Generating growth via acquisitions can be risky, but in Bunzl's (BNZL) case it has worked a treat. In the past 10 years, Bunzl, who supplies products ranging from food packaging to disposable tableware, has spent £1.7bn on more than 80 acquisitions. Over that same period, the compound annual growth rate in the dividend has been more than 10 per cent per annum and total shareholder return has been double that of the FTSE 100.
Last year was another solid performance, with adjusted diluted earnings per share up 16 per cent to 81.4p, which was 4 per cent ahead of consensus. Chief executive Michael Roney sees no reason to change what has been a successful formula. "There is still a lot more to roll out. Expect more of the same," he says.
In 2013, Bunzl made 11 acquisitions, spending £295m, and a further two have been completed since the year-end. Mr Roney says there are still plenty of possible targets, particularly as Bunzl has expanded its geographic footprint. Just over half of the company's revenues now come from North America, with a further fifth coming from continental Europe.
That geographic spread does, however, expose Bunzl to currency movements and stronger sterling will be a headwind this year. JPMorgan Cazenove, nonetheless, raised its 2014 adjusted EPS forecast to 79.8p from 79p (from 81.4p in 2013) to reflect the stronger-than-expected performance last year.
BUNZL (BNZL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,552p | MARKET VALUE: | £5.2bn | |
| TOUCH: | 1,551p-1,552p | 12-MONTH HIGH: | 1,604p | LOW: 1,200p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 282p* | NET DEBT: | 90% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 4.65 | 216 | 46.4 | 21.6 |
| 2010 | 4.83 | 225 | 49.1 | 23.4 |
| 2011 | 5.11 | 194 | 38.2 | 26.4 |
| 2012 | 5.36 | 264 | 58.7 | 28.2 |
| 2013 | 6.10 | 290 | 63.5 | 32.4 |
| % change | +14 | +10 | +8 | +15 |
Ex-div: 7 May Payment: 1 Jul *Includes intangible assets of £1.5bn, or 437p a share | ||||
