(Reuters) – South Africa’s Bidvest Group said on Monday its annual earnings would drop 20% due to a 467 million rand ($26.66 million) hit to its profit, as it would take an impairment charge on its airline operator Comair.
Bidvest, whose businesses include freight, automotive and aviation services, said the coronavirus-related lockdowns had a “particularly devastating” impact on its trading and distribution activities.
Many South African companies have been battered by coronavirus-feuled lockdowns and face an uncertain near-term future, plagued by demand weakness and constrained consumer spending.
The company said in a statement that demand during the lockdown was limited, even for its businesses deemed essential services.
“The COVID-19 pandemic, which has mainly impacted the April month, has resulted in the economic and social environment becoming more demanding and uncertain, and has created significant operational disruptions, both on the demand and supply side of our economy,” Group CEO Lindsay Ralphs said in a separate statement.
The company, which owns 27.2% stake in Comair, said it would recognise a capital impairment charge of 232.2 million rand on Comair and incur its share of the airline’s operating loss of 209.7 million rand.
Bidvest in March said it had taken a share of Comair’s impairment of the South African Airways (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 off that claim.
($1 = 17.5177 rand)
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Vinay Dwivedi)