UPDATE 2-Bidvest sees tough H2, cuts payout; shares fall

* Slashes shareholder payout

* Says seeking acquisitions

* Sees tough conditions ahead

* Shares fall more than 4 pct, lag market

(Adds details, CEO, analyst comments, shares)

By Tiisetso Motsoeneng

JOHANNESBURG, March 2 (Reuters) - South African industrial conglomerate Bidvest (BVTJ.J) forecast a tough second half on Monday as it slashed its payout to conserve cash after posting lower first-half profit, sending its shares lower.

The company, whose activities span auto retailing, food distribution and freight services, said it is looking for acquisitions in South Africa and mainland Europe to offset recession-induced losses in Britain, where it shut some units.

Bidvest cut its first-half distribution to shareholders, which includes a dividend and a share issue, by 13.6 percent to 190 cents, sending its shares 4.49 percent lower by 0954 GMT, lagging a slightly weaker Johannesburg Top-40 index .JTOPI.

"The market seems to be taking the news that they dropped their interim distribution negatively," said one Johannesburg-based analyst.

Bidvest posted a 8.9 percent fall to 454 cents in first-half headline earnings per share, in line with its own forecast, due to a 165.3 million rand ($16.69 million) expense as it closed or reorganised underperforming parts of its South African motor retail, UK-based food services and British logistics businesses.

Stripping out that expense, headline EPS -- a key profit gauge in South Africa -- would be 0.8 percent lower.

The company, one of South Africa's largest by revenue, said it expects trading to remain difficult in the second half, declining to give a detailed outlook, but said business so far this calendar year had been "pleasing".

"It's very volatile at the moment, it's difficult to see how these conditions would impact on profits, but trading since January has been pleasing," Brian Joffe, Bidvest's chief executive said in a telephone interview.

Joffe said Bidvest was looking for acquisition opportunities in Europe and closer to home.

"We like South Africa, without being specific we have identified one or two [acquisition] targets," said Joffe, adding internationally the company was looking at acquisitions in the food service sector.