Bunzl share price: Services group posts full-year results

Company benefits from sterling slump

Bunzl share price: Services group posts full-year results

Bunzl (LON:BNZL) has updated investors on its full-year performance this morning.

Highlights from the company statement:

CHAIRMAN'S STATEMENT

Results

I am pleased to report another good set of results against the background of mixed macroeconomic and market conditions across the countries in which we operate. Overall currency translation movements due to the weakening of sterling had a significant positive impact on the reported Group growth rates at actual exchange rates.

Group revenue increased 14% to £7,429.1 million (2015: £6,489.7 million) and adjusted operating profit before customer relationships amortisation and acquisition related costs was up 15% to £525.0 million (2015: £455.0 million). Adjusted earnings per share were 106.1p (2015: 91.0p), an increase of 17%.

At constant exchange rates, revenue increased by 4% and adjusted operating profit rose by 5%. The Group operating margin improved from 7.0% to 7.1% with adjusted earnings per share up 6% at constant exchange rates.

Return on average operating capital increased to 55.9% from 55.5% in 2015, driven by an improvement in the operating capital in the underlying business, partly offset by an adverse impact from exchange rate movements, a slightly lower underlying operating margin and the impact of the lower return on operating capital from acquisitions. Return on invested capital of 16.7% was down from 17.1% in 2015, principally due to the effect of acquisitions and limited organic growth.

Dividend

The Board is recommending a final dividend of 29.0p. This brings the total dividend for the year to 42.0p, up 11% compared to 2015. Shareholders will again have the opportunity to participate in our dividend reinvestment plan.

Strategy

Our consistent and proven strategy of developing the business through organic growth, consolidating our markets through focused acquisitions and continuously improving our operations has delivered another successful year of growth for the Group.

We look to achieve organic growth by applying our resources and expertise to enable our customers to reduce or eliminate the hidden costs of sourcing and distributing a broad range of goods not for resale. By outsourcing these activities to Bunzl they are able to focus on their core business and run their operations more cost-effectively by achieving purchasing efficiencies and savings, while at the same time freeing up working capital, improving their distribution capabilities, reducing carbon emissions and simplifying their internal administration.

Acquisition activity continued throughout 2016. Including Saebe Compagniet and Prorisk and GM Equipement, which we agreed to acquire in November 2016 and completed in January 2017, we made 14 acquisitions with a total committed spend of £184 million, thereby adding annualised revenue of £201 million. These acquisitions have helped to strengthen our position in many of the markets that we serve. In addition, the acquisition of Packaging Film Sales in the US was announced and completed at the beginning of 2017 and we are today announcing the purchase of LSH in Singapore. We now have operations in 30 countries.

As of 07:28 GMT, Monday, 27 February, Bunzl plc share price is 2,356.50p.

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