Update: 11 September
South Africa’s GDP in the second quarter of 2023 exceeded expectations, driven by factors like reduced load shedding and sectoral strengths.
The second quarter of 2023 brought welcoming news for South Africa’s economy, as real GDP expanded by a stronger-than-anticipated 0.6% quarter-on-quarter.
One significant contributor to this growth was the reduction in levels of load shedding, which has been a persistent challenge for the country. The built-in resilience to power outages, developed over previous quarters, proved crucial in mitigating the impact of energy disruptions on economic activities. This resilience allowed businesses to operate more consistently, boosting production and overall economic output.
The manufacturing sector emerged as a standout performer, making the most significant contribution to the quarterly GDP growth. With a notable 2.2% increase in production, this sector alone accounted for 0.3 of a percentage point of the overall GDP growth. The resurgence of manufacturing activity reflects a positive trend in industrial production, which is vital for creating jobs and stimulating economic development.
The finance industry was also instrumental in propelling economic growth during the second quarter. Contributing 0.2 of a percentage point to the overall growth figure, the finance sector’s performance underscored its importance in providing stability and support to the broader economy.
In addition, the agricultural sector experienced a remarkable resurgence, growing by 4.2% and contributing 0.1 of a percentage point to GDP. This turnaround was particularly noteworthy as it followed two consecutive quarters of decline. The 4.2% rise in agricultural output was driven by increased production of field crops and horticultural products. Favorable weather conditions, expanded cultivation, and rising export demand all played pivotal roles in revitalizing the agricultural sector, demonstrating its resilience and potential to contribute significantly to economic growth.
In contrast to the positive economic indicators in South Africa’s second quarter of 2023, not all industries experienced a similar trajectory. One notable setback was witnessed in the transport, storage & communication industry, which had previously enjoyed 18 months of consistent growth but stumbled during this period, declining by 1.9%.
The decline in this industry can be attributed to various factors. Transport support services, which are integral to the smooth functioning of supply chains and logistics, were lackluster during this period. This sluggish performance had a cascading effect, leading to declines in land freight and road passenger transport, both critical components of the transportation sector.
Bidvest Group Ltd. (JSE: BVT)
Bidvest has unveiled impressive 2023 financial results driven by robust organic growth, strategic acquisitions, and market share gains. Notably, Bidvest achieved exceptional growth in renewable energy and travel services, capitalizing on sustainability trends. Services South Africa crossed the billion-rand mark, while the Freight division doubled its contribution in just three years.
Financially, Bidvest demonstrated strength with a significant 33% increase in cash from operations. The company is poised for further growth, eyeing potential acquisitions to complement its organic expansion. Group revenue surged by 15%, boosted by recent acquisitions, resulting in a 17.6% increase in trading profit, reaching R11.4 billion.
Shareholders also received good news: a final dividend of 439 cents per share, a 20.6% increase from the previous year, totaling 876 cents per share. Bidvest’s CEO, Mpumi Madisa, attributes the success, especially in renewable energy, to addressing Eskom’s underperformance.
Shoprite Holdings Ltd. (JSE: SHP)
Shoprite’s recent earnings report showcases both impressive achievements and challenges in the retail sector.
One of the standout achievements was Shoprite’s ability to increase diluted continuing headline earnings per share by a substantial 9.7%. This impressive performance was further underscored by the decision to raise the full-year dividend per share by 10.5%, culminating in a dividend of 663 cents per share for investors.
However, the report had its disappointments. Shoprite faced an unexpected hurdle in the form of R1.3 billion in diesel expenses, highlighting the ongoing challenges of operating in a dynamic economic environment.
When it comes to sales growth, Shoprite has demonstrated its resilience and adaptability. Sales at Checkers and Checkers Hypers surged by an impressive 18%, while the online delivery service Sixty60 experienced an astounding 81.5% increase in sales. Even Shoprite and Usave, staples in the retail landscape, saw sales rise by 15.6%, a testament to the company’s continued relevance.
Regarding merchandise sales, Shoprite recorded a remarkable 16.9% surge, with sales reaching an impressive R215 billion, up from R183.86 billion in 2022. This significant growth in merchandise sales further solidifies Shoprite’s position as a leading player in the retail industry.
Sources: Moneyweb; BusinessLive; Daily Maverick
Disclaimer: Trive South Africa (Pty) Ltd, Registration number 2005/011130/07, and an Authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 2002 (FSP No. 27231). Any analysis/data/opinion contained herein are for informational purposes only and should not be considered advice or a recommendation to invest in any security. The content herein was created using proprietary strategies based on parameters that may include price, time, economic events, liquidity, risk, and macro and cyclical analysis. Securities involve a degree of risk and are volatile instruments. Market and economic conditions are subject to sudden change, which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. When trading or investing in securities or alternative products, the value of the product can increase or decrease meaning your investment can increase or decrease in value. Past performance is not an indication of future performance. Trive South Africa (Pty) Ltd, and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered from using or relying on the information contained herein. Please consider the risks involved before you trade or invest.
