Bunzl Plc · LSE:BNZL
Bunzl — FY2020 Earnings Presentation
47 slides from Bunzl's earnings presentation, March 2021
Slide 1: 2020 Full Year Results
2020 FULL YEAR RESULTS MARCH 2021
Slide 2: Introduction
INTRODUCTION FRANK VAN ZANTEN CEO
Slide 3: Thank you to our colleagues
THANK YOU TO OUR COLLEAGUES Our people have been instrumental during the pandemic, delivering essential products to frontline heroes Our sourcing teams continue to go above and beyond to supply quality products that our customers need Our colleagues’ dedication and hard work has been the key driver
Slide 4: Highlights
HIGHLIGHTS Strong and resilient performance Responsible actions taken over a challenging period Repaid government assistance and increased charitable donations Milestone revenue of £10bn Materiality assessment conducted to Adjusted operating profit* +21%◊, with prioritise sustainability ambitions mi
Slide 5: Financial Results
FINANCIAL RESULTS RICHARD HOWES CFO
Slide 6: Revenue growth
REVENUE GROWTH Revenue growth*: 9.4% Revenue 14.6% growth* 4.1% 9.4% 0.5% (9.8%) Underlying Underlying growth*: 4.8% growth* 4.8% * At 2020 constant exchange rates ** Top 8 Covid-19 related products are masks, sanitisers, gloves, disinfectants, coveralls, disposable wipes, face shields and eye prote
Slide 7: Income statement
INCOME STATEMENT Adjusted operating CONSTANT profit* growth◊ £m 2020 2019 REPORTED EXCHANGE 20.9% Revenue 10,111.1 9,326.7 8.4% 9.4% Adjusted operating profit* 778.4 653.3 19.1% 20.9% Operating margin* 7.7% 7.0% Increase in Adjusting items** (159.9) (124.9) operating margin Operating profit 618.5 52
Slide 8: Income statement (continued)
INCOME STATEMENT (CONTINUED) Adjusted earnings CONSTANT £m 2020 2019 REPORTED EXCHANGE per share* growth◊ Effective tax rate* 23.1% 23.8% 26.6% Adjusted profit for the period* 550.5 440.6 24.9% 26.8% Weighted average number of shares (m) 333.8 333.3 Adjusted earnings per share* 164.9p 132.2p 24.7% 2
Slide 9: Balance sheet
BALANCE SHEET £m DECEMBER 2020 DECEMBER 2019 Net debt : EBITDA** Intangibles 2,441.9 2,290.9 1.5x Right-of-use assets Property, plant and equipment 453.4 122.7 432.9 118.3 Substantial capacity for self- Working capital 1,021.4 943.4 funded acquisitions Other net liabilities (323.0) (278.2) 3,716.4 3
Slide 10: Cash flow
CASH FLOW Cash conversion*† £m 2020 2019 Operating cash flow* 776.8 633.7 103% Net interest excluding interest on lease liabilities Income tax paid (41.5) (153.8) (51.2) (125.6) Free cash flow 581.5 456.9 Cash conversion Dividends paid (171.5) (167.3) excluding net Acquisitions◊ (387.5) (162.8) upfr
Slide 11: Cash conversion
CASH CONVERSION 110% Average cash ◊ 103% 102% 102% 99% 97% 101% 103% conversion* 93% 95% 92% 92% 93% 93% 95% 97% 94% 98% TARGET 90% 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 * Alternative performance measure – see Appendix 2 ◊ Cash conversion for the year was 103% benefiting from advance pa
Slide 12: Dividend per share
DIVIDEND PER SHARE 54.1 28 years of consecutive dividend growth CAGR 9.7% 4.0 2020 FULL YEAR RESULTS MARCH 2021 12
Slide 13: Financial summary
FINANCIAL SUMMARY Strong performance driven by demand for Adjusted earnings per share * Covid-19 related products, sector diversification and the Group’s agility and execution growth◊ +26.6% Cash conversion* Strong cash conversion 103% FY total dividend Proposed 2020 final dividend growth of +7.0% 5
Slide 14: Business Review
