Thanks for joining the Bidcorp Capital Markets update for the first few months of the year. I don't think today is gonna be a very long session. Hopefully, you've read the update that we released on SENS an hour or so ago, and I'll just talk you very briefly through it, and then we'll hand over to David Cleasby, who'll give us a very quick financial update. Then we'll move into a Q&A session. In terms of the Q&A, please use the Q&A function on your screen, on your participation screen, and that will send us questions, which we'll just read it afterwards and answer as we go through. So I guess it's been a few months since we last spoke.
We last spoke towards the end of August, when we released results for the year end of June, and we also updated you as to our progress to the end of August. Now we can update you further to the end of October and a couple of weeks into November. Things are pretty much as we said, and they continue on the same path. We're very happy with our performance overall, and obviously, there's some that are stronger, some that are weaker, and when I go through some of the detail, we might just unpack that a little bit.
But overall, in a diversified group of our nature, geographically diversified group of our nature, we're very happy that there's enough going right to offset that that's going wrong and still result in a net positive outcome for the start of the year. Before we get too far into the detail, I think we also just need to reflect what we're comparing to, and I think that might sometimes get lost. And I think we need to refer back to a few of the things we spoke about this time last year, or even at that half year stage, about last year. So in terms of the July 2022 to probably December 2022 period, it was absolutely phenomenal. We saw activity rebound at an exceptionally rapid rate.
We saw people revenge spending, leisure and hospitality rebounded. Business travel started recovering very, very quickly, and that was coupled with a few other factors. You had inflation that suddenly reared its head and was tracking quite aggressively. You had huge supply chain disruptions, which meant that there were shortages of certain products. Some of that was pure supply chain, some of that was agricultural, climate in nature. Some of it was the demand was so strong coming out of COVID that manufacturers couldn't keep up. We had the issue of immense labor shortages. We couldn't find labor, we couldn't put labor on quick enough to cater for the increased demand.
We actually said that our cost base was unsustainably low at the time, not out of, not out of design, but it was just circumstantial that we actually couldn't fill the number of vacancies that we had to fill. And it was a really, really strong trading period, and you saw that in the numbers last year. And almost every business performed exceptionally well, in the comparative period last year. So going into this year, we were a little bit concerned about what we're cycling up against. It was a really, really strong trading performance.
Now, let's not make any bones about that, and I did allude to it when we spoke in August, and I spoke about the trend, that it was, things seemed to be normalizing, getting back to the status quo of what it was before, and we've seen that trend continue. So there's no doubt that the exuberance is generally out the market, and things generally are back to normal. When I say back to normal, that doesn't mean positive or negative normal. It could mean positive or negative, but they're just back to normal, and much of life is as it was pre-COVID and the world is readjusting to this, this new normality. And the outcome of that is, I think, reflected in a very strong trading performance that our business has put in.
Certainly, demand isn't as strong as it was a year ago. We don't have that same huge pent-up demand that's getting spent. You don't have the same amount of revenge spending. In fact, I think that's all gone. People have done what they needed to do, and there is just a level of normality and flatness that's come back into the market. That's been coupled with some macroeconomic headwinds. Inflation, obviously, is a problem that's manifested itself in interest rates going up almost everywhere in the world, which in turn has resulted in consumer stress as people refinance mortgages at higher rates and all of those other good things, and as economies start slowing down in order to give the central bankers what they wanted in terms of slowing inflation.
So we're seeing inflation slowing, we're seeing wage growth moderating, we're seeing demand moderating. I don't wanna say it's going backward, but it's certainly not going forward in any great way. It's you know, it's reasonably tough out there, and certain geographies are tougher than others. So I don't think that we're looking at a totally exuberant economic environment, but I don't think we're looking at a terrible economic environment either. And yeah, when you look at the jurisdictions we're operating in, I think generally GDP growth is very anemic. Some of them is even negative, and in most geographies, it's relatively tough going at this stage, primarily because of the higher cost of interest as it affects consumers, which flows through to consumer demand.
which hopefully solves the inflation problem, but doesn't tip the economy, the relevant economies, too far over the edge. So, you know, that's a little bit of macroeconomic view on it, which I'm sure all of you know much better than me. For us, that's all well and good, but we operate our businesses in the environments we operate in. We are where we are, the economies are where they are, and our teams are tasked with doing as best they can under the circumstances that we find ourselves. And I think our teams around the world have done a phenomenal job. After four months, we've got real growth in hard currency, in excess of the weighted average inflation.
