Bunzl’s (BNZL) international businesses served to offset “subdued” trading in some areas of the UK and Ireland during the first half of 2017. Around 86 per cent of sales are derived from outside of these islands, so a slight softening in the domestic safety and healthcare markets was only ever going to have a minimal impact, especially when you consider outward appearances in the wake of sterling’s post-referendum decline. Group turnover was up by a fifth (see table), but even without the positive foreign exchange benefit it was still 7 per cent to the good. However, given the frequency of Bunzl’s forays into the buyers’ circle, the definition of what constitutes ‘organic growth’ at the outsourcing and distribution group might present a challenge.
The group has either acquired or agreed to acquire another 11 businesses this year. Among other things, the record outlay of £546m has significantly expanded the group’s retail supply capacity through deals to acquire DDS in the US, in addition to a group of businesses in France consisting of Hedis, Comptoir de Bretagne and Générale Collectivités, which serve a range of sectors.
The retail distribution sector has attracted no end of comment due to the evolution of e-commerce, but Bunzl’s place in the market has not been subject to any digital disruption due to the nature of the products it shifts, ie bulky and lower value. There are “no drones” in the offing, according to chief executive Frank van Zanten.
Under separate cover, the group announced its maiden acquisition in China: Shanghai-based HSESF. The company supplies personal protection equipment, mirroring the activities of the new Singapore subsidiary LSH, acquired in January. The deal, characterised by Mr van Zanten as “dipping our toes in the water”, has been a long time in the making; Bunzl has had boots on the ground in China for around three years.
JPMorgan Cazenove gives adjusted profits of £536m for the year-end, leading to EPS of 114p, against £478m and 105p in 2016.
| BUNZL (BNZL) | ||||
| ORD PRICE: | 2,315p | MARKET VALUE: | £7.78bn | |
| TOUCH: | 2,315-2,316p | 12-MONTH HIGH: | 2,535p | LOW: 1,963p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 380p* | NET DEBT: | 110% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 3.45 | 156 | 33.8 | 13.0 |
| 2017 | 4.12 | 182 | 40.0 | 14.0 |
| % change | +20 | +17 | +18 | +8 |
| Ex-div: | 16 Nov | |||
| Payment: | 02 Jan | |||
| *Includes intangible assets of £2.14bn, or 637p a share | ||||