BUSINESS REVIEW FRANK VAN ZANTEN CEO • Operations review • Navigating Covid-19 • Prospects • Strategic developments
Slide 15: Trusted provider of Covid-19 related products
TRUSTED PROVIDER OF COVID-19 RELATED PRODUCTS Bunzl is a key Covid-19 related products* provider of own- brand imported £2.2bn of revenue in Covid-19 related 2020 products ― 2.6x prior year** ― Sold across all sectors Top 8 Covid-19 ― c.40% of this y-o-y growth attributable to related products* larg
Slide 16: Diversification benefits Bunzl
DIVERSIFICATION BENEFITS BUNZL Significant shift Constant exchange 2020 Revenue as Regional commentary towards higher growth over 2019 % of Group total margin healthcare, • Rest of the World benefited (c.70% of mix) safety and cleaning • Continental Europe and UK & Ireland saw Safety highest value o
Slide 17: Business area analysis
BUSINESS AREA ANALYSIS 31 countries NORTH AMERICA CONTINENTAL EUROPE 58% Revenue 21% Revenue 49% Operating profit* 29% Operating profit* 6 sectors UK & IRELAND REST OF WORLD 13% Revenue 8% Revenue <10% 9% Operating profit* 13% Operating profit* of profit through UK & Ireland * Adjusted operating pro
Slide 18: North America
NORTH AMERICA GROWTH CONSTANT £m 2020 2019 REPORTED EXCHANGE Revenue 5,843.8 5,473.2 6.8%. 7.2%. Adjusted operating profit* 395.7 343.6 15.2% 15.7% Operating margin* 6.8% 6.3% Return on average operating capital* 41.3% 36.1% • Organic revenue growth of 1.0% driven by a strong increase in demand for
Slide 19: Continental Europe
CONTINENTAL EUROPE GROWTH CONSTANT £m 2020 2019 REPORTED EXCHANGE Revenue 2,127.3 1,829.8 16.3% 15.6% Adjusted operating profit* 238.1 182.1 30.8% 30.8% Operating margin* 11.2% 10.0% Return on average operating capital* 59.6% 45.0% • Very strong organic revenue growth of 15.1% due to larger Covid-19
Slide 20: UK & Ireland
UK & IRELAND GROWTH CONSTANT £m 2020 2019 REPORTED EXCHANGE Revenue 1,287.7 1,242.1 3.7% 3.5% Adjusted operating profit* 68.6 87.1 (21.2)% (21.2)% Operating margin* 5.3% 7.0% Return on average operating capital* 41.4% 45.3% • Organic revenue growth of 2.6% driven by growth in Covid-19 related produc
Slide 21: Rest of the World
REST OF THE WORLD GROWTH CONSTANT £m 2020 2019 REPORTED EXCHANGE Revenue 852.3 781.6 9.0% . 21.6% Adjusted operating profit* 104.2 61.6 69.2% 94.0% Operating margin* 12.2% 7.9% Return on average operating capital* 50.9% 26.8% • Very strong organic revenue growth of 17.6% and operating margin* increa
Slide 22: Navigating Covid-19
NAVIGATING COVID-19 RESILIENT MODEL RESPONSIBLE BUSINESS • Diversified sector portfolio across geographies and sectors • We focused on keeping our people safe • Critical supplier status granted • We monitored wellbeing of colleagues • Strong global supply chains a key asset, including Asia globally
Slide 23: 2021 outlook and longer-term prospects
2021 OUTLOOK AND LONGER-TERM PROSPECTS OUR 2021 OUTLOOK IS UNCHANGED BUNZL MODEL REINFORCED Expect robust revenue growth in 2021 over the prior year, after excluding larger Covid-19 Bunzl long-term attractive prospects related orders which strongly supported performance in 2020 and which are not • R
Slide 24: Supportive future trends
SUPPORTIVE FUTURE TRENDS Good acquisition SUPPORTIVE TO Continuing focus on momentum COMPOUNDING responsible sourcing GROWTH Enhanced hygiene STRATEGY requirements Acquisition opportunities strengthened by the Bunzl is a proactive leader pandemic, with the in sustainable solutions, benefits of joini
Slide 25: Consistent strategic focus
