Acquisitions continue to drive growth at Bunzl
Bunzl reported a 1% improvement in its revenue at constant exchange rates in its final results on Monday, to £9.33bn, or 2.7% growth at actual exchange rates.
The FTSE 100 distribution and services provider said its operating margin rose to 6.8% from 6.7% at constant exchange rates on a consistent IAS 17 basis for the year ended 31 December, and was unchanged at actual exchange rates.
It said its adjusted profit before income tax was 2.4% higher at constant exchange rates on a consistent IAS 17 basis at £578.2m, and up 3.6% at actual exchange rates.
Adjusted earnings per share were up 1% at constant exchange rates and 2.2% at actual exchange rates at 132.4p.
During the year, Bunzl’s committed acquisition spend totalled £124m, with four acquisitions announced in recent months bringing in annualised revenue of £300m, with the board also describing a “promising” pipeline.
The company’s return on average operating capital stood at 48.4%, with its return on invested capital coming in at 14.6% on an IAS 17 basis.
It reported continued strong cash conversion of 101%, and free cash flow growth of 10%.
The firm’s 27-year track record of dividend growth also continued, with a 2.2% increase in its dividend for the year to 51.3p.
“Against the background of mixed macroeconomic and market conditions which prevailed during 2019 across the countries and sectors in which we operate, I am pleased to report that Bunzl has produced another resilient performance with an increase in operating margin,” said chief executive officer Frank van Zanten.
“It is particularly good to see continued strong cash conversion and free cash flow growth.
“Looking forward, although we continue to see challenging trading conditions in many of our markets, our strong competitive position, diversified and resilient businesses and ability to consolidate our fragmented markets further should lead to improved growth at constant exchange rates principally due to the impact of the good level of recent acquisition activity.”
Van Zanten said Bunzl had a “strong” balance sheet, with “significant” financial capacity and acquisitions remaining a key element of its strategy.
“The acquisition pipeline is promising and a number of discussions are ongoing.”