Bunzl Plc · LSE:BNZL
Bunzl — H1 2024 Earnings Presentation
33 slides from Bunzl's earnings presentation, Aug 27, 2024
Slide 1: Bunzl 2024 Half Year Results
BUNZL 2024 HALF YEAR Add subtitle RESULTS here
Slide 2: Introduction
INTRODUCTION Frank van Zanten, Chief Executive Officer
Slide 3: Key Take-aways
KEY TAKE-AWAYS Record acquisition spend, 3-year capital allocation commitment & full year profit upgrade >£650m 1 Annual committed acquisition spend reaches record high; pipeline remains active YTD committed acquisition spend Commitment to return to target leverage range of £700m p.a. 2 2.0-2.5x by
Slide 4: Half Year 2024 Summary
HALF YEAR 2024 SUMMARY Continuing operating margin expansion leads to strong operating profit growth Adjusted Driven by an underlying 7.4% Driven by operating Operating 8.0% 2 operating margin increase and margin expansion margin1 profit1 growth acquisitions 2 Impacted by deflation, Strong increase
Slide 5: Building Blocks of Medium Term Growth
BUILDING BLOCKS OF MEDIUM TERM GROWTH Confident in our consistent compounding growth strategy to generate attractive returns KEY CONTRIBUTORS FOR SHAREHOLDER RETURNS 8.0% 0 Near term trends improving Good margin management Organic Operating revenue Net inflationary margin Operational efficiency oper
Slide 6: Financial Results, Capital Allocation and Outlook
FINANCIAL RESULTS, CAPITAL ALLOCATION AND OUTLOOK Richard Howes, Chief Financial Officer
Slide 7: Revenue
REVENUE Underlying revenue trends improving Revenue change vs H1 Revenue change1: (0.4)% 2023 (0.4)%1 6,000 £m Organic revenue change1,2: (4.1)% 3.7% Underlying revenue 0.8% change2 (4.9)% (4.9)% 1 5,000 Impacted by deflation, expected Change: Q1: (5.4)% volume softness in our US 5,736 Q2: (4.3)% 5,
Slide 8: Income Statement
INCOME STATEMENT Strong adjusted operating profit growth as margin expansion continues Adjusted operating profit1 £m H1 2024 H1 2023 REPORTED GROWTH CONSTANT EXCHANGE1 growth vs H1 2023 Revenue 5,711.5 5,906.8 (3.3)% (0.4)% 7.4% 2 Adjusted operating profit1 455.5 438.3 3.9% 7.4% Operating margin1 8.
Slide 9: Cash Flow
CASH FLOW Strong cash conversion and free cash flow growth H1 cash conversion1 over the last 10 years Cash conversion1 £m H1 2024 H1 2023 100% Operating cash flow1,3 Net interest paid (excluding lease liabilities) 442.8 (33.9) 397.3 (29.7) 112% Strong cash conversion Income tax paid (98.5) (81.3) 96
Slide 10: Balance Sheet
BALANCE SHEET Substantial headroom supports acquisition growth and capital returns JUNE DECEMBER Adjusted net debt to EBITDA1 Adjusted net debt £m 2024 2023 to EBITDA1 Intangible assets 3,579.9 3,242.1 2.3x TARGET 1.5x Right-of-use assets 716.2 616.3 2.1x 2.0x 2.0x Property, plant and equipment 209.
Slide 11: Sector Performance
SECTOR PERFORMANCE Volume growth in certain sectors offset by deflation Safety Cleaning & Hygiene Healthcare Grocery1 Foodservice Retail Revenue opportunity in the medium term Sector commentary – Safety saw a small impact from deflation. Infrastructure spend in – Our grocery sector – Foodservice was
Slide 12: North America / Continental Europe
NORTH AMERICA / CONTINENTAL EUROPE Some volume recovery and strong margins in NA; moderate profit growth in CE North America Continental Europe CONSTANT CONSTANT £m H1 2024 H1 2023 REPORTED EXCHANGE1 UNDERLYING1 H1 2024 H1 2023 REPORTED EXCHANGE1 UNDERLYING1 Revenue 3,234.8 3,514.4 (8.0)% (5.1)% (6.
