Bunzl’s (BNZL) underlying revenue growth of 1.9 per cent during the first half was nothing to shout about. But contributions from acquisitions helped offset a challenging macroeconomic backdrop and drive operating profit, before intangible amortisation and acquisition costs, up by 14 per cent to £189m. That results beat broker estimates, prompting analysts at Citi to nudge up their full-year EPS forecast to 78.3p, up from 71.4p 2012.
The company, which distributes food packaging, cleaning and safety products to a customer base that includes supermarkets, caterers and food processors, has acquired a further six businesses so far this year with a total spend of £203m. This is in line with Bunzl's strategy to generate growth through the consolidation of the fragmented markets in which it operates.
Chief executive Michael Roney says the macroeconomic conditions remain tough in some markets, but the acquisition pipeline looks promising and the company still has plenty of financial fire-power. "We have a lot of headroom; it is just a matter of finding good opportunities." He notes that the company's strong cash conversion, with operating cash flow to operating profit of 103 per cent in the first half, allows it to reinvest in acquisitions and grow the dividend.
BUNZL (BNZL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,374p | MARKET VALUE: | £4.57bn | |
| TOUCH: | 1,373p-1,375p | 12-MONTH HIGH: | 1,423p | LOW: 995p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 261p* | NET DEBT: | 100% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 2.61 | 119 | 25.9 | 8.8 |
| 2013 | 2.96 | 129 | 27.8 | 10.0 |
| % change | +13 | +9 | +7 | +14 |
Ex-div: 6 Nov Payment: 2 Jan *Includes intangible assets of £1.5bn, or 438p a share | ||||