Please don't ask difficult questions as to exactly how that inflation is calculated, and that's a basket across all the countries we operate in. But we're seeing real growth in our business, in excess of inflation. David will talk about the exchange rate, which has given us a 14% tailwind, or a 14% positive uplift, if you compare the average exchange rates this year compared to last year. So we are very satisfied where we are after four months, after four and a half months. The great results, these strong results, haven't come about because of huge volume growth. In fact, volume growth's been relatively difficult to come by, but we still are seeing some volume growth. We believe we are gaining some market share in various geographies.
And we're doing relatively well in economies, as I've said, that are relatively benign and quite tough. We've controlled our cost base as best we can, which is more or less in line with sales growth. Which is tough in an inflationary environment, because you still have wage pressure. We have a full staff complement now. We can find people. You pay them what you have to pay them. So we are seeing an increase in wage costs compared to last year, but like I said, last year was absolutely unsustainable. And fortunately, we have been able to fill those positions. So generally, we're running at a full staff complement now, for the volumes we're doing. And the rest of the cost base is quite small.
We are seeing generally a drop in energy prices. We are seeing generally a drop in fuel prices year on year. Generally, there are pockets of exception to that. And on the gross margin, we've more or less managed to maintain our gross margin percentage at where it was a year ago. And for us, that's one of the great achievements in these numbers, because last year you had this almost unsatisfiable demand, so you could just pass whatever price increases up whatever, but it was much easier to pass these inflationary price increases through, because you had this huge demand coming at you all the time. That demand has obviously softened a whole lot. And it's more difficult to pass price increases through. And also, price increases are far less than they were before.
So we've seen food inflation dropping quite quickly, and despite all of that, we've managed to maintain our margins. Another point worth mentioning is, in an inflationary environment, where you have good traders, like we have around the world, there's always an opportunity to make an extra buck or two on certain products that you know are gonna be inflating in price. And you buy today, and you sell in three months' time, and you know you're gonna make a larger than normal profit out of that. And our guys around the world are empowered to do that, and they do it very, very well. Those opportunities have been very few and far between this year, and in fact, we've even seen some cases where it's negative and prices have dropped, and we've had to.
Yeah, we've had to make sure that we balance our inventories accordingly. And all of that has netted out in us maintaining our gross margins at where they are. So in a nutshell, the overall result is, we think, very satisfactory, very pleasing in a toughish environment. There's real growth, which is always the target we set ourselves in excess of inflation. The look forward is always difficult to do, but we aren't seeing anything looking forward that's different to where we currently are. So circumstances aren't changing rapidly. Things are more or less the same, and yeah, there's obviously a build-up now to Christmas. Hopefully, it will be a good Christmas season. We don't know if it will or won't, but we're hoping it will be. Forward orders look very reasonable.
They don't look overly, overly robust, but they look totally reasonable. Next year is next year. What happens with the macroeconomic environment? I don't know what happens with the geopolitical environment, I've got no clue. But like I say, we are where we are. We've got great teams in each country doing what they do. They do it very, very well, and we're very happy with the outcome. If we just unpack a little bit by country, by division, I'll just give you a little bit of color on that. Maybe we start with emerging markets, which is the most complicated to understand, because it encompasses so many jurisdictions. Firstly, Greater China, Hong Kong, and mainland China, has been tough going. We are below last year's numbers. Last year's numbers were COVID impacted.
This year they're not COVID impacted, and still, we are struggling to see any growth. China is in a deflationary environment. The consumer's not in a great way. There's a big shift away from spending on expensive Western product, which has inflated because of inflation, and there's a big shift back into cheaper Chinese product, which is deflating, so the cost price differential is becoming bigger. So China is a, yeah, is a tough market. We're still absolutely profitable in the market, and we're absolutely confident about our future prospects there. Hong Kong is stable, but it hasn't seen a return of tourism. And in fact, they get negatively impacted during every holiday season, that there's a massive migration out of Hong Kong without the expected influx of foreign tourists in, back into Hong Kong.
