March 2, 2020 / 10:21 AM / a month ago

UPDATE 2-South Africa's Bidvest seeks more hygiene sector deals

* Bought British-based hygiene service provider PHS Group in Dec

* Bets on urbanisation, demand for better hygiene, safety standards

* HY NHEPS down 3.9% (Recasts with potential interest in hygiene sector acquisitions)

By Nqobile Dludla

JOHANNESBURG, March 2 (Reuters) - Bidvest is on the look out for more acquisitions in the hygiene business to build on its purchase of British-based hygiene service provider PHS Group announced in December.

Bidvest, whose businesses include freight, automotive and aviation services, is betting on growth drivers such as urbanisation, demand for better hygiene and safety standards as well as a growing and ageing population to boost hygiene market growth.

Bidvest’s purchase of PHS Group for around 9.1 billion rand marked a move to expand beyond its South African home market.

“From there (PHS) you could very likely see us moving across the globe into virtually any geography,” CEO Lindsay Ralphs said during a news conference.

“Hygiene services have traditionally been our significant target worldwide, it’s a very large industry worldwide but quite fragmented.”

Ralphs said another industry Bidvest was potentially looking to expand into outside South Africa was plumbing supply, while at home it is looking for bolt-on acquisitions.

Bidvest reported a 3.9% drop in normalised headline earnings per share (NHEPS) for the six-months to Dec. 31 to 610.9 cents compared with 635.7 cents in 2018 after new international accounting standards and a write-off of money owed by South African Airways.

Excluding the effects of the IFRS 16 accounting change, normalised HEPS rose 0.1%, Bidvest said in a statement.

Bidvest, which owns 27.2% of airline operator Comair , said it had taken a share of Comair’s impairment of the SAA settlement owed to it.

In February, Comair, which operates low-cost carrier Kulula.com, said SAA had breached the terms of a 1.1 billion rand settlement agreement after it was placed under business rescue, resulting in Comair writing that claim off.

Trading profit increased 19.8% to 4.0 billion rand ($255.31 million), while revenue grew 9.2% as a result of the consolidation of drugmaker Adcock Ingram.

Ralphs said that the coronavirus outbreak was number one on Bidvest’s risk profile, with a lot of its products imported internationally.

“If they are not imported directly from China, a lot of the raw materials are made in China,” Ralphs said.

“We do have quite significant facilities of stock at the moment so there is no imminent short-term problem with regards to inventory levels. We’re making every possible contingency plan to ensure that it doesn’t disrupt our business,” he said.

Bidvest’s business is 35% product driven, with tools, equipments, plumbing material and some components of the automotive business made in China, but not a huge portion, he also said. ($1 = 15.6671 rand) (Reporting by Nqobile Dludla; Editing by Kirsten Donovan/Alexander Smith/Jane Merriman)

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