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Bunzl Plc

Bunzl plc Resilient operating performance

Bunzl plc (LON:BNZL), the specialist international distribution and services Group, today publishes its half yearly financial report for the six months ended 30 June 2019. 


Financial results
As reported under IFRS 16 H1 19  IAS 17ΔH1 19As reported under IAS 17 H1 18IAS 17Δ growth at actual exchangeIAS 17Δgrowth at constantexchange
Revenue£4,528.4m£4,528.4m£4,343.7m4.3%1.2%
Adjusted operating profit*£302.7m£291.8m£285.0m2.4%0.3%
Adjusted profit before income tax*£264.2m£264.9m£257.9m2.7%0.8%
Adjusted earnings per share*60.4p60.6p59.4p2.0%0.0%
Interim dividend15.5p15.5p15.2p2.0%

Statutory results
As reported under IFRS 16 H1 19As reportedunderIAS 17H1 18
Operating profit£239.0m£210.8m
Profit before income tax£200.5m£197.3m
Basic earnings per share46.5p45.1p

Highlights include:

·      Revenue up 4.3%, 1.2% at constant exchange rates, with underlying organic growth of 0.8%

·      Operating margin* 6.7%, up 12 basis points on a reported basis; down 6 basis points at constant exchange rates on a consistent IAS 17 basis

·      Adjusted profit before income tax* up 2.7% on a consistent IAS 17 basis, 0.8% at constant exchange rates

·      Year to date committed acquisition spend of £98 million with active pipeline

·      Return on average operating capital* 48.8% with return on invested capital* 14.7% on an IAS 17 basis

·      Continued strong cash conversion* of 96%

·      26 year track record of dividend growth continues with a 2% increase in the interim dividend

Commenting on today’s results, Frank van Zanten, Chief Executive of Bunzl, said:

“Against the background of slowing macroeconomic and market conditions across the countries and sectors in which we operate, Bunzl has produced a resilient operating performance with high cash conversion and an increased dividend.

Looking forward, the Group’s expectations for 2019 remain unchanged.  Despite continuing economic uncertainties, the Board believes that the combination of our strong competitive position, diversified and resilient businesses and ability to consolidate our fragmented markets will lead to further progress.  We have a strong balance sheet and are in active discussions with a number of acquisition targets which we anticipate will result in additional deals during the remainder of the year.”

Δ Following the adoption of IFRS 16 ‘Leases’ with effect from 1 January 2019, because the Group has adopted the accounting standard using the modified retrospective approach to transition and has accordingly not restated prior periods, the results for the six months ended 30 June 2019 are not directly comparable with those reported in the prior period under the previous applicable accounting standard, IAS 17 ‘Leases’.  To provide meaningful comparatives, the results for the six months ended 30 June 2019 have therefore also been presented under IAS 17 with the growth rates shown on an IAS 17 basis.  See Notes 2 and 3 for a reconciliation of the IAS 17 alternative performance measures to the equivalent IFRS measures.

* Alternative performance measure (see Note 3).

Business area highlights:

To aid comparability of the trading performance between 2018 and 2019, the business area highlights in this section have been presented and are reviewed on a consistent IAS 17 basis.  Details of the adjusted operating profit of each business area for 2019 on an IFRS 16 basis are set out in Note 4.

North America (58% of revenue and 50% of adjusted operating profit)

·      Slowing underlying organic revenue growth principally due to grocery

·      Operating margin unchanged at 5.7%

·      Improved gross margins and cost savings largely offset operating cost increases

·      More focused and streamlined organisation structure in grocery and redistribution operating well

·      Strong overall growth in safety, convenience store, processor and agriculture

·      Acquisition of Liberty Glove & Safety in February

Continental Europe (20% of revenue and 29% of adjusted operating profit)

·      Good underlying organic revenue growth

·      Operating margin unchanged at constant exchange rates at 9.9%

·      Revenue growth in France (excluding OPM disposal) from cleaning & hygiene

·      Good sales growth in Netherlands, Denmark, Spain, and Turkey

·      Recent acquisitions integrating well and trading ahead of expectations

UK & Ireland (13% of revenue and 12% of adjusted operating profit)

·      Significant impact of disposal in 2018 (£2.2m reduction in adjusted operating profit)

·      Strong growth in cleaning & hygiene 

·      Weaker performance in safety due to continued slowdown in industrial and construction sectors

·      Difficult trading conditions in hospitality and healthcare

·      Supermarket account regained, effective in H2

·      Continued growth and expansion in Ireland

Rest of the World (9% of revenue and 9% of adjusted operating profit)

·      Good underlying organic revenue growth

·      Position in Brazil safety strengthened through purchase of Volk do Brasil

·      Operating margin down 50 basis points at constant exchange rates to 7.1%

o  Latin America – weaker performances particularly in Brazil healthcare and Mexico safety

o  Asia Pacific – lower margin from impact of weaker Australian dollar on product prices

*  Alternative performance measure (see Note 3)

   Based on IAS 17 adjusted operating profit and before corporate costs (see Note 4)