Bunzl Plc · LSE:BNZL
Bunzl — Investor Day (March 2012)
75 slides from Bunzl's investor day presentation, Mar 22, 2012
Slide 1: Bunzl Investor Day 22 March 2012
Bunzl Investor Day 22 March 2012 -0- 2012 Investor Day Presentation
Slide 2: Agenda
Agenda 1. Michael Roney, CEO: Welcome 2. Paul Budge, MD UK & Ireland 3. Frank van Zanten, MD Continental Europe 4. Break 5. Rodrigo Mascarenhas, MD South America 6. Patrick Larmon, CEO North America 7. Michael Roney, CEO: Close 8. Refreshments -1- 2012 Investor Day Presentation
Slide 3: Our value proposition
Our value proposition Bunzl applies its resources and expertise to reduce or eliminate many of the “hidden” costs of self distribution Outsourcing adds value to the customer -2- 2012 Investor Day Presentation
Slide 4: Overview
Overview 1. UK & Ireland – Delivering results in a challenging environment 2. Continental Europe – Opportunities for expansion 3. Brazil – Entering and growing in a new market 4. North America – Customer opportunities – winning new accounts -3- 2012 Investor Day Presentation
Slide 5: Agenda
Agenda 1. Michael Roney, CEO: Welcome 2. Paul Budge, MD UK & Ireland 3. Frank van Zanten, MD Continental Europe 4. Break 5. Rodrigo Mascarenhas, MD South America 6. Patrick Larmon, CEO North America 7. Michael Roney, CEO: Close 8. Refreshments -4- 2012 Investor Day Presentation
Slide 6: Delivering results in a challenging environment
Delivering results in a challenging environment Bunzl UK & Ireland -5- 2012 Investor Day Presentation
Slide 7: Markets we serve
Markets we serve Other 5% Grocery 12% Healthcare 19% Foodservice 24% Non-Food Retail 12% Safety 11% Cleaning & Hygiene 17% Diversification across customer markets Bunzl UK & Ireland -6- 2012 Investor Day Presentation
Slide 8: UK & Ireland businesses
UK & Ireland businesses Decentralised businesses with own P&L and balance sheet Bunzl UK & Ireland -7- 2012 Investor Day Presentation
Slide 9: Decentralised operating structure
Decentralised operating structure Managing Director Sales Purchasing Operations Finance • Motivated to achieve and exceed budgeted PBIT and ROACE • Low growth has brought specific needs for management • Sales resource • Service • Suppliers • Cost to serve • Products • Margins Accountable teams each
Slide 10: Benefits to customers: supply chain
Benefits to customers: supply chain Global sourcing Warehousing Consolidation Range of Customer & procurement & distribution of consumables delivery options infrastructure Supported by an integrated I.T. platform Bunzl UK & Ireland -9- 2012 Investor Day Presentation
Slide 11: Customers
Customers • Relationship and account management • Access to competitive product sources and pricing • Understand cost to serve and value of services provided • In providing service we have to ask ourselves: • Can we do it well? • Will it add value for the customer? • Is the business profitable? Reta
Slide 12: Preferred suppliers
Preferred suppliers • Identify key suppliers - consolidate purchasing power • Work with preferred suppliers to grow revenue and margin • Rationalise purchasing around these suppliers • Eliminate purchases from non-preferred sources • Benefits in buying plus logistics and control for customers Prefer
Slide 13: Own brands
Own brands • Develop own brands and import programme • Own brands as quality alternative = savings to customers plus a margin opportunity • Access low cost manufacturing • Define products into good, better and best • Optimise own brand penetration whilst maintaining balance with brands Developing Bu
Slide 14: Bunzl exclusive brands
Bunzl exclusive brands Bunzl UK & Ireland -13- 2012 Investor Day Presentation
Slide 15: Warehouse footprint
Warehouse footprint • Acquisitions bring an inherited property portfolio • As leases expire, opportunity to consolidate • Cleaning and hygiene - 32 to 23 branches since 2008 • Hospitality - 13 to 9 branches since 2008 Ongoing facility consolidation Bunzl UK & Ireland -14- 2012 Investor Day Presentat
Slide 16: Headcount
Headcount • Reduction since end 2008 c.900 (>25% of current headcount) • Reductions across all businesses • Adapt to changing requirements • Constant assessment of resource levels Proactively managing headcount levels Bunzl UK & Ireland -15- 2012 Investor Day Presentation