So the tourism market in Hong Kong is very different to what it was in 2019. And it's a far more, I guess, insular place now than it was before. Will that change going forward? I'm not really sure. They're obviously pumping a lot of money into reestablishing Hong Kong as a destination, and time will tell. But we are still profitable. We've had a transition of management there. That's going absolutely according to plan and fine, and Wyman's got his feet under the desk and is running the business accordingly. Singapore, Malaysia are doing fine. I think those economies are. Yeah, they're a little bit tough, but we're doing good. We're getting good growth out of there.
The Middle East went through their hot summer, where you expect a deterioration in trading, which we saw. They were also coming off a few poorer months before that, and they're cycling through that and are doing very well and absolutely running according to plan. So the Middle East is looking fine. Turkey's an interesting market. It's very developmental for us at this stage. We're seeing huge growth, but that growth comes at a cost. It's an infrastructural cost. You're growing into this new infrastructure all the time in a very challenging, high inflation environment. Yeah, we're not talking single digits. We're talking many, many months of double-digit inflation just in the month. So it's quite a challenge, but we are building a very solid business there with multiple locations.
We don't have a national presence yet, but we've got a quasi-national presence in all the most important markets in Turkey, and one day, we believe this will be a sizable business for us. We've just got to go through the investment phase. South Africa is a tough place. As you all know, the economy is not great, load shedding is not great. I can rattle off a whole lot of not great things. Yet our business has performed phenomenally well, with double-digit growth, both at the top and the bottom line. So I don't know how they do it, and well done to the team there. A phenomenal job out of South Africa in exceptionally trying conditions.
They've done very, very well, which just does go to prove the point that you don't only need strong economies to perform well in. There's opportunity in not so great economies if you're nimbly enough and quick enough to take advantage of those opportunities. South America is a bit of a mixed bag. Interestingly enough, our Argentinian business is flying. It's very tiny and won't shift the needle, but it's just interesting to see how they operate in a high inflation environment. And that business is doing phenomenally well. Brazil, the economy is not great. Our business is performing ahead of last year, but it really is a slog. And Chile remains a work in progress for us. It is a profitable venture.
It's a venture with a lot of potential, and there's just 1 or 2 or 3 internal things we need to get right, and we'll be very confident about what we've built there. Bear in mind, it was a greenfield start, maybe 8 or 10 years ago, and now we have a very large national business. We're either number 1 or number 2 in a highly fragmented market. But we are a business of scale now in Chile, and we just need to tweak a few of the components to get that business performing correctly. Moving on to Australasia. Australia and New Zealand both continue to perform exceptionally well under the circumstances. The New Zealand economy is probably a little bit weaker than the Australian economy.
They did have a change of government a few weeks ago, so we'll see what, what type of, of change that brings. They're doing well. They're getting volume growth, they're getting profitability growth. Australia also continues to perform absolutely according to plan. Volumes are tougher to come by, but that business is well managed. The correct levers are being pulled, and they continue to go from strength to strength, and show good growth. The U.K. remains slightly challenging for us, and I wanna say slightly challenging. We're still highly profitable. I believe we still probably are doing better than our peers, although we've got no real way of knowing that.
We've seen some great market share growth, but we are seeing big increases in the cost base, probably bigger than we're seeing in other parts of the world. There's very big wage pressure, there's big regulatory pressure, energy prices. There's a whole lot of things that are moving in tandem on the cost side, which aren't helping. Bear in mind, we've got a strong top line. And we're also, I'm not gonna say struggling, but our ability to recoup our gross margin lags in the U.K. because of the structural nature of how they run their business, how our contracts are set up, the number of larger contractual-type obligations they have, and their pricing models aren't necessarily as dynamic as many of our other markets.
So we have no doubt that at some point in time, we will translate the top line growth into very satisfactory bottom line growth. That just takes a little bit longer, and it's a little bit more circumstantial. But they are doing a phenomenal job on the top line. They've had some great contractual wins. We remain very confident and enthused about the future of the U.K. and see that as an opportunity for growth. You know, it's always nice to know that you've still got some potential that you can grow into, and the U.K. certainly presents us with that. Europe was probably the surprise performer of the period that we're looking at. The weather across both Europe and the U.K. wasn't great during the summer.
