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Boring, boring Bunzl delivers again despite Brazilian slowdown

Bunzl delivered another year of solid earnings growth despite a marked slowdown in its Brazilian operations
February 29, 2016

Bunzl (BNZL) delivered another year of profit growth in the high single digits, a decent dividend hike and a cash conversion rate approaching 100 per cent. Given the degree of market volatility in the early part of this year, we shouldn't downplay the attractions of the reassuring predictability of this supplier of everything from hotel napkins to safety helmets: a point borne out by a beta ratio of 0.85 and a relatively narrow trading band.

IC TIP: Hold at 1932p

Although divisional management is constantly driving incremental improvements on the cost front, it remains the case that the group needs to get in acquisitive mode in order to spur growth. And 2015 was certainly no exception. Bunzl acquired 22 businesses last year for a record aggregate of £327m. The December purchase of Brazilian specialist supplier Dental Sorria, which was announced separately, highlights management's determination to consolidate the group's offering in key distribution markets, thereby driving scale benefits.

It wasn't all plain sailing. Margins came under intensified pressure outside North America and Europe, with profits in retreat amid "challenging macroeconomic conditions and currency weakness", particularly in Brazil.

Prior to these figures, JPMorgan Cazenove had expected adjusted EPS of 92.77p for 2016.

BUNZL (BNZL)
ORD PRICE:1,932pMARKET VALUE:£6.48bn
TOUCH:1,932p-1,934p12-MONTH HIGH:1,972pLOW: 1,665p
DIVIDEND YIELD:2.0%PE RATIO:27
NET ASSET VALUE:303p*NET DEBT:109%

Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20115.1119438.226.4
20125.3626458.728.2
20136.1029063.532.4
20146.1630064.535.5
20156.4932371.038.0
% change+5+8+10+7

Ex-div: 19 May

Payment: 1 Jul

*Includes intangible assets of £1.63bn, or 487p a share