CONSISTENT STRATEGIC FOCUS Successful Remain focused on developing Bunzl’s unique business model for the future implementation of consistent PROFITABLE Use SUPPORTED BY competitive strategy ORGANIC advantage to GROWTH grow market share in a INVESTMENT IN OUR PEOPLE Trusted partner in profitable way
Slide 26: Accelerating Bunzl's sustainable priorities
ACCELERATING BUNZL’S SUSTAINABLE PRIORITIES Continued focus on climate change Providing sustainable solutions • Carbon benefits from product consolidation • Play a proactive role in the supply chain as an advisor to customers on the shift to sustainable solutions • Bunzl has meaningfully improved ef
Slide 27: Sustainable products and solutions
SUSTAINABLE PRODUCTS AND SOLUTIONS Bunzl is a A few of the many 2020 examples proactive leader in MAKING AN IMPACT ON THE WINNING AND RETAINING HELPING CUSTOMERS ACHIEVE the transition to a ENVIRONMENT CUSTOMERS WITH OFFERING THEIR SUSTAINABILITY TARGETS more sustainable Australia & NZ packaging Con
Slide 28: Acquisition momentum in 2020
ACQUISITION MOMENTUM IN 2020 Second highest Eight announced acquisitions Committed acquisition spend (£m) level of committed spend in Bunzl history - £445m Eight transactions £445m announced covering all our Average: £310m business areas and expanding core Bunzl sectors All acquisitions are 2016 201
Slide 29: Two sizeable deals in North America
TWO SIZEABLE DEALS IN NORTH AMERICA 35 acquisitions in JOSHEN PAPER AND PACKAGING MCR Safety North America since 2010 Acquisitions have supported doubling • Completed in early January 2020 • Completion in early September 2020 of revenue and • Based in Cleveland, USA with annualised revenue • Based i
Slide 30: 2021 YTD acquisition snapshot
2021 YTD ACQUISITION SNAPSHOT Acquisitions Deliver Net since 2004 • Healthcare distributor to care homes in UK 172 • Closely aligned with our existing care home business in the UK; anticipate being able to develop the business through the introduction of additional product offerings • 2020 revenue o
Slide 31: Significant opportunities to grow in existing countries
SIGNIFICANT OPPORTUNITIES TO GROW IN EXISTING COUNTRIES COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE USA ● Hungary ● ● Canada ● Romania ● ● ● Mexico ● ● ● Slovakia ● ● ● ● UK Israel ● ● ● ● ● Ireland Turkey ● ● ● Germany ● ● Brazil
Slide 32: Sizeable growth opportunities remain
SIZEABLE GROWTH OPPORTUNITIES REMAIN Large opportunity Based on UK & Ireland penetration we have the Implied revenue growth opportunity based on for growth remains opportunity to increase our presence across our UK & Ireland penetration countries meaningfully, as well as growing beyond Germany 17x t
Slide 33: Consistent and proven compounding strategy
CONSISTENT AND PROVEN COMPOUNDING STRATEGY Consistent REVENUE (£bn) strategy and PROFITABLE Use competitive 10.1 delivery ORGANIC advantage to GROWTH grow market share in a profitable way 2.4 Proven OPERATING MODEL Daily focus resilience IMPROVEMENTS on making our business 04 05 06 07 08 09 10 11 12
Slide 34: Summary
SUMMARY STRENGTHS REINFORCED ENHANCED LONG TERM GROWTH OPPORTUNITY • Strong 2020 performance with Growth supported by: adjusted EPS growth* of 26.6% • Recovery of the underlying business • Strength of Bunzl model and • Continuing focus on responsible sourcing resilience demonstrated • Enhanced hygie
Slide 35: Q&A
