The Bidvest Group Limited

Group revenue increased 4% to ZAR 67 billion (reported as ZAR 66.7 billion elsewhere), with organic revenue growth of 2.1% and acquisitive growth of 1.6%. Trading profit rose 7% to ZAR 6.7 billion, gross margin improved 43 bps to 28.1%, and trading margin expanded from 9.8% to 10.1%. HEPS increased 5.1% and normalized HEPS increased 5.3%. Cash generated by operations was up 36%, underlying cash generated by operations before working capital rose 7.2% to ZAR 8.7 billion, working capital absorption improved to ZAR 2.6 billion from ZAR 3.6 billion, cash conversion improved to 70%, and free cash flow was ZAR 3.8 billion versus ZAR 2 billion last year. Net debt to EBITDA was 2.2x, ROFE was 37.6% versus 37.9%, ROIC was 13.4% versus 14.4%, and the interim dividend was ZAR 4.95 per share, up 5.3%. No explicit next-quarter or full-year financial guidance was given, but management said it expects a stronger second half, better cash performance by year-end, and lower second-half acquisition costs.

The CEO framed the half as a resilient set of results and emphasized that Bidvest has rebuilt its international footprint since the Bidcorp unbundling, with operations across 14 countries, about 750 branch locations and roughly 1 million customers. She said the group is focused on sustainable profit growth, returns, and cash generation, and noted that M&A is now materially depleted after closing Aquatico and other smaller deals. Her tone was confident on hygiene and strategic discipline, but more cautious on returns, saying the group is now focused on rebuilding ROFE after years of capital deployment.

The CFO highlighted broad-based margin improvement, tight expense control and stronger cash generation, calling the first half strategically disciplined despite mixed macro conditions. He cited revenue up 3.7% to ZAR 66.7 billion, gross profit up 5.3%, operating expenses up 3.4% overall but only 1.2% organically, trading profit up 6.9% to ZAR 6.7 billion, and a cash conversion improvement to 70% from 45%. On the balance sheet, he said the group issued a $500 million 7-year Eurobond at 6.2%, a GBP 130 million term facility at 5.6%, and ZAR 2.3 billion of domestic bonds at record low spreads, used proceeds to redeem debt, fund Aquatico and repay ZAR 2.1 billion of preference shares; weighted average debt cost stabilized at 6.4% and variable-rate debt remains 63%. He also said net debt/EBITDA is 2.2x, comfortably within covenant, and that the group is targeting below 2x in the near term with an internal sweet spot of about 1.5x.

Analysts asked about refinancing needs, and management said there are no significant near-term maturities; the main item is the FY '28 RCF term facility maturing, which they will start addressing later this year and early next year. On the hygiene business, management said there are no current plans to list it, explaining that the focus is on building scale, extracting synergies and consolidating a fragmented market, and that returns are only one of several reasons for being in the space. Questions also covered the failed Access Bank transaction for Bidvest Bank; management said the prior price was a 20% premium to NAV two years ago, the sale process was delayed, performance has softened, and they are now back-solving to a target debt-reduction amount while aiming to negotiate the best achievable price.