• Trading profit drops by 28%
• Revenue increased by 9.2%
• Low profits from Angolan operations
• Voltex turnaround plan
Bidvest Namibia (BVN) had a very difficult financial year resulting in below expectation performances during the previous financial year. Although revenue increased by 9,2% to N$3,9 billion, trading profit decreased by 28% to N$294,9 million. “The increase in revenue is mainly attributable to the acquisition of Novel Motor Company, which made a N$755,2 million contribution to revenue,” said the company in statement announcing the company’s annual audited financial results for the year ended June 30 2016 issued on the Namibia Stock Exchange bearing the names of company chairperson and CEO Lindsay Ralph and Sebby Kankondi respectively.
It added that: “The Fishing division continued to face challenges on various fronts. Horse mackerel quotas were insufficient to fully utilise catching capacity, despite reducing the horse mackerel fleet by two vessels.” Although the division continued to secure third-party quotas at a cost, the company said, the horse mackerel volumes sold decreased by 36,2%.
“The hard currency prices also declined by 21,0% compared to the previous year, due to various external market forces including import restrictions in Nigeria. The lack of large fish in the size mix of fish caught suppressed the average selling prices. Fortunately the exchange rate helped to offset lower volumes and selling prices,” Bidvest said. Bidvest further indicated that the Carapau Joint Venture, which was constituted during the previous year worked well and contributed N$8,3 million in equity accounted earnings for the year.
“The Namibian pilchard resource is under great strain which put the industry and operations under severe pressure. Consequently it was not feasible for Walvis Bay´s two canneries to both open this pilchard season. Therefore agreement was reached with Etosha Fishing for them to can and our United Fishing to catch the pilchards,” reads the statement. As for its Angolan operations, lower than expected profits were recorded mainly due to technical breakdowns of the two vessels. “The Fishing division nevertheless still contributed 67% of our trading profit.”
Bidvest expressed satisfaction with the performance of its automotive division. “The new Automotive division performed remarkably well in a declining market and is in line with our expectations at acquisition.” It however noted that freight and logistics struggled due to lack of projects and reduced port and freight volumes in the current financial year.
“Structural changes have been made to correct size operations and the division should show improved results.” Food and distribution performed well compared to the previous year, Bidvest said. “This year´s trading profit includes a N$7 million settlement received from Namibian Poultry Industry Proprietary Limited regarding their cancellation of a chicken distribution agreement.”
Bidvest is currently implementing a turnaround plan for its Voltex operations. “Most of our businesses in the Commercial and industrial products and services division showed double-digit growth in revenue and in profits, which, however, were negated by a poor performance at Voltex. A turnaround plan is currently being implemented in this operation,” Bidvest said. Voltex is a Bidvest company and a wholly owned subsidiary of The Bidvest Group Limited. It is listed on the Johannesburg Stock Exchange (JSE). Voltex forms part of Bidvest Electrical and has a level 2 BBBEE rating. Bidvest’s fishing division continues to face significant challenges in the horse mackerel and pilchard operations.
“The current market prices, the strengthening of the Namibian dollar and the declining pilchard resource availability are external market factors placing pressure on our performance in the short term,” the company said.
To remedy the situation, Bidvest said: “We will continue to right-size our fishing operations with our quota availability and will strive to secure further joint ventures with new horse mackerel right holders.” The commercial businesses are also facing challenging economic conditions, and efforts are being made to align or keep cost structures in line with revenue streams, it said.
• Trading profit drops by 28%