Slide 17: Operational efficiency
Operational efficiency • Electronic trading – Process simplification and improved accuracy • Operation efficiency – Warehouse management – Red Prairie – Route planning software and electronic proof of delivery – Green Road driving efficiency and accident reduction Continuing best practice implementa
Slide 18: Working capital management
Working capital management Average working capital to sales % 9.4 • Management incentivised 8.7 7.7 • Key measures constantly monitored 6.3 2008 2009 2010 2011 Strong working capital management Bunzl UK & Ireland -17- 2012 Investor Day Presentation
Slide 19: Acquisitions
Acquisitions • Four small acquisitions since 2009 • WK Thomas • Industrial Supplies • Cannon Consumables • SIG Safety and Workwear • All “bolt ons” with immediate synergies • Managed and integrated into existing businesses • Identify key elements to preserve • Settle customers and employees • Deal w
Slide 20: Summary
Summary • The foundations are set: • Our offer is attractive • Grip on the detail • Focused on the right priorities • Well positioned to take advantage of macro economic growth Positioned well for recovery Bunzl UK & Ireland -19- 2012 Investor Day Presentation
Slide 21: Your Questions
Bunzl UK & Ireland YOUR QUESTIONS Bunzl UK & Ireland -20- 2012 Investor Day Presentation
Slide 22: Agenda
Agenda 1. Michael Roney, CEO: Welcome 2. Paul Budge, MD UK & Ireland 3. Frank van Zanten, MD Continental Europe 4. Break 3. Rodrigo Mascarenhas, MD South America 4. Patrick Larmon, CEO North America 5. Michael Roney, CEO: Close 6. Refreshments -21- 2012 Investor Day Presentation
Slide 23: Opportunities for expansion
Opportunities for expansion -22- 2012 Investor Day Presentation Bunzl Continental Europe
Slide 24: Introduction
Introduction Key Facts Bunzl Continental • 2011 revenue €1.2bn Europe Frank van Zanten • 12 countries, 60+ distribution centres Managing Director • Small central team in Amsterdam • Decentralised - strong local management Purchasing Director Continental Europe Finance • Importing via Bunzl Shanghai
Slide 25: Our countries and core sectors
Our countries and core sectors France Netherlands Other 4% Denmark Grocery 12% Healthcare 7% Belgium Non-Food Spain Retail 9% Foodservice 20% Germany Switzerland Hungary Romania Safety 17% Israel Czech Rep. Cleaning & Slovakia Hygiene 31% Well positioned in our markets Bunzl Continental Europe -24-
Slide 26: Evolution of revenue growth
Evolution of revenue growth £1,067m Israel Switzerland Spain Slovakia Belgium Strong historic Czech Rep. performance driven by: France - organic revenue growth Hungary Romania - acquisition growth £308m - CAGR – 19% 2004 2005 2006 2007 2008 2009 2010 2011 9 countries added - revenue tripled since 20
Slide 27: Profit growth drivers
Profit growth drivers Improving competitive position Strong Consolidation management of customers Profit growth Better Product sourcing range capabilities extension than (‘one stop competition shop’) -26- 2012 Investor Day Presentation Bunzl Continental Europe
Slide 28: Position in supply chain
Position in supply chain • Low customer concentration • Increasingly important for branded suppliers due to our rapid expansion • Biggest customer for many of our Global suppliers • Growth increases opportunities to import through Bunzl Shanghai and build own brands • Significant own brand businesse
Slide 29: Successful acquisition strategy
Successful acquisition strategy Disciplined in choice of target companies Target Retain companies in former core owners business sectors Successful acquisitions Experienced in integrating Substantial family synergies businesses 20 announced acquisitions since 2004 Bunzl Continental Europe -28- 2012
Slide 30: Benelux
Benelux Revenue Majestic Summary Global Net D-Care Van’t Veer Worldpack • Presence in all core sectors King Benelux • Acquisitions integrated quickly Gelpa and re-branded where Hopa appropriate 1994 2004 2005 2006 2007 2008 2009 2010 2011 • Synergies achieved from best practice and purchasing Foodse
Slide 31: Denmark
Denmark Clean Care Summary Revenue Hamo • Acquisitions integrated quickly MultiLine • Synergies achieved from best practice and purchasing DKI Group Greenham 2000 2001 2003 2004 2009 2010 2011 Foodservice Retail Cleaning & Hygiene Healthcare Safety A model for future growth Bunzl Continental Europe