Tourism probably wasn't quite as great as was expected. It certainly wasn't as strong as the prior year. But notwithstanding that, I think every single one of our businesses, and maybe one didn't, one or two didn't, have outperformed the prior year. And they've outperformed relatively well. Just doing more of the same, just doing what they do, but just more of. So we've seen reasonable top line growth, some volume growth. We've maintained margins, we've controlled cost bases, and the European business certainly has been the standout performer in the quarter. And, you know, if you had to rank them, and I don't want to rank them because they're all great performances relative to their own. But yeah, the Europe performance is exceptionally strong. Australia, New Zealand, the Australasian business, was a perennial strong performer.
South Africa was really good. And then in the emerging markets class, there are a few others that were relatively strong as well. So overall, that's where we're sitting. One of the challenges it's not even a challenge, it's just an observation I'll make, is I think as the dust has settled, maybe a few competitors in various different jurisdictions, and please don't ask me to tell you where, I'm not going into this detail. But competitors in various jurisdictions, particularly in the more developed markets, have probably woken up to the fact that maybe some of their market share has slipped, and there's quite a lot of aggressive approaches being made to customers with pulling the only lever that a lot of people know, which is price.
A lot of larger customers are struggling with inflation, and cost price increases, are looking for whatever savings they can find. Service isn't necessarily all that important anymore, and it's gone into a price market. So we are seeing some very aggressive price taking by some of our customers, some of our former customers. At some point in time, we walk away from business. Business is only good if it's mutually beneficial. If we don't cover our costs, then there's no point in doing the business. And from a competitive point of view, if they take it on and they do try to raise their pricing, that business is gonna be up for tender anyway, at a point in time.
So either it's gonna be carried on and doing unsustainably, or it's gonna have to be corrected at some point in time. But we don't want to get involved in this race to the bottom. We believe there's a limited amount of capacity from our competitor's point of view to take this business on, and rather they take on high volume, low margin business, and we'll carry on focusing on the correct customer base from where we are. In terms of acquisitions, we only completed one acquisition during the period, which was in Australia, a regional location called Dubbo, in New South Wales. We are working on a few others in a few other geographies in South Africa, in the U.K. , in Europe, and a couple in the emerging market segment. Some of them might come to fruition, some won't.
What we are finding at the moment is, from a vendor point of view, their mindset is on what their last year's numbers were, and last year was a whopper of a year, and that's probably reflected in some of their numbers. And so their expectation going forward is based on last year plus. We're not convinced that they will do last year plus. They might be last year flat. And we also think multiples should come down as interest rates go up and cost of funding goes up. So there's a little bit of an equilibrium that still has to find itself in terms of acquisitions. We'll carry on looking for, we'll carry on looking for them accordingly. From a large-scale acquisition point of view, once again, we remain alert, but absolutely nothing of any consequence has come across anybody's desk.
And the M&A landscape generally doesn't look all that, all that busy at the moment. So, you know, we remain, like I say, we remain vigilant, and should something come across our desk, we'll absolutely look at it. We've got an exceptionally strong balance sheet. Our cash generation, David will go through all of that, remains great, with almost no debt. So we're sitting in an exceptionally strong position. So to wrap it up, we're exceptionally proud of what our teams have achieved in four, four and a half months. Probably exceeded our realistic expectations, slightly. Obviously, we aim for that real growth, but we were nervous going into the year. It has held up better than I thought it would, which is a great testament to the teams in a relatively tough environment.
And as I say, looking forward, we don't see it being much different to the last 4.5 months, but circumstances are what circumstances are, and we just have to adapt and change things as necessary, although fundamentally, we've made very few changes. So what have we done differently this last period? Absolutely nothing. It's more of the same. So it's the same story. We've got our strategy, we execute on the strategy, we make slight tweaks along the way. We start introducing new activities and new initiatives on a country-by-country basis. Some of them take a little bit longer, some of them work. Most of them work, one or two don't work. But we're on this path. I think it's the correct path. I certainly think our performance reflects that.
