Thanks to the heavy weighting of the business towards North America, which accounts for just over half of sales, distribution group Bunzl turned in a pretty robust performance in its first half.
North America managed underlying growth of 2 per cent, and was also boosted by sterling weakness, which offset the sharper effects of economic downturn being felt elsewhere. In the UK and Ireland, its vending, non-food retail, catering equipment and safety businesses all proved particularly exposed to the recession. It was the same story in Continental Europe, especially in the hotel and industrial sectors. Elsewhere, Bunzl was hit by weakness of the Australian dollar, which knocked some £6m off profits.
The recovering Australian dollar should help the second half, though, while North America is befitting from recent business wins with new and existing customers. Cost cutting through headcount reduction will also ease pressure on margins in Bunzl's domestic market, and the withdrawal of a major competitor has also given the group a market share boost in the UK hotel, restaurant and catering supplies sector. Good cash flow and debt headroom of over £450m puts it in a strong position to make further bolt-on acquisitions, too.
Broker Numis expects underlying full-year pre-tax profits of £246m and EPS of 51.7p (£243m and 52.7p in 2008).
BUNZL (BNZL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 572p | MARKET VALUE: | £1.88bn | |
| TOUCH: | 572-573p | 12-MONTH HIGH: | 742p | LOW: 473p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 168p* | NET DEBT: | 137% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.96 | 93.8 | 19.8 | 6.45 |
| 2009 | 2.29 | 94.6 | 20.4 | 6.65 |
| % change | +17 | +1 | +3 | +3 |
Ex-div: 11 Nov Payment: 4 Jan *Includes intangible assets of £1.18bn, or 361p a share | ||||