Q&A REVENUE (£bn) ADJUSTED OPERATING PROFIT* (£m) 755 10.1 2.4 169 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 ADJUSTED EPS* (p) DIVIDEND PER SHARE (p) 04-12 restated on adoption 54.1 of IAS 19 (revised 2011) 164.7 13.3 31.7 04 05 06 07 08 09
Slide 36: Appendices
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Slide 37: Exchange rates
APPENDIX 1 EXCHANGE RATES 2020 2019 Average rate US$ 1.28 1.28 Euro 1.12 1.14 Canadian$ 1.72 1.69 Brazilian real 6.61 5.04 Australian$ 1.86 1.84 Closing rate US$ 1.37 1.32 Euro 1.12 1.18 Canadian$ 1.74 1.72 Brazilian real 7.08 5.33 Australian$ 1.77 1.88 2020 FULL YEAR RESULTS MARCH 2021 37
Slide 38: Alternative performance measures
APPENDIX 2 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 are
Slide 39: Adjusted operating profit
APPENDIX 3 ADJUSTED OPERATING PROFIT ALTERNATIVE PERFORMANCE MEASURES £m 2020 2019 Operating profit 618.5 528.4 Adjusted for: Customer relationships and brands amortisation 100.4 107.3 Acquisition related items 42.7 17.6 Non-recurring pension scheme charges 16.8 Total adjusting items 159.9 124.9 Adj
Slide 40: Adjusted profit before income tax
APPENDIX 4 ADJUSTED PROFIT BEFORE INCOME TAX ALTERNATIVE PERFORMANCE MEASURES £m 2020 2019 Profit before income tax 555.7 453.3 Adjusted for: Customer relationships and brands amortisation 100.4 107.3 Acquisition related items 42.7 17.6 Non-recurring pension scheme charges 16.8 Adjusted profit befor
Slide 41: Adjusted profit for the period
APPENDIX 5 ADJUSTED PROFIT FOR THE PERIOD ALTERNATIVE PERFORMANCE MEASURES £m 2020 2019 Profit for the period 430.0 349.2 Adjusted for: Customer relationships and brands amortisation 100.4 107.3 Acquisition related items 42.7 17.6 Non-recurring pension scheme charges 16.8 Tax on adjusting items (39.
Slide 42: Net debt
APPENDIX 6 NET DEBT £m 2020 2019 Opening net debt (1,247.0) (1,386.5) Net cash inflow 14.1 99.1 Exchange (22.1) 40.4 Closing net debt excluding lease liabilities (1,255.0) (1,247.0) Lease liabilities (497.5) (480.0) Closing net debt including lease liabilities (1,752.5) (1,727.0) 2020 FULL YEAR RESU
Slide 43: Cash flow and cash conversion
APPENDIX 7 CASH FLOW AND CASH CONVERSION £m 2020 2019 Adjusted operating profit* 778.4 653.3 Adjusted for: Non-cash items** 184.9 156.5 Working capital movement 5.0 4.3 Cash flow from operations◊ 968.3 814.1 Net capital expenditure (31.9) (28.8) Payment of lease liabilities (159.6) (151.6) Operating
Slide 44: Acquisition growth
APPENDIX 8 ACQUISITION GROWTH 172 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 YTD acquisitions* Number of 7 7 9 8 7 2 9 10 13 11 17 22 14 15 6 3 9 3 acquisitions Committed acquisition 302 129 162 197 123 6 126 185 277 295 211 327 184 616 183 124 445 £310m spend (£m) Annualised average spen
Slide 45: Financial track record 2004 - 2020
APPENDIX 9 FINANCIAL TRACK RECORD 2004 - 2020 REVENUE (£bn) ADJUSTED OPERATING PROFIT* (£m) 755 Proven long term 10.1 compounding growth strategy 2.4 169 CAGR 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 c. 9 - 11% ADJUSTED EPS* (p) 04-12 rest
Slide 46: Revenue by customer markets
APPENDIX 10 REVENUE BY CUSTOMER MARKETS Diversified customer exposure Other Healthcare +3% YoY 2% 10% 25% Foodservice -4% YoY Retail 10% -1% YoY 13% 26% 14% Cleaning & hygiene Grocery +1% YoY 0% YoY Safety 2020 FULL YEAR RESULTS MARCH 2021 +1% YoY 46
Slide 47: 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 year ended 31 December 2020. For the purposes of this disclaimer, “Presentation” shall mean this document, the oral presentation o