Our metrics are all, I think, top class, and something to be proud of. You know, my thanks go out to the team around the world, 27,000 people, who do the job every day. They do it great and continue to deliver the results. You know, first and foremost, my thanks go out to my senior team and the rest of the team around the world. I'd like to hand over to David just to give you a bit of a financial summary.
Thanks, Bernard, and morning, afternoon, evening to everyone. I'll go through a few things just very quickly. Performance, obviously, as Bernard indicated, real growth. Our inflation number is an indication. It's not an exact number, but it's on a weighted basis across all the geographies around the world, the latest data. So it is an indication and gives you an idea of sort of currently the inflation - food inflation numbers that you see. And then really, just to reiterate, as Bernard said, the impact of the rand, the depreciation of the rand across all the currencies is 14%. So overall, the business in rand has performed very, very well.
I think just on those sales numbers, we've given you, as we have for the last while, the monthly sales. These are tracked weekly. I think just really two things to note. Firstly, the November numbers is really to the first week of November, so I know we've given you the latest data, but it, it's designed to give you a trend. The other thing is in Australasia, there were some contracts exited in the base, and we've given you, if you look through the detail, the actual like for like sales growth in both Australia and New Zealand, and both of those are tracking absolutely fine.
In terms of the trading performance, gross margin is tracked down a little bit, but it's largely due to the impact in the U.K. But I think that's a trading issue, and we need to marry, you know, volume and margin, and depending on the circumstances of each of the businesses. So at times, we will sacrifice a bit of margin for volume, and the businesses do that, but overall, sold it, you know, relatively well. Operating costs, we've seen some efficiencies. They are on a percentage, as we say, cost of doing business, as a percentage to revenue are down. And overall, that's mitigated the slight decrease in the gross margin.
So overall, the EBITDA is tracking at 9.8%, and that's largely in line with where we were a year ago. As we remind you, every time we do have a working capital cycle, we absorb in the first half, we generate into the second half, and we've seen that absorption into the first half. But overall, the percentage of working capital to revenue is annualized. As we track it, it's tracking exactly in line with our normalized metric. So that's all under control, and we've continued to invest. So that's an ongoing program.
And, you know, those investments have been, you know, broadly all over the world, Australia, there's some coming into New Zealand, U.K. , in Europe, and, and also, you know, places like Malaysia, and South Africa. So investing all over the place as and when we see the need for capacity. In terms of liquidity, there's nothing really that's happened in the period, and we've got certainly, as Bernard indicated, a strong balance sheet and absolutely ample capacity for future investment as and when it's required. So that's all I really want to add. Bernard, I'll hand back to you.
Thanks, David. I'm just going to read out the questions we got and answer them to the degree I can. Some of them I won't answer in a whole lot of detail. So please, can you talk to cost drivers with revenue growth slowing? Are you concerned that EBIT margins will be under pressure going into the second half, or price increases and some gross margin improvement hopefully offset? Like we said, the cost drivers are primarily labor. Labor is 70% of our cost base, with electricity, fuel, and occupancy costs above that. We're not seeing anything significant on volume declines. Don't read too much into that. We're not seeing 10% or 20% volume decline. We're just not seeing 10% volume growth.
So if we see a flat, flat volume or volume up 1 or 2 or 3% in this environment, we're very happy with that. And with the way the business is structured, with, with any type of volume growth, we're going to see operating leverage or, or margins staying relatively flat. So no, we, we're not concerned that we're gonna be under more pressure in the second half than the first half, as long as demand sort of tracks where it's tracking. And like I say, we can only talk about what we can talk about. Sales for last week were absolutely fine. They tracked along the same trajectory. And we are tracking through the strongest period on a comparable basis. So I think that gives us a little bit of comfort, but we don't know what we don't know.
How much of acquisitions contributed to the year-to-date constant currency revenue growth? Acquisitions in this year, zero. That acquisition in Australia was made in October, and it's, it's relatively small. So that would have made no difference. And I'm not sure what last year's acquisitions add, or the year before's acquisitions add, but that was probably all in the number, and it's probably not a huge contributor overall to the growth that we've seen. So I can't answer that question, and maybe when we get to half year, we'll have a little bit more information on that, but acquisitions aren't a big part of the growth. Do you have any concerns that the build-out of capacity over the past few years will lead to an excess in certain countries, given the softening in demand? Absolutely not.
