Bunzl (BNZL) could be in for a record year of acquisitions and related expenditure, says chief executive Michael Roney. The group, which supplies schools, hospitals and hotels with items ranging from cleaning products to food packaging, snapped up 14 businesses during the first half for £241m in aggregate, compared with 17 acquisitions made during the whole of 2014. This acquisition-led growth strategy can partly be attributed to slow growth rates from some of Bunzl's key markets. Indeed, organic growth accounted for a relatively minor proportion of the overall increase in revenues. More importantly, however, Bunzl's operating margin held steady at 6.6 per cent, allowing the group to book a 10 per cent increase in operating profits to £169m at constant exchange rates (CER).
There was a mixed showing on a regional basis. Organic growth was held back in North America as Bunzl's largest grocery business lost work due to a client merger. As a result, CER revenues were up just 4 per cent to £1.79bn. Bunzl has continued streamlining its operations in Continental Europe, including consolidating its warehouse operations and reducing headcount in France. This is paying off - operating margin was up 50 basis points to 9.2 per cent. However, the group's 'rest-of-the-world' segment had a more difficult time as the commodities sector slowdown in Brazil and Australia weighed on group profits.
Broker Investec Securities expects adjusted EPS of 90.3p this year, up from 85.2p in 2014.
BUNZL (BNZL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,729p | MARKET VALUE: | £5.79bn | |
| TOUCH: | 1,728-1,730p | 12-MONTH HIGH: | 1,969p | LOW: 1517p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 258p* | NET DEBT: | 124% | |
| Half-year to 30 June | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 2.94 | 132 | 27.5 | 11.00 |
| 2015 | 3.14 | 147 | 32.1 | 11.75 |
| % change | +7 | +11 | +17 | +7 |
Ex-div: 19 Nov Payment: 4 Jan *Includes intangible assets of £1.5bn, or 461p a share | ||||