Slide 32: Spain
Spain King Spain Revenue Summary Juba • In process of consolidating a fragmented market Marca Hicosa • Cleaning & Hygiene presence in Sudecol Catalonia since 2007 Iberlim • Two leading PPE companies (2008-2010) 2007 2008 2010 2011 Foodservice • National coverage in Retail Foodservice and Cleaning &
Slide 33: Continental Europe
Continental Europe Foodservice Retail Cleaning & Healthcare Safety Hygiene = No existing presence France Netherlands Denmark Belgium Spain Germany Switzerland Hungary Romania Israel Czech Rep. Slovakia Italy Poland Sweden Norway Austria Finland Significant opportunities to grow in new and existing m
Slide 34: Acquisition opportunities
Acquisition opportunities Competition Fragmented mostly local market – family owned penetration still businesses – low growing scale advantage Significant acquisition Family growth potential businesses see in large areas Bunzl as a e.g.Germany & preferred buyer Scandinavia Ambitious expansion plan f
Slide 35: Summary
Summary • Strong revenue and profit growth during the last 7 years • Good, experienced management teams • No reliance on big customers; good spread by sectors and countries • Experienced in making acquisitions and realising synergies post acquisition • Good cash conversion enables expansion through
Slide 36: Your Questions
Bunzl Continental Europe YOUR QUESTIONS -35- 2012 Investor Day Presentation Bunzl Continental Europe
Slide 37: Agenda
Agenda 1. Michael Roney, CEO: Welcome 2. Paul Budge, MD UK & Ireland 3. Frank van Zanten, MD Continental Europe 4. Break 5. Rodrigo Mascarenhas, MD South America 6. Patrick Larmon, CEO North America 7. Michael Roney, CEO: Close 8. Refreshments -36- 2012 Investor Day Presentation
Slide 38: Agenda
Agenda 1. Michael Roney, CEO: Welcome 2. Paul Budge, MD UK & Ireland 3. Frank van Zanten, MD Continental Europe 4. Break 5. Rodrigo Mascarenhas, MD South America 6. Patrick Larmon, CEO North America 7. Michael Roney, CEO: Close 8. Refreshments -37- 2012 Investor Day Presentation
Slide 39: Entering and growing in a new market
Entering and growing in a new market 2012 Investor Day Presentation Bunzl Brazil -38-
Slide 40: Brazil has overtaken the UK economy
“Brazil has overtaken the UK economy in 2011 to become the world’s 6th largest economy”* * The Cebr (Centre for Economics and Business Research) World Economic League Table 2012 Investor Day Presentation Bunzl Brazil -39-
Slide 41: Model for further geographic expansion
Market entry 2006 Market research and roadmap 2007/2008 Target selection and detailed due diligence 2008 Market Entry Retention of experienced management with the acquisition Model for further geographic expansion 2012 Investor Day Presentation Bunzl Brazil -40-
Slide 42: Acquisition growth
Acquisition growth 2008 – Market Entry • Acquisition of Prot-cap • Entry into safety market 2010 – AM Supply • Expansion in safety market 2011 – Ideal 2011 2010 • Entry into cleaning and 2008 hygiene market 2011 2011 – Danny • Expansion in safety market 2012 Investor Day Presentation Bunzl Brazil -4
Slide 43: Customers
Customers • Well balanced mix of global customers and small to medium size local ones • More than 20,000 active customers • Low customer concentration 2012 Investor Day Presentation Bunzl Brazil -42-
Slide 44: Organisation
Organisation Bunzl Brazil Rodrigo Mascarenhas Managing Director Finance Prot-Cap Danny Ideal Global (incl AM Supply) • Business founders have stayed with us • Investment in finance and IT 2012 Investor Day Presentation Bunzl Brazil -43-
Slide 45: Revenue CAGR over 25% since market entry
Acquisition growth Ideal Revenue Danny AM Supply Prot-Cap 2008 2010 2011 Safety Cleaning & Hygiene Foodservice Healthcare Retail Revenue CAGR over 25% since market entry 2012 Investor Day Presentation Bunzl Brazil -44-
Slide 46: Brazil investments
Brazil investments • PAC – Multi year Government Growth Acceleration plan: • US$550bn investment in infrastructure in the next five years • Petrobras alone estimated to invest US$45bn annually until 2014 Long term growth opportunities 2012 Investor Day Presentation Bunzl Brazil -45-
