Weak macroeconomic conditions continued to weigh on international distribution and services group Bunzl (BNZL) in the second half of 2019. Organic revenue growth slowed as the year progressed, swinging from 0.8 per cent in the six months to 30 June to negative 0.2 per cent by the year-end.
North America was the main culprit, as lower sales to the largest grocery customer triggered a 1.2 per cent drop in organic revenue. Changes to the product mix and lower pricing from this client are expected to continue to hinder performance in the first half of 2020, in addition to subdued grocery and retail sectors.
Last year was particularly reliant on acquisitions to boost top-line growth, with bolt-on additions driving the 1 per cent constant currency increase in like-for-like revenue to £9.33bn. M&A investment is falling, however, with a committed acquisition spend of £124m down from £183m in 2018 and the record £616m spend in 2017. The group did make three purchases post period-end, with Joshen Paper and Packaging expected to add £225m of revenue in North America in 2020.
Bloomberg consensus places adjusted pre-tax profit at £560.5m and EPS at 126.9p in 2020, rising to £579.1m and 130.6p in 2021.
| BUNZL (BNZL) | ||||
| ORD PRICE: | 1,931p | MARKET VALUE: | £6.5bn | |
| TOUCH: | 1,923-1,932p | 12-MONTH HIGH: | 2,554p | LOW: 1,892p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 518p* | NET DEBT: | 99%** | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 6.49 | 323 | 71.0 | 38.0 |
| 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 |
| % change | +3 | +7 | +7 | +2 |
| Ex-div: | 21 May | |||
| Payment: | 01 Jul | |||
| *Includes intangible assets of £2.3bn, or 680p a share. **Includes £480m in lease liabilities. | ||||
