Annual Integrated Report 2019

Africa delivered an improved second half performance, with trading pro t marginally up for the whole year. Dif cult economic conditions have curtailed consumer spending with cost pressures rising well above food in ation. Bidfood delivered excellent results under the circumstances and Crown Food Group (CFG) achieved a second half recovery. Chipkins Puratos (CP), our 50% equity-accounted joint venture (JV), experienced a tougher latter part of the year. All businesses grew volumes in their targeted channels, but margins were under pressure. Bidfood secured further street trade gains, bene ting from real volume growth and better margins. National Accounts declined slightly impacted by competition and weaker demand. Industrial catering sales rose, however, credit to the channel was carefully managed. Expansion of the myBidfood ecommerce platform continues. Own brand products remain a differentiator for Bidfood. At CFG, the impact of the listeriosis crisis was reduced by the growth in the wholesale and independent channels. The Six Bar acquisition is performing well. CP was impacted by lower yeast offtake due to declining bread sales but bolstered by good sales of own-manufactured products. The state-of-the-art wet plant was commissioned, however, start-up losses impacted pro tability. Greater China faced pressures which signi cantly impacted overall pro tability. Sales gains were realised and margins held up but trading pro t fell as expenses became signi cantly higher to expand our product offering following the loss of our cornerstone dairy products agency in F2018. Dairy remains an important category, however, diversi cation of the supplier base continues. A recovery was evident with a strong last quarter. In mainland China, our geographic distribution network is reasonably complete. The Guangzhou Meat factory commenced operations in the last quarter which is an important milestone in our product diversi cation. Miumi, the Japanese food business, delivered a strong performance. Emerging Markets Revenue R21,1bn 2018: R18,7bn Hong Kong and Macau introduced new brands into the portfolio while stepping up investment into production centres. The hotel and restaurant channel and Chinese cuisine remain opportunities for mainland operations. The business is well poised to resume its growth strategy, however, the fallout from ongoing protests in Hong Kong are unquanti able at this stage. Singapore achieved gains but trading pro t growth was impacted as a result of our Vietnam start-up costs. The Vietnam JV became operational late in the period. Singapore is now a predominantly foodservice business with exports, marine and commodities having been scaled back. Malaysia performed well, growing sales and margins. Chile bene ted from the October 2018 acquisition of Foodchoice, giving the business a national presence. Integration and ef ciency extraction continue. Organic growth remained an important driver as processed meat and seafood categories were expanded. The acquired Temuco and Antofagasta branches added to momentum. Brazil achieved strong sales growth. Both the Irmãos Avelino and Mariusso components of the business reported solid trading pro t growth. Recent political change has yet to manifest in higher economic growth, however, consumer sentiment is positive. Re nement of the business model continues to enable sales growth and expansion of the broadline product range. Further capex is planned to cater for growth. Bolt-on opportunities are being pursued, however, vendor expectations remain unrealistic. The introduction of own brand products in numerous categories is gaining momentum. Middle East delivered an excellent performance, surpassing previous levels of pro tability. Sales and trading pro t exceeded expectations while margins rebounded. UAE secured a signi cant agency which impacted working capital in the second half. Al Diyafa, the Saudi Arabian JV, recorded very pleasing results, driven by new account gains and better product mix. Turkey recorded good sales gains. A small trading pro t was achieved which is an improvement on the comparative period. Izmir-based EFE continues to perform well. The weak Turkish lira compounded dif cult trading conditions. Opportunities for regional expansion are under consideration. 2018: R1,0bn Trading pro t R1,0bn 1,4% 13,1% Manufactured capital Manufactured capital Financial capital Financial capital Emerging Markets continued to navigate challenging economic and political headwinds, however, staged a strong recovery by year-end. Overall revenue was up 13,1% to R21,1 billion (F2018: R18,7 billion), with trading profit marginally up at R1,0 billion (F2018: R1,0 billion). 2018: 237 426 17% 2018: 731 Vehicles (#) 790 8% See: AFS, Note 7.1 page 112 Depots 64% Vehicles 19% IT 17% 2019 capex Capex investment 2019 R344,8m 2018: R236,8m Depots ( m 2 ) 277 822 50 / Bid Corporation Limited Annual integrated report 2019