JOHANNESBURG (Reuters) - South African food services firm Bid Corporation Ltd (Bidcorp) (BIDJ.J) said on Wednesday it expects to finalize talks on the sale of its UK logistics business by October, leaving the group free to focus on its main operations.
Bidcorp, which operates in Europe, Australasia and emerging markets, has been trying to sell the loss-making UK Contract Distribution (CB) business for more than a year.
In September, a potential unidentified buyer ditched plans to acquire the non-core unit.
“Negotiations for the sale are progressing. We remain hopeful that we will conclude that in the next month or two,” Group Chief Executive Bernard Berson said after the company announced a 12.5% rise in full-year earnings.
He did not name the potential buyer.
Berson told analysts at the results presentation that the UK CB business was now operating profitably and in June regained a Yum Brands Inc’s (YUM.N) KFC contract after the fast-food chain switched its delivery contract to DHL in 2018.
Its UK PCL dairy distribution business also ceased operating in April when it was acquired by Scandinavian dairy firm Arla Foods, Bicorp said in its results statement, adding that a further warehousing contract was in the process of disposal.
“We are optimistic that the distraction of dealing with the discontinued operations will be behind us into financial year 2020, enabling the group to be fully focused on its core foodservice markets,” it said.
In the year to June 30, Bidcorp spent 847.1 million rand ($55.60 million), compared with 1.2 billion rand in 2018, on acquiring a remaining minority stake in D&D in Italy, Igartza food service in Spain and Punjab Kitchen, rebranded as Food Solutions, in Britain.
“Our lower acquisition costs reflect fewer acquisitions in the year as management’s focus was on bedding down the various investments made in previous periods,” Berson said in the statement.
“We retain adequate headroom for further organic and acquisitive growth, and we are still well capitalized.”
It also started a greenfield operation in Vietnam that imports a broad range of higher-end and branded European, Australian, New Zealand and potentially American products “that goes into the more western type cuisine”, Berson said.
Bidcorp was seeing a turnaround in China, where business was hampered by the loss of a major dairy products agency in financial year 2018, which represented 40% of sales.
Sales grew 7.2% in the fourth quarter, with profits up sharply as the strategy to diversify into other product ranges gained traction, it said.
Hong Kong and Macau introduced new brands into the portfolio while stepping up investment in production centers.
“The business is well poised to resume its growth strategy, however, the fallout from ongoing protests in Hong Kong are unquantifiable at this stage,” the firm said.
Reporting by Nqobile Dludla; editing by Subhranshu Sahu/Jason Neely and Emeiia Sithole-Matarise