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Bidvest sees modest 2010 profit growth in UK unit
South Africa's Bidvest expects its UK business to return modest profit thisfiscal 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 earningsper share for the year ended in June, hit by partial closurecosts at its cash-guzzling UK vehicle distribution businessOntime Automotive.
As part of its restructuring, the group also closed sixwholesale depots in its food and catering equipment firm, 3663First For Foodservice in Britain, as key customers in thecatering industry cut spending.
"The British economy will remain under pressure for sometime; therefore next year's business gains are expected to bemodest" 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 keyclients such as restaurants, pubs and hotels to scale down onspending or go out of business.
It also operates food service businesses in Belgium, the Netherlands, the Middle East and more recently Czech Republic.
The company, whose activities cover auto retail, freightservices and industrial products manufacturing, expects itsindustrial and commercial products to increase revenue andtrading profit slightly over 10 percent.
The group said its Bid Industrial and Commercial Products unit, which distributes electrical products, would face toughconditions for some time.
"A difficult first half is in prospect (for the industrialand commercial products unit), though business conditions areexpected to improve in quarters three and four," the companysaid.
Bidvest added that its auto retailing unit in South Africawas expected to achieve "meaningful trading profit growth" thisfiscal year after closing loss-making dealerships.
"There are grounds for believing a bottom has been reachedin 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 percentyear-on-year in September as recession in Africa's biggesteconomy curbed consumer demand, though the rate of contractioneased relative to earlier months.