On Tuesday Bidcorp released a strong trading update but it disappointed the market. One of the groups biggest challenges was high food inflation in their operating countries. Australasia had food inflation of 9%, Europe of 16%, and the UK at 19%! Rapidly rising prices makes is difficult to pass on the increases to clients.
Reading results from a food supplier is a great way to gauge the health of different economies. The UK and Europe are strong, and well placed to accelerate as they enter their busy summer months. No surprise, South Africa is limping a bit with loadshedding making the food chain challenging. Surprisingly, China hasn't rebounded as quickly as the rest of the world after Covid restrictions were lifted.
Bidcorp is a good way to get international exposure in our local portfolios. The company continues to look for small bolt-on acquisitions to grow its international footprint. As a result, management keep billions on hand so that the can pounce when the right opportunity presents itself.
Bidcorp is a quality company, even though food isn't as sexy as the tech industry.