Bidcorp operating update - More bolt-ons

The company said that trading in the first quarter has been reasonably positive in their core foodservice business. All their businesses performed well in their local currencies. Management is putting efforts to down scale in non-core, underperforming Logistics businesses in the U.K. as trading remains tough. The U.K. logistics business is not a material player in the groups overall business.

The company continues to see organic growth in the Foodservice business and opportunities for bolt-on opportunities in all their different geographies. This is on the back of increasing inflation in some of their product categories such as dairy.

In my last meeting with David Cleasby, one of the things he said was that the company will focus more on increasing the basket of goods purchased by its customers. If they can convince the customer to add more products to their basket, that becomes pure margin as the delivery truck was coming in that direction anyway. In the update the company makes reference to this point where it emphasises the fact that they have been focusing on the correct segment of the markets (growing segments I'm guessing), adding value to the clients offering through innovation and improved service delivery. This is when they use their system to help chefs improve their menus for example.

The main takeaway here is that Bidcorp bought a few businesses to expand into new territories, which is their preferred strategy. These acquisitions cost the company R608 Million in aggregate and the company expects earnings of R104 Million from these business if they continue to perform as planned.