The softening in demand, like I say, isn't going backwards at a rate of knots. It's purely that it might be standard, staying still or going up 1 or 2 or 3%. Whatever capacity we got, we think is fantastic. It probably puts us ahead of quite a few competitors. Replacement cost of capacity is just going up and up. So whatever we've invested in over the past few years will certainly stand us in good stead. So we've got no issue with capacity issues, and we never build a huge amount of excess capacity. There's always enough capacity, but it's only for the next number of years. It's not in perpetuity. Very encouraging you are seeing further margin gains in Australasia.
What is driving that, given the macro challenges, is the mix of customers placed at QSR contract exits or other? We exited two very large QSR customers at the end of October last year, one in Australia, one in New Zealand. I think the New Zealand one was about 8% of their annual revenue. Australia was about 5% of their annual revenue, and as a result of exiting those, obviously, your mar- your, your percentages change, your margin goes up. Your volumes are, are more constrained, but what you got is a better mix of business. Is it just the contract pricing dynamics in the U.K. that is holding back margins? Or what other parts of this business need to improve to get back to historical levels? I think the U.K. maybe is in a worse economic position than the rest of Europe.
I think the cost of living crisis might be a little bit worse in the U.K. I think the competitive pressure we're facing might be a little bit more fierce in the U.K. Might be. But a lot of it just goes to the nature of the pricing mechanisms that we have in the U.K. , that aren't as dynamic and flexible as they are in many other markets. And that's historical, and that's the nature of the market. It's not something we can go change too quickly. It's also because a large chunk of the U.K. market is serviced by larger national customers. It's just the reality. There are just more chains, national buying, consolidated buying in the U.K. than there are in many other markets. That's just the way it is.
So we're operating in that environment. It's no different to what we said a year ago. We're still seeing the same cycle because you still got quite strong inflation. But we remain very, very confident that our business is performing ahead of its peers, and is doing well. They are, you know, I think they obviously compared to the rest of our businesses, there's scope for improvement. But I think compared to comparables that we see in the U.K. market and from what we understand, we're doing okay. Kindly, can you elaborate a bit on the volume growth in the U.K. , and expand a bit on the contract wins in the region you alluded to in your comments? None of the contracts are big in isolation.
So for us, a large U.K. contract is maybe GBP 20 million or GBP 30 million, against a turnover of GBP 2.5 billion. We certainly aren't chasing the GBP 200 million, GBP 300 million, GBP 400 million-pound contracts. That's not where we're at. So there's multiple numbers of contracts across hotel groups, restaurant groups, caterers, fast food, casual dining type concepts. So it's a blend of customers. None of them individually are gonna shift the needle, but obviously our teams are doing something right in the U.K. , that we are picking up a fair amount of volume growth. U.K. sounds tough. Able sales growth of 24% versus inflation, implying very strong volume growth, including acquisitions. Trying to reconcile this with your comments. Once again, there are acquisitions that are now in there that weren't necessarily in the full base.
Some acquisitions we made in the U.K. were in July last year, but there was a large one that was only made, David, in January, which might have some impact. But their volume growth has been strong. Their volume growth is strong, and, yeah, that will translate into bottom line at some point in time. Please provide some detail on the European operations across the various countries. I don't really wanna go into detail. I'll just go very, very quick. And it might sound blasé, but this is the way it is. Holland, strong volume growth, strong profit growth. Belgium, strong volume growth in the correct segments. We have exited another large, logistic-type customer on the first of July, which obviously impacts the sales line, but certainly isn't impacting the profitability. So profitability is strong.