Slide 47: Strategic long term opportunity
Future prospects • Stable democracy • World Cup 2014 • Olympic Games 2016 • Long term infrastructure investments • Oil and gas developments • Demographic dividend • Large and growing middle class Strategic long term opportunity 2012 Investor Day Presentation Bunzl Brazil -46-
Slide 48: More to go for……
Summary • Revenue CAGR > 25% since 2008 • Four acquisitions in two sectors – R$350m+ (£120m+) revenue • Experienced local management team • Global brands and private label • National distribution capabilities • Further acquisition opportunities More to go for…… 2012 Investor Day Presentation Bunzl B
Slide 49: Significant scope for further investment
South America VENEZUELA GUYANA SURINAME FRENCH COLOMBIA GUIANA ECUADOR PERU BRAZIL BOLIVIA PARAGUAY CHILE URUGUAY ARGENTINA Significant scope for further investment 2012 Investor Day Presentation Bunzl Brazil -48-
Slide 50: Your Questions
Bunzl Brazil YOUR QUESTIONS Bunzl Brazil -49- 2012 Investor Day Presentation
Slide 51: Agenda
Agenda 1. Michael Roney, CEO: Welcome 2. Paul Budge, MD UK & Ireland 3. Frank van Zanten, MD Continental Europe 4. Break 5. Rodrigo Mascarenhas, MD South America 6. Patrick Larmon, CEO North America 7. Michael Roney, CEO: Close 8. Refreshments -50- 2012 Investor Day Presentation
Slide 52: Customer opportunities – winning new accounts
Customer opportunities – winning new accounts Bunzl North America -51- 2012 Investor Day Presentation
Slide 53: Resilient markets
Markets we serve Resilient markets Bunzl North America -52- 2012 Investor Day Presentation
Slide 54: Unique presence in North America
Unique presence in North America Bunzl North America -53- 2012 Investor Day Presentation
Slide 55: What makes Bunzl successful in the marketplace
What makes Bunzl successful in the marketplace • Experienced sales force • Complete North American coverage • Our private fleet • Single IT platform • E-commerce capabilities • Multi-segmented business • Vendor relationships • Private label program • Import program • Financial strength • Logistics t
Slide 56: Our value proposition: self distribution is costly
Our value proposition Product cost is just one component of what our customers incur when they self distribute operating supplies Product Cost Self distribution is costly Bunzl North America -55- 2012 Investor Day Presentation
Slide 57: Our value proposition
Our value proposition Bunzl applies its resources and expertise to reduce or eliminate many of the “hidden” costs of self distribution Outsourcing adds value to the customer Bunzl North America -56- 2012 Investor Day Presentation
Slide 58: How do we go about winning new business?
How do we go about winning new business? Let’s walk through two cases… Target supermarket Tesco’s fresh&easy Bunzl North America -57- 2012 Investor Day Presentation
Slide 59: Taking aim at a giant retailer: Target
Taking aim at a giant retailer: Target Target’s initial state • Target utilized seven third party logistics (“3PL”) distribution centres (“DCs”) to distribute operating supplies to its 26 Regional DCs for the company’s 1,600+ stores coast-to-coast • Target managed demand forecasting and replenishmen
Slide 60: Taking a shot at winning Target
Taking a shot at winning Target Arranged meetings with Target on a periodic basis to explore the business opportunity Month 1 - Target requested us to temporarily supply 30 critical items In 48 hours, we successfully supplied 1,600+ stores with a 98% fill rate Month 10 - Target requested a proposal
Slide 61: Implementation: Putting the plan into action
Implementation: Putting the plan into action • Formed a multi-discipline implementation team to handle the project • Four month effort with significant time spent coordinating with Target’s team and our branches • Two phase operational implementation plan ® Bunzl North America -60- 2012 Investor Day
Slide 62: Initial performance: On target with Target
Initial performance: On target with Target • Branch performance has been exceptional • Target and Bunzl are working together as strategic partners • As a result, Target is experiencing… • Reduced lead times - estimated reduction approximately 40% • Higher fill rates - currently averaging over 98% •
Slide 63: What does Target have to say?
