Bidcorp's Recipe: Food Inflation Vacuum, AI, and a Depressed Share Price
CEO says growth algorithm intact amid benign food inflation and strong cash generation.
BID.JO · Earnings Call · 2026-08-26
Benign Food Inflation: A Macro Surprise
Bidcorp's annual results were delivered against a backdrop of widespread fears of food inflation. But CEO Stephen Koseff and CFO Bernard Berson were emphatic: “we haven't seen it. It might still come. We don't believe it will. There's very, very little food inflation, and it's running in the low 1%.” — Bernard Berson, CFO · 2026-08-26 This is a sharp contrast to the global keyword trajectory, where food inflation was a top concern in earlier quarters. The global tape, for instance, shows keywords like "High fuel costs" and "Diesel fuel" as high-momentum themes, but Bidcorp's experience suggests these input costs did not translate into broad food price rises. The company sees the sweet spot of food inflation at 2-3% where pricing power exists, but current conditions remain below that.The Algorithm of Growth
Despite low GDP growth in its markets, Bidcorp posted 5% constant-currency revenue growth and 8.2% trading profit growth. The company's "algorithm" is simple: 5-6% organic revenue growth, gross margin improvement, cost control, and bolt-on acquisitions. Bernard Berson explicitly described “If we can achieve revenue growth of around 5% or 6% in a low inflation, low economic growth market, that's a good starting point.” — Bernard Berson, CFO · 2026-08-26 The results were strengthened by a strong second half, with trading profit up 9.5% in H2 versus the prior year. Trading profit is the core metric investors watch, and the momentum is clearly positive.Technology and AI: A New Frontier
A notable shift in the call was the emphasis on technology, particularly agentic AI. Berson revealed that the company is re-platforming its B2B solution and implementing agentic AI in sales and customer service. “We are implementing agentic AI into certain aspects of the business. It is being trialed. It is being developed. It's being used quite extensively in terms of selling opportunity, health opportunity, where is my order? Can I add to my order?” — Bernard Berson, CFO · 2026-08-26 This is a fresh theme for Bidcorp, which historically focused on distribution and manufacturing. The company sees AI as a "game changer" that will unlock micro efficiencies across its data-rich operations. This aligns with the global hype around AI, but Bidcorp's approach is pragmatic—using AI to improve margins rather than as a product itself.Cash Engine and Capital Allocation
Free cash flow was ZAR 7 billion, up significantly, with net debt/EBITDA at just 0.2x. The company has been buying back shares, and management laid out a clear pecking order for capital: dividends, buybacks, and bolt-on acquisitions. Berson noted in Q&A: “we believe that the share price is depressed and probably not correctly valuing the future opportunity, we'll continue to do buybacks.” — David Cleasby, Investor Relations or Corporate Communications · 2026-08-26 This is a strong signal from management that they see the stock as undervalued. The strong cash generation also supports continued investment in technology and manufacturing. cash generation is a recurring theme, but the absolute level this year is impressive.Regional Standouts
The U.K. margin improved from 3.7% to 4%, and Europe's trading margin expanded to 6%. South Africa delivered a 15% increase in profitability. Australia and New Zealand are rebounding after a "breather". The company's house brand and vertical integration strategies continue to drive margin improvement. As Berson said: "We've got substantial manufacturing operations around the world... that no doubt is pretty exciting about future prospects." These regional gains are the foundation of the growth algorithm.The Road Ahead
With the first 8 weeks of FY27 showing revenue up 6%, management is confident. They are predicting continued growth, but the biggest risk they cite is complacency. The company's decentralized structure allows quick adaptation to local conditions. Given the depressed share price and strong cash returns, Bidcorp looks like a defensive compounder with a tech twist.We are very comfortable where we're sitting at the moment in a very volatile world... and we're enthused and excited about the future.