Italy, we're seeing strong volume growth, strong profit growth. Czech Republic, Slovakia, Hungary, volume growth is moderate, and we're seeing some good profit growth. Because they're recovering some of the price increases historically, that they traded away for margin. So they're catching up on that now, so they're doing good. Ireland continues to perform excellently. The Baltics performs exceptionally well. Spain, we're seeing an excellent performance there, and they're making, shouldn't say it, but they're making EBITDA margins of 6% or 7% now. So that business is substantially in great shape. Portugal is doing well off a very small base, and Germany continues to be a work in progress. We like to think of it as a blank canvas, and one day we'll create a masterpiece out of it. It might just take us a little bit of time.
Are you expecting to recover the lost volume in Australia and New Zealand by the end of this financial year? The volume is irrelevant to us. We don't want to replace the volume on a like-for-like basis. And quite honestly, we've replaced, we've replaced what we wanted to, the amount we wanted to replace, we've replaced anyway, and that's why the Australian and New Zealand businesses are both outperforming last year, which were great, strong record performances. We're not at all unhappy with getting rid of some of that volume, which did release some capacity for us to carry on growing our core focus business, which has resulted in what we're doing. When you relinquish very low margin business, you don't replace it on a like-for-like basis. You don't replace one carton for one carton.
You can replace one carton with 0.2 of a carton, and your contribution is gonna be very similar. So for us, this volume is a little bit of a misnomer, and it's what you're selling to who and at what price. I'm not sure. Just hold on. Let me see if I've got any others. The update indicates trading margin improvement in Australasia and in Europe. The FY23 margin by, by these territories were reasonably high. Could you indicate how you are extracting additional margin improvement in these divisions? The differential we're talking is relatively small. You know, you're talking basis points, percentage points, and the way we're doing it is by doing exactly what we're doing, doing a little bit more of.
So we've exited some large customers in Australia, in New Zealand, in Belgium, in Holland, and I think you can see the benefit of that. So it's absolutely the path we're on. There's a little bit more light manufacturer, there's a little bit more import. So it's all these little levers that we're pulling, just a little bit here, a little bit there, that are all working very nicely and synchronously and giving us that benefit. Please, can you highlight the percentage of revenue in these big national contracts in the U.K. and for the group where pricing dynamics are not that dynamic? I don't know how to answer that question because I don't know what big means and, I'm not really sure I can give an answer to that.
In the fresh business, pricing is dynamic, and that's about GBP 250 million a year of revenue. That pricing is relatively dynamic, and you don't have too many contracts where pricing is held for one month or three months or six months or a year. In the independent businesses, in the Caterfood Buying Group, pricing is relatively dynamic, and it won't be held for many customers for a long period of time. In the U.K., they generally, The pricing works off a catalog, and the catalog is only changed when you put inflationary or deflationary increases, decreases through, which only happens a few times a year. Last year, it happened much more frequently than this year. We did put through a pricing revision in October. We saw the benefit of that in October.
And what we call national business, which is, once again, a little bit of a misnomer, is at about 65% of the core Bidfood business, excluding the independents and the fresh business. So there's a lot of words around that, but it's quite a big chunk of the overall business. Doesn't have that dynamic pricing that many of our other businesses do. Are there more big contracts you are looking to exit? Time will tell. Like I say, there's no such thing as, yeah, business that's definitely not good, definitely that's not, that is good. What starts off as good can tend to become not attractive business going forward. At this point in time, we are in discussions with a few customers, nothing of any consequence.
We're doing very few QSR type customers anymore. We're doing very few of the very, very large national caterers. Where we are, we've got a good relationship, until that relationship isn't good. But it's, once again, it's one of these things that's, it's always ongoing, and we're, we're always onboarding customers as well. Let's not just talk about the exits. You know, we're getting a lot of wins through all our businesses, onboarding customers, and they might start relatively small, and after a year or two or three or four or five, they might be relatively big. So there's nothing that's that has a definite starting point or an end point. It's something that's constantly being reassessed, and a customer's only, a customer's only worth keeping in the business if it's mutually beneficial.
You know, if it's a win-lose, it doesn't work for us. So, those conversations happen when they need to happen, and we will exit some business, and we will gain some business, but overall, we're confident we'll be a net gainer, not a net loser. What percentage of your sales come through digital channels now? That's an interesting question. It's not something we look at. I mean, we do look at it, but it's almost like saying, does your business have a fax machine in nineteen ninety-two? So digital is just a fact of life now. Our competitors have it. Most businesses have it. We like to think that we invest in quite a bit, and our technology is constantly being refined and changed and improved, which it is.