What does Target have to say? “Bunzl’s fill rates have been exceptional, and the transition of business was transparent to our stores” Dan Riley Vice President of Property Development Operations, Target ® A seamless transition Bunzl North America -62- 2012 Investor Day Presentation
Slide 64: Creating value with Tesco's fresh&easy
Creating value with Tesco’s fresh&easy Sourcing expertise • Demanding product specifications • Stringent sourcing requirements Category budget control • Demanding product negotiations with international and domestic vendors We share in our customer’s goals “…wholesome food should be accessible and a
Slide 65: Getting in the door with Tesco
Getting in the door with Tesco • Tesco announced its entrance into the US market • Leveraged a previously established relationship • Our Bunzl Anaheim sales rep secured the business • We handle approximately one fifth of their operating supplies Items include: – Sampling kitchen items • Tasting spoo
Slide 66: Growing with Tesco
Growing with Tesco • We experienced significant growth with fresh&easy’s 160+ stores in 2011 • An example of a program contributing to our growth: • New in store baked bread program – fresh&easy requested that we develop all of the packaging – Piloted several options in four stores – Rolled out the
Slide 67: What does the customer have to say?
What does the customer have to say? Bunzl North America -66- 2012 Investor Day Presentation
Slide 68: Your Questions
Bunzl North America YOUR QUESTIONS Bunzl North America -67- 2012 Investor Day Presentation
Slide 69: Agenda
Agenda 1. Michael Roney, CEO: Welcome 2. Paul Budge, MD UK & Ireland 3. Frank van Zanten, MD Continental Europe 4. Break 5. Rodrigo Mascarenhas, MD South America 6. Patrick Larmon, CEO North America 7. Michael Roney, CEO: Close 8. Refreshments -68- 2012 Investor Day Presentation
Slide 70: Overview
Overview 1. UK & Ireland – Delivering results in a challenging environment 2. Continental Europe – Opportunities for expansion 3. Brazil – Entering and growing in a new market 4. North America – Customer opportunities – winning new accounts -69- 2012 Investor Day Presentation
Slide 71: Strategy: Acquisition ROIC
Strategy Operating Model Efficiencies GDP+ Acquisition Organic Growth Growth AcquisitionROIC Growth 17.3% Consistent and proven strategy -70- 2012 Investor Day Presentation
Slide 72: Financial track record
Financial track record Revenue (£bn) Operating profit (£m) 353 04-05 continuing operations only 5.1 Before amortisation and acquisition 4.8 323 related and corporate costs 312 4.6 297 4.2 04-05 continuing operations only 259 3.6 241 3.3 218 2.9 183 2.4 2004 2005 2006 2007 2008 2009 2010 2011 2004 20
Slide 73: Agenda
Agenda 1. Michael Roney, CEO: Welcome 2. Paul Budge, MD UK & Ireland 3. Frank van Zanten, MD Continental Europe 4. Break 5. Rodrigo Mascarenhas, MD South America 6. Patrick Larmon, CEO North America 7. Michael Roney, CEO: Close 8. Refreshments -72- 2012 Investor Day Presentation
Slide 74: Bunzl Investor Day 22 March 2012
Bunzl Investor Day 22 March 2012 -73- 2012 Investor Day Presentation
Slide 75: Disclaimer
Disclaimer No representation or warranty (express or implied) of any nature can be given, nor is any responsibility or liability of any kind accepted, by Bunzl plc with respect to the completeness or accuracy of the content of or omissions from this presentation. This presentation is for information