Slide 13: UK & Ireland / Rest of the World
UK & IRELAND / REST OF THE WORLD Strong margin growth in UK&I; RoW benefits significantly from acquisitions UK & Ireland Rest of the World CONSTANT CONSTANT £m H1 2024 H1 2023 REPORTED EXCHANGE1 UNDERLYING1 H1 2024 H1 2023 REPORTED EXCHANGE1 UNDERLYING1 Revenue 689.1 663.8 3.8% 4.1% (5.6)% 600.7 549
Slide 14: Disciplined Approach to Capital Allocation
DISCIPLINED APPROACH TO CAPITAL ALLOCATION Healthy balance sheet and strong cash flow; opportunities to enhance shareholder returns 2019-2023: structural deleveraging Capital allocation priorities unchanged Cumulative free 1. Invest in the business Leverage2 cash flow1 Low risk, high-return invest
Slide 15: Disciplined Approach to Capital Allocation
DISCIPLINED APPROACH TO CAPITAL ALLOCATION Committed to return to adjusted net debt to EBITDA target range of 2.0-2.5x by 2027 >£650m c.£700 million per annum Committed to YTD committed allocated towards value-accretive return to acquisition spend acquisitions and, if required, returns of capital ad
Slide 16: Dividend Track Record
DIVIDEND TRACK RECORD Strong growth in H1 2024 dividend per share from normalisation of dividend cover 10.4% 31 years 68.3 interim of consecutive dividend per annual dividend share growth increases Dividend per share Further normalisation of CAGR c.10% dividend cover expected 2.65x 2.5–2.6x 2024 202
Slide 17: 2024 Outlook
2024 OUTLOOK Upgrading adjusted operating profit expectations Other aspects of FY 2024 guidance2 Strong increase in adjusted operating profit1 as a result of further operating margin1 expansion Tax rate c.25.5% – We expect adjusted operating profit1 in 2024 to show a strong increase in Net finance e
Slide 18: Strategy Update
STRATEGY UPDATE Frank van Zanten, Chief Executive Officer
Slide 19: Margin Drivers
MARGIN DRIVERS Strong increase in operating margins since 2019 OPERATING MARGIN1 PROGRESSION OPERATING MARGIN1 EXPANSION DRIVERS Organic Good margin Operational management efficiencies c.50% contribution 8.0% vs 2019 Including focus on Actions taken to partially Acquisition Increase vs H1 2019 incre
Slide 20: Driving Organic Growth – UK & Ireland Case Study
DRIVING ORGANIC GROWTH – UK & IRELAND CASE STUDY Sustainability proposition increasingly drives organic growth opportunities Bunzl is the new supplier of customised safety products for fast-growing and sustainability-focused Core Highways, a leading provider of temporary traffic management, barrier
Slide 21: Record Year for Acquisition Spend
RECORD YEAR FOR ACQUISITION SPEND Seven acquisitions announced year-to-date; pipeline remains active Announced today 2023 revenue: c.£49m £498m c.£4m c.£24m c.£14m c.£18m c.£5m Finland UK Canada Spain Netherlands Brazil Australia Acquisition Feb May Jun Jun Jun Jul Jul completed: Acquisitions Year-t
Slide 22: Acquiring Market Leading Businesses
ACQUIRING MARKET LEADING BUSINESSES Supplemented by bolt-on growth Progress to date Healthcare growth in Latin America • Trading in line with expectations • Leading omnichannel distributor • Integration proceeding well with of catering equipment and synergies expected for 2025 consumables based in t
Slide 23: Case Study: Adding Value to Our Acquisitions
CASE STUDY: ADDING VALUE TO OUR ACQUISITIONS Leveraging Bunzl’s scale benefits to accelerate organic growth Key benefits from joining Bunzl Sourcing Value proposition • Leveraging Bunzl’s Global Supply Chain Solutions Team Able to hold more critical Acquired by Bunzl in 2020 led to working with new
Slide 24: Confidence in Long-Term Growth
CONFIDENCE IN LONG-TERM GROWTH Adjusted operating profit1 (£m) 944 1 Annual committed acquisition spend reaches record high; pipeline remains active 169 Commitment to return to target leverage range of 2 2.0-2.5x by 2027; launching share buyback programme with £250m buyback to be completed 04 05 06
Slide 25: Appendices
Appendices
Slide 26: Appendix 1.1: Alternative performance measures
APPENDIX 1.1 Alternative performance measures This presentation includes various performance measures defined under International Financial Reporting Standards (‘IFRS’) as well as a number of alternative performance measures. The principal alternative performance measures used in this presentation a
Slide 27: Appendix 1.2: Alternative performance measures
APPENDIX 1.2 Alternative performance measures Return on invested capital - The ratio of adjusted operating profit to the average of the month end invested capital (being equity after adding back net debt, lease liabilities, net defined benefit pension scheme assets, cumulative customer relationships
Slide 28: Appendix 2: Statutory P&L
APPENDIX 2 Statutory P&L £m H1 2024 H1 2023 Revenue 5,711.5 5,906.8 Adjusted operating profit1 455.5 438.3 Operating margin1 8.0% 7.4% Adjusting items (105.9) (78.5) Operating profit 349.6 359.8 Net finance expense (47.1) (42.7) Disposal of business (23.1) - Profit before income tax 279.4 317.1 Repo
Slide 29: Appendix 3: Acquisitions announced August year-to-date
APPENDIX 3 Acquisitions announced August year-to-date1 • Pamark Group acquired in February • Nisbets acquired in May 2024 • Clean Spot acquired in June 2024 • Sistemas De Embalaje Anper acquired in 2024 • A leading omnichannel distributor of June 2024 • A distributor of cleaning & hygiene • A leadin
Slide 30: Appendix 4: Acquisition growth
APPENDIX 4 Acquisition growth 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 YTD1 Number of 7 7 9 8 7 2 9 10 13 11 17 22 14 15 6 3 9 14 12 19 8 acquisitions Committed acquisition 302 129 162 197 123 6 126 185 277 295 211 327 184 616 183 124 445 508 322 468 >650 spend (£m) Annualised
Slide 31: Appendix 5: Focus on higher margin sectors
APPENDIX 5 Focus on higher margin sectors in recent years; significant opportunities remain to expand COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE USA ● ● ● ● ● Austria ● Canada ● ● ● ● ● Czech Republic ● ● Mexico ● ● ● Hungary ● ●
Slide 32: Appendix 6: Revenue by customer market in H1 2024
APPENDIX 6 Revenue by customer market in H1 2024 Safety Foodservice Personal protection and safety equipment, including 16% 28% Non-food consumables, including food packaging, gloves, boots, hard hats, ear and eye protection and disposable tableware, guest amenities, catering other workwear, as well
Slide 33: Disclaimer
DISCLAIMER This document has been prepared by Bunzl plc (the ‘Company’) solely for use at the presentation of the Company’s results announcement in respect of the period ended 30 June 2024. For the purposes of this disclaimer, ‘Presentation’ shall mean this document, the oral presentation of the sli