Digital penetration is growing, but we don't want to lose the fact we're a relationship business. We aren't getting rid of reps on the ground. In fact, we're investing. In order to grow our correct target market, we're ensuring that these relationships are made stronger, not weaker, by technology. If technology is your only differentiating factor, then price is all you have to offer. And we're making sure that our relationship with the customer is a lot more than price. Obviously, our price has to be correct, but there's a lot more that goes with it as well, and solution selling, and alternatives to customers, and its service, and its reliability and all the rest. But from a technology point of view, we continue to invest a lot of money into it.
We continue to roll out our solutions across the world. AI is playing a role when we talk about dynamic pricing. AI has a reasonably exciting job to do for us and does do some stuff and some of the things we're getting out of it are phenomenal. Some of the benefits we're seeing are phenomenal. I'm not gonna describe them to you, but it is something that's being invested in quite significantly, because our business is very complex. As I've explained before, we make it look simple, but our relationship is always a one-to-one. We deal with each customer differently. So every customer theoretically has a different purchase price and a different product compared to anybody else, and they can buy what they want to buy.
It's not a supermarket where everybody buys a Kit Kat for the same price. It just doesn't work that way. Every single customer potentially pays a different price for a different product, depending on what's important to them, what's not important to them, and a whole lot of other factors. The secret really is in how you construct the basket. Technology has a big role to play in that. You mentioned some competitors waking up to lost market share and using price as a competitive lever. How will you respond to that? Sometimes we'll say goodbye to the customer and let them go.
What we find happens is price only has a benefit for a certain period of time, and either whoever's taking the business on has to get the business up to acceptable margins, or their service is gonna be so poor that it's gonna be unacceptable to the customer. So sometimes you've got to lose the customer for a year, for two years, for three years, but generally, you find these things come around and come around and come around. There are very few customers who we've exited that haven't asked us to re-tender for their business at a later stage. Sometimes it's just not the type of business we want to re-tender for. Sometimes we do re-tender and pick it up at a reasonable margin again. So yeah, we're not gonna hold on to volume if it's not mutually beneficial.
If we can't make a return out of doing the volume, there's no point in doing the volume. It's just as simple as that. It's just, yeah, it's a race to the bottom that we're not gonna participate in. There's also a limit. I've said there's limited capacity for our competitors to take on too many of these customers. So you know, we can't tell them what to do. They might have a different view. I'm sure when they talk to their shareholders, they'll say how wonderful it is and how they're giving us a smack around the ears. And, and that's okay. But I think the proof of the pudding is in the eating, and, and our numbers reflect what happens when you get the correct customer base and the correct, you know, the correct weighting.
And that's something we're always looking at. I'm not sure if there are any more. I think we're done. No more questions. Okay, well, that still took 50 minutes. Thanks, everybody. I know I haven't answered some of your questions in the granular detail that you might want me to, so might not look so good in your spreadsheets, but I think overall it's far more important to understand the overall position of the business. The performance, like I said, I think is very pleasing. Maybe you had higher expectations. Good luck if you did. You know, we operate in a reality, not in some theoretical environment. The world is quite tough out there.
There are a lot of challenges, and I think our teams have performed phenomenally, and I still think we've got a lot of runway ahead of us, a lot of opportunities. There's a lot of positivism in the business, and we're actually relatively confident that economically, things are gonna get better, not worse, in a period of time. Maybe not in the short term, 3 months or 6 months, but we actually think that we're seeing the downward cycle at the moment, and that will then trend towards an upward cycle, and we're very, very well positioned to take advantage of that. Our teams are nimble. They've done great. They continue to do great. Once again, I pay full tribute to them. They've done a great job, and they're the ones who put these numbers together.
They're the ones who make it, make it all happen. So thanks, everybody. We've got another month and a half to go, and then we can put six months in the bag. Sign that off, wipe a bit of sweat off the brow before you raise the bar even higher for us. Thank you. And we'll talk to you all at the end of February. So thank you, everybody. Stay safe and talk to you soon. Thanks. Bye-bye.