Bidvest sees modest 2010 profit growth in UK unit

* Says industrial products' sales to grow 10 pct

* Auto unit to return "meaningful trading profit"

* UK economy to remain under pressure

By Tiisetso Motsoeneng

JOHANNESBURG, Oct 16 (Reuters) - South Africa's Bidvest (BVTJ.J) expects its UK business to return modest profit this fiscal year, helped by a revamp of the unit and Britain's recovery from a recession, it said on Friday.

Bidvest suffered a 13 percent decline in headline earnings per share for the year ended in June, hit by partial closure costs at its cash-guzzling UK vehicle distribution business Ontime Automotive.

As part of its restructuring, the group also closed six wholesale depots in its food and catering equipment firm, 3663 First For Foodservice in Britain, as key customers in the catering industry cut spending.

"The British economy will remain under pressure for some time; therefore next year's business gains are expected to be modest," it said in its latest annual report.

Bidvest, which makes about a quarter of its sales in Europe, has been under pressure as the recession in the UK forced key clients such as restaurants, pubs and hotels to scale down on spending or go out of business.

It also operates foodservice businesses in Belgium, the Netherlands, the Middle East and more recently Czech Republic.

The company, whose activities cover auto retail, freight services and industrial products manufacturing, expects its industrial and commercial products to increase revenue and trading profit slightly over 10 percent.

The group said its Bid Industrial and Commercial Products unit, which distributes electrical products, would face tough conditions for some time.

"A difficult first half is in prospect (for the industrial and commercial products unit), though business conditions are expected to improve in quarters three and four," the company said.

Bidvest added that its auto retailing unit in South Africa was expected to achieve "meaningful trading profit growth" this fiscal year after closing loss-making dealerships.

"There are grounds for believing a bottom has been reached in the new auto market ... We expect to achieve meaningful trading profit growth in the coming year," Bidvest said.

South Africa's total new vehicle sales fell 19.5 percent year-on-year in September as recession in Africa's biggest economy curbed consumer demand, though the rate of contraction eased relative to earlier months. [ID:nL2128102] (Editing by Will Waterman)