration, insulation and solar initiatives in all new depots. In addition, all current sites are fitted with timers on the air-conditioning. All lighting is turned off when offices are closed.
Water consumption is another key area of focus. The Auckland plant, our largest site in New Zealand, has installed a 200 kilolitre rain-harvesting tank that gathers rain water for use in irrigation and the washing of our fleet. Australia reported 29% increase in water consumption being the full year effect of the 2017 acquisitions of Pye, Central Choice, Primo and Festival. The acquisition of Prepared Produce, a fresh food processing business, in the current year has increased water usage due to the nature of the operations.
Natural capital
| Scope 1 emissions (tCO2e) (excl refrigerants and aircon gases) |
Scope 1+ emissions (tCO2e) (only refrigerants and aircon gases) |
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| 28 747 | 11 372 | |||||||
| 2017: 27 151 | 2017: NR | |||||||
| Scope 2 emissions (tCO2e) | Scope 3* (tonnes) | |||||||
| 48 403 |
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| 2017: 43 950 | 2017: NR |
| 2018 | % Change |
2017 | ||
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Diesel (kilolitres) | 9 804 | 5 | 9 340 |
| Petrol (kilolitres) | 785 | 9 | 720 | |
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LPG (tonnes) | 131 | 5 | 115 |
| LNG (tonnes) | 73 | 3 | 72 | |
| Aircon gas (tonnes) | 3 | – | NR | |
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Electricity (non-renewable) (kWh) | 79 834 037 | 9 | 73 142 923 |
| Electricity (renewable) (kWh) | 5 540 154 | 11 | 5 000 000 | |
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Municipal water (kilolitres) | 300 015 | 29 | 233 420 |
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Depot (m2) | 469 986 | 5 | 445 716 |
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Vehicles | 1 135 | (3) | 1 171 |
NR = not reported
* Emissions not calculated.
At the Auckland and the new Hamilton distribution centres, compacting balers are being used in the recycling of cardboard and plastic. They save space and improve recycling rates while significantly boosting the revenue generated from these initiatives.
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Human capital
Employee development is a key operational focus and expenditure on staff training continues to increase.
In New Zealand, the roll-out continues of “seeing eye” technology that detects driver fatigue and inattention. The deployment reduces the risk of accidents and can save lives. Health and safety procedures are well drilled in all our New Zealand sites and close analysis made of typical workplace injuries and remedial action.
Within Australian operations, all branches are guided by a Quality, Safety, Environmental and Food Safety Policy that outlines strict occupational, health and safety procedures.
In 2018, Bidfood Australia launched its Employee Assistance Programme (EAP) to promote mental wellbeing and provide team members with access to free and confidential counselling, either face-to-face or by phone. Professional EAP assistance enables individuals to develop strategies for handling stress, set goals and plan for major life events or changes.
Social and relationship capital
Bidfood Australia is a proud partner of KickStart for Kids. We donate a pallet of milk every week to the programme. Annually, this equates to A$30 000 worth of milk. Each week, the gift of milk enables KickStart for Kids to serve around 40 000 breakfasts and 10 000 lunches to schoolchildren in need.
This year, Bidfood Australia also partnered with Reconciliation Australia and developed a Reconciliation Action Plan that encourages cultural learning, respectful business practices and Aboriginal and Torres Strait Islander employment.
Bidfood Australia is also a proud sponsor of the Australian Culinary Federation, the industry organisation that represents professional chefs, cooks, apprentices and culinary students. Bidfood Australia is involved with leading apprentice chef competition, the Nestle Golden Chef’s Hat Award, along with numerous regional culinary student initiatives.
Since 2011, Bidfood Australia has supported the Daniel Morcombe Foundation and its work in the area of child safety awareness. To date, Bidfood Australia is the largest single contributor to the Foundation, raising more than A$400 000 through annual “Day for Daniel” fundraising events across its national branches.
Bidfood New Zealand has a long history of collaboration with the Graham Dingle Foundation (GDF, formerly the Foundation for Youth Development). Over the past 10 years, we have raised approximately NZ$720 000, including NZ$170 000 in 2018, in support of the Foundation’s work with vulnerable children. This is achieved by channelling a percentage of the sales of our Smart Choice home brand products to GDF.
Support is warranted. New Zealand has the highest youth suicide rate in the OECD while 20% of its children live in relative hunger. The GDF’s work is well researched and sustainable.
In addition to donations to sports teams and smaller charities, much of the community outreach work in New Zealand has focused on youth development.
Bidfood New Zealand has also responded to the growing call for better animal welfare and in 2018 switched house brand eggs over from caged produced eggs to cage free produced eggs.
Human capital
 Female employees 1 244 2017: 1 184 |
 Male employees 3 394 2017: 3 199 |
4 638 Total employees 2017: 4 383 |
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Employees training spend
2017
R1,8m 2018 R2,4m  |
Fatalities Zerofatalities for the past three years |
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Payroll spend (Rbn)  |
Social and relationship capitalCSI Spend(Rm) 
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| 1. | Bidfood Christchurch | 5. | Bidfood Processing, Auckland |
| 2. | Hawkes Bay Freezer | ||
| 3. | New Mozzie Fleet Brisbane | ||
| 4. | Demonstrating MyBidFood Online, Australia |