Bidcorp Covid-19 Update

On Tuesday, Bidcorp released an update to give us an idea of how their business has been impacted by this Covid-19 global shutdown. Being in the food industry, they have been hit harder than some other companies. The Bidcorp share price was around R350 in January, with a high of R358. Last month it reached a low of R171, and is now trading around the R240 level.



The lockdown means that they are seeing a 45% - 70% drop in volumes across their different operating regions. Ouch! Their business is regarded as essential services, so they can operate, giving them room to try to target new customers. Management is exploring ways of increasing their retail customer numbers and doing home delivery of food. Encouragingly, the Chinese operations have rebounded quickly after the country came out of their lockdown.

One of the reasons that we like Bidcorp is because the company has a strong balance sheet. In these tough times, strong companies will survive. In their update, management makes the point that some of their competitors won't survive the lockdown. That means either Bidcorp can buy the failed company or they can increase market share due to having fewer competitors.

There is no doubt that the short term numbers will be ugly. Hopefully, by the time the company reports their full year numbers in August, we will have some clear direction of where the globe is going. Bidcorp will survive this crisis, and will be better placed for the long term.