Bidcorp: a world class international foodservice presence.

Divisional reviews

Italy achieved strong growth in revenue and trading profit, with a positive contribution from new acquisition, D&D. Pleasing momentum was evident in the core DAC business. Quartiglia Food Service (QFS), acquired in the previous year, met expectations. Trading profits still topped projections, even without the D&D contribution.

Work to integrate D&D into DAC systems will begin early in the new period as our intellectual capital has become as an indispensable lever of sustained growth. Work on QFS integration is approaching completion.

Sales into the street or independent channel now account for more than 80% of volumes. Product sales to DAC’s international trading markets (including other Bidfood companies) gained momentum, with own brands accounting for a significant part of the total mix.

Iberia developed momentum as the Guzmán business created a platform for strategic growth. Revenue and trading profits were bolstered by contributions from new acquisitions, Frustock (our operation in Portugal) and Sáenz Horeca (a meat and hospitality specialist). Continued political uncertainty in and around Barcelona affected sales in this important region. Costs increased as systems, sales force and infrastructure were strengthened. The overall results were below expectations, but the base is now set for future growth.

Growth of independent business was an important feature of the year and the sales force was beefed up. Investment of manufactured capital is constant and the Barcelona warehouse was expanded.

Late in the year, a new branch in Mallorca was opened. Initial performance was promising. Frustock performed in line with expectations.

Intellectual capital as a driver of growth is coming to the fore. Going forward, work will be stepped up on the integration of Frustock and Sáenz Horeca systems on Iberia’s new IT platform. The Spanish roll-out of the “myBidfood” ecommerce tool is in prospect.

Czech Republic and Slovakia performed excellently, securing good profit and volume growth on the back of a buoyant consumer market.

Horeca Gastro benefited from positive consumer sentiment and the middle-class trend to increased out-of-home eating. Quality service underpinned continued growth. Good spring and summer weather drove strong ice cream sales, contributing to the excellent results.

Relationship capital helps drive the business as restaurants, hotels and caterers face a shortage of trained chefs and other specialists. We provide solutions for our customer partners through the development of ready-meal ranges, Sous-Vide and added value products.

Retail was buoyed by rising consumer incomes and growing focus on quality and reputable brands. Growth was achieved in many value-add products as market demand rose and shopping at upmarket malls became part of the lifestyle. Sales of fresh fish and meat exceeded expectations.

Output at the factories was consistently high. Highest production was achieved in Sous-Vide lines, ready meals, red meat and ice cream. Manufactured capital and intellectual capital support our growth and in the review period a new depot was established in Chlumec. Training was initiated for staff and users.

Germany recorded a small loss. Sales at the recently acquired business failed to meet expectations. Margins were impacted by high levels of operational expenses at the branches and the poor quality of some National Account businesses.

Manufactured capital is a point of focus. Hamburg depot moved into a new warehouse in April and Munich will move to a new warehouse in the new period. Vienna maintained solid margin management and performed well. We are setting up a solid foundation in Germany to facilitate further expansion in due course.

Poland delivered substantial revenue growth. Market share improved and profit forecasts were exceeded.

Freetrade growth continued at a high rate, now accounting for more than 70% of all volumes. We have become one of the major players in this market. Margins were well managed as terms were revised on some National Accounts.

Expansion of the Gdansk and Poznan operations was completed, underlining the continuing commitment of manufactured capital. Lublin branch moved to a new depot. Further small investments are planned at the Katowice and Bydgoszcz branches.

Innovation continues. Asian cuisine is a growth area and Farutex has begun to serve this sector. Early results are encouraging. Good progress was also achieved with a new venture in the wine market.

Further inroads are expected in these areas of opportunity as online capability has the potential to drive further sales gains while investment in manufactured capital – specifically warehousing – creates the capacity to pursue ongoing growth.

Pressure on the wage bill persists as a result of low unemployment levels.

Baltics showed continued improvement, with growing emphasis on intellectual capital as a differentiator. Work on the implementation of the “myBidfood” platform began at the end of the period, along with integration of the ERP process. Manufactured capital is another priority. Construction of a new depot in Kaunas is on track. Human capital development is constant. Intensive training for loaders and drivers was successful and more responsibility was given to shift leaders. Revenue at the now profitable Lithuanian operations continues to rise. Latvia did well off the back of sales growth and improved expense control. Performance improvements across the Baltic markets are driven by growing foodservice volumes.

Natural capital

Scope 1 emissions (tCO2e) (excl refrigerants and aircon gases)		Scope 1+ emissions (tCO2e) (only refrigerants and aircon gases)
46 572		31 432
2017: 40 708		2017: NR
Scope 2 emissions (tCO2e)		Scope 3* (tonnes)
53 874		Food waste 536 Waste recycled 1 953 Waste to landfill 898
2017: 38 057		2017: NR

		2018	% Change	2017
	Diesel (kilolitres)	13 619	14	11 905
	Petrol (kilolitres)	917	16	793
	LPG (tonnes)	1	(86)	9
	LNG (tonnes)	2 857	14	2 503
	Aircon gas (tonnes)	9	–	NR
	Electricity (non-renewable) (kWh)	100 692 114	23	81 724 940
	Electricity (renewable) (kWh)	895 951	>100	10 000
	Municipal water (kilolitres)	226 305	26	179 858
	Depot (m2)	441 637	22	360 905
	Vehicles	2 449	30	1 881

NR = not reported
* Emissions not calculated.

