Covid-19 second wave weighs on Bidcorp’s earnings

Bidcorp, a leading foodservice group, recently reported a 46.2% decline in its headline earnings per share from continuing operations for the six months ending in December. The group's financial performance was heavily impacted by the harsh second wave of Covid-19 in Europe and the UK. As a result, the board has decided not to declare an interim dividend. David Cleasby, the Chief Financial Officer of Bidcorp, shared insights on the company's future strategies and challenges in a recent interview with CNBC Africa. Despite the challenging environment brought about by the pandemic, Cleasby remains optimistic about the company's prospects. He highlighted the rapid rebound in activity levels in Australasia, China, and other regions where lockdown restrictions have been lifted. Cleasby emphasized that Bidcorp's performance is closely tied to the recovery of the tourism, leisure, and hospitality sectors. He noted that the speed and extent of the bounce-back in these industries depend on the easing of restrictions and the control of the virus. One of the key concerns facing Bidcorp is the potential long-term changes in consumer behavior. The shift towards remote working and changes in dining preferences have led to a redistribution of demand for food products. While Cleasby acknowledged the impact of these trends, he expressed confidence that demand would eventually return, albeit possibly in different forms and locations. The company has also observed disruptions in non-discretionary spending areas such as hospitals, government institutions, and old age homes. Cleasby attributed the decline in demand in these sectors to the postponement of elective surgeries and other activities due to the pandemic. However, he remains optimistic about the recovery of the non-discretionary sector once normalcy is restored. In light of the challenging economic environment, Bidcorp has opted to retain its cash reserves and forgo the payment of dividends. Cleasby explained that this decision reflects the company's stance of supporting customers and employees during uncertain times. The focus is now on exploring organic growth opportunities and potential acquisitions, especially in markets where distressed companies may present attractive investment prospects. While the company is actively seeking in-country acquisitions in various jurisdictions, Cleasby highlighted the challenges posed by travel restrictions and the need for thorough due diligence in evaluating potential targets. Bidcorp is exploring opportunities in countries such as Australia, Brazil, Chile, Italy, and South Africa, although the current market conditions have not yet produced a significant pipeline of acquisition targets. Looking ahead, Cleasby expressed confidence that as government support wanes and market conditions evolve, more opportunities for strategic acquisitions may emerge. Bidcorp remains vigilant and prepared to capitalize on these opportunities as they arise, staying true to its commitment to sustainable growth and shareholder value.