The trading profit of the division rose by 25.6% to R819 million after the prior year’s profit increased by 267.3% following the lifting of some of the COVID-19 pandemic lockdown restrictions.

Bidvest Automotive said the availability of new vehicles across the dealer network continued to be erratic with global vehicle supply, componentry and parts still a challenge.

The KwaZulu-Natal floods further hampered supply, it said. However, the division said despite this, new vehicle sales still increased by 8.6%.

Fleet sales are, however, yet to recover to pre-pandemic levels, it said.

The division reported that demand for used vehicles was strong, putting pressure on the franchised dealer network to secure good quality, well-priced used vehicles.

“In total, 9.6% fewer used vehicles were retailed during the financial year.

Aftermarket activity improved as the year progressed, but recently showed signs of plateauing.

“Management’s focus on margin rather than volume and continued attention to improving efficiencies paid off handsomely,” it said.

Bidvest Automotive said return on funds employed was “very pleasing”, increasing to 50.0% in the reporting period from 37.6% in the previous year.

It said the supply of new vehicles had started showing early signs of improvement but indicated that pressure on consumers’ disposable income was manifesting in lower credit approval rates and aftermarket activity.

“The discipline of targeting good margin sales will continue, and strategies to grow the contribution from used vehicles [will be] explored,” it said.

The activities of the automotive division impacted on the financial services division, which achieved a disappointing trading profit of R85.6 million compared to R331.6 million in the previous year.

Bidvest Bank accounted for significant one-off costs, which included branch closure costs and credit impairment charges on a few single-name exposures where the lagged effect of the pandemic and national lockdown caught up.

It said at the same time, the deployment of capital was slower than anticipated, and approved pay-outs were delayed owing to vehicle stock shortages while demand for fleet and forex-related products was still muted.

The Bidvest group grew trading profit by 23.3% to R9.7 billion in the year to end-June, which is getting close to its income prior to the 2016 unbundling of the foodservice businesses.

Bidvest group CEO Mpumi Madisa said superb profit growth was delivered by Services South Africa and Freight, primarily on the rebound in tourism and hospitality-related demand and strong maize export volumes handled.

Madisa said excellent profit performances were also achieved off already high bases by Branded Products, Commercial Products and Automotive, which were driven by an exceptional Adcock Ingram result, market share gains and margin focus.

Group revenue grew 13.2% to R99.9 billion from R88.3 billion.

Madisa said key growth drivers of the revenue growth were the record bulk commodity volumes handled and pharmaceutical sales, new vehicle price and volume increases, a strong rebound in travel and tourism-related revenue and the full year contributions from the acquisitions concluded in the UK and Ireland in the latter part of the previous financial year.

Headline earnings per share from continuing operations grew by 21.9% to 1 442.0 cents.

Madisa added that the agility and diversity of the group presented opportunities for continued operating efficiency and growth.