Consistency in sustainability activities has been achieved across our European geographies against an operating background of six business acquisitions, increased headcount and depot square metres, as well as sales and trading profit improvements. Carbon emissions (both scope 1 and 2) have increased. However, the region’s acquisitive and organic growth is the key driver.

This performance is indicative of a growing economic region and greater disposable income, combined with strong, stable local Bidfood management and operational efficiency gains.

Natural capital

Environmental efforts in Europe have focused on energy efficiencies and fleet fuel optimisation through monitored driver behaviour and route planning.

Bidfood Netherlands continue to roll out LED lighting solutions across all distribution centres. Within the vehicle fleet, a pilot programme using onboard computers has shown reduced fuel consumption. In total, 180 trucks are equipped with the fleet telematics systems, with more installations planned for the coming year. Account managers within Amsterdam’s inner-city limits utilise scooters instead of cars while cycle-powered “bubble post” is used for local deliveries.

Bidfood Belgium have embraced new cold-production technology in petrol-fuelled truck engines, resulting in greater emission efficiencies. Previously, trucks had independent cold engines. Operations continue to focus on driver behaviour and route optimisation, pursuing the decreased fuel consumption goal of 5% by the end of 2019. However, petrol consumption depends on weather conditions: the hotter the summer, the higher the consumption. The increase reported in 2018 was partly due to this factor.

Electricity usage has also received attention in Belgium, with LED lighting and motion detection systems being introduced at various sites. Photovoltaic solar systems were installed in Thuin and Kruibeke sites. Employee awareness is being raised in a bid to cut consumption by 6% by the end of 2019.

Our Czech and Slovakian operations have been replacing warehouse lighting with LED solutions. An electricity-efficient microprocessor was installed at one of the factories. One depot has installed a full photovoltaic solar energy system, allowing it to operate independently of the national electricity grid.

A particularly cold European winter this year resulted in an increase in liquid natural gas consumption to heat the operational environment.

Water availability, cost and quality continue to be areas of concern. Netherlands has installed two rainwater tanks in fire sprinkler systems. The Belgium Thuin site is a large consumer of water used in its cooling system towers. Water consumption is related to weather conditions. The hot European summer meant more water was consumed. Water consumption is variable from one year to the next. Our Belgium operations have introduced various water-saving initiatives, including the installation of rainwater harvesting tanks.

Acquisitions in Italy, Spain and Germany over the 2018 financial year impacted the reported consumption of electricity, water, fuels and gases. These operations are now being integrated into the Bidcorp system, with its strong focus on efficiencies in these areas. Reduced consumption and greater efficiency are priorities in these operations.

Human capital

A 26% increase in headcount was as a direct result of the acquisitions made in Bidfood Europe over the year. Gender diversity and EU GDPR regulations on the protection of personal information are key areas of management attention across this region.

The Netherlands continues to focus on hiring employees living with disabilities. By 2025 the business intends that 5% of its workforce will be drawn from groups previously “distanced from the labour market” by disabilities. The target is self-imposed.

Bidfood@Work, the Dutch staff wellness programme, provides access to stress, emotional and physical therapies. With PAM-coaching, Bidfood proactively coaches drivers and warehouse staff in workplace ergonomic techniques. Expenditure on employee training and learnerships is significant, indicating management’s commitment to grow and develop the labour force.

Bidfood Poland has established a labour social fund for the direct benefit of employees.

Social and relationship capital

Guzmán Gastronomia in Spain, is known for its community spirit. Despite an operationally challenging year, the business committed staff, time and resources to engage with the local community. Projects included the collection of toys, food and clothes for local charities over the Christmas period and blood donation drives. Fresh produce suitable for consumption but not for selling is donated to Banc de aliments, a Barcelonan programme to assist the homeless.

Netherlands continues to support an annual “Ouderendag” (Day of the Elderly) in which staff volunteer their time and engage with local old age homes in company-sponsored outings.

In Belgium, staff participated in the annual 20km Brussels run to raise funds for worthy causes. The Belgium management team have begun to incentivise staff to participate in environmental and social projects through an allowance scheme.

In addition, 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.

Bidfood Czech Republic and Slovakia commits to community assistance in various areas of need. Czech Republic has adopted the national Lunches4Kids project, ensuring children from low-income homes receive filling, nutritional meals in their school canteens. Local charities, schools, nursery schools and sports clubs also receive assistance; sometimes financial, sometimes in the form of food donations.

Cultural support is also an area of focus, and the business is a proud long-time partner of Prague’s National Theatre. The Slovakian business not only contributes annually to the National Civic Associations, it is also a key sponsor of the Citifest music festival in Piestany and the Krištálové Krídlo Foundation.

Human capital

Female employees 2 227 2017: 1 805	Male employees 5 615 2017: 4 425		7 842 Total employees 2017: 6 230
Employees training spend 2017 R17,2m 2018 R17,1m			Fatalities Zero fatalities for the past three years
Payroll spend (Rbn)	Social and relationship capital CSI Spend (Rm)

1.	Bidfood Farutex truck, Poland	4.	Bidfood Baltics van, Lithuania
2.	Bidfood Netherlands fleet	5.	Chefs in Bidfood Czech Republic
3.	Guzman product display, Spain	6.	DAC delivery truck, Italy