- Demand for PPE fuelled 16 per cent organic revenue growth in Europe
- £445m spent on acquisitions in 2020
Bunzl’s (BNZL) acquisition-heavy strategy proved resilient last year, as its diverse income streams contributed to higher profits and a higher investor payout in 2020. The company sells consumables around the world and has a sizeable logistics operation. Growth was limited in North America and the UK, but other markets delivered strong sales and profit increases.
North America was still the company’s biggest region by revenue, at £5.8bn, but organic growth was limited to 1 per cent because of the shutdown in retail and food services. Meanwhile, amid a surge in personal protective equipment (PPE) sales, 16 per cent organic revenue growth in Europe translated into the region’s adjusted operating profit rising by almost a third, to £238m.
Bunzl committed to £445m in acquisitions in 2020, which it said was its second-highest M&A spend ever. For 2021, the company does not expect further sales growth, because of “larger Covid-19 related orders which we do not expect to repeat”.
Bunzl had the right business to do well during Covid-19, and shareholders will get a welcome dividend boost as well. Hold.
Last IC View: Hold, 2,458p, 24 Aug 2020
| BUNZL (BNZL) | ||||
| ORD PRICE: | 2,240p | MARKET VALUE: | £ 7.5bn | |
| TOUCH: | 2,239-2,241p | 12-MONTH HIGH: | 2,710p | LOW: 1,242p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 575p* | NET DEBT: | 91% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 7.43 | 363 | 80.7 | 42.0 |
| 2017 | 8.58 | 409 | 94.2 | 46.0 |
| 2018 | 9.08 | 425 | 98.4 | 50.2 |
| 2019 | 9.33 | 453 | 105 | 51.3 |
| 2020 | 10.1 | 556 | 129 | 54.1 |
| % change | +8 | +23 | +23 | +5 |
| Ex-div: | 20 May | |||
| Payment: | 01 Jul | |||
| *Includes £2.4bn in intangible assets or 732p a share | ||||
