Bunzl plc · LSE:BNZL
Bunzl — H1 2010 Earnings Presentation
36 slides from Bunzl's earnings presentation, 2010
Slide 1: Half Year Results 2010
HALF YEAR RESULTS 2010 2010 Half Year Results Presentation
Slide 2: Agenda
Agenda 1. Philip Rogerson, Chairman: Welcome 2. Brian May, FD: Financial Results 3. Michael Roney, CEO: Business Review 4. Q&A -1- 2010 Half Year Results Presentation
Slide 3: Highlights
Highlights • Revenue growth of 2.4% Revenue • Underlying revenue growth of 5.0% in North America • Group operating margin improved - significant increase Profitability in UK & Ireland and Rest of the World • Adjusted earnings per share up 10% • Increase in ROOC to 57% - all business areas improved O
Slide 4: Agenda
Agenda 1. Philip Rogerson, Chairman: Welcome 2. Brian May, FD: Financial Results 3. Michael Roney, CEO: Business Review 4. Q&A -3- 2010 Half Year Results Presentation
Slide 5: Income Statement
Income Statement Growth % Constant £m June 10% June 09% Reported Exchange Revenue 2,345.1% 2,293.3% 2 2 Operating profit* 140.5% 132.1% 6 7 Margin* 6.0% 5.8% *Before intangible amortisation and acquisition related costs -4- 2010 Half Year Results Presentation
Slide 6: Income Statement
Income Statement Growth % Constant £m June 10) June 09) Reported Exchange Operating profit* 140.5) 132.1) 6 7 Net finance cost (15.4) (16.6) Profit before tax* 125.1) 115.5) 8 9 Effective tax rate (%) 29.0) 30.5) Adjusted earnings per share* (p) 27.5) 25.1) 10 10 Dividend per share (p) 7.15) 6.65) 8
Slide 7: Balance Sheet
Balance Sheet £m June 10) Dec 09) June 09) Intangibles 1,209.7) 1,196.6) 1,183.2) Tangibles 119.7) 102.8) 101.4) Working capital 394.4) 363.6) 354.0) Other liabilities (252.2) (212.3) (265.6) 1,471.6) 1,450.7) 1,373.0) Pension deficit (78.8) (59.8) (68.2) Net debt (745.2) (716.8) (754.3) Equity 647.
Slide 8: Cash Flow
Cash Flow £m June 10)% June 09)% Operating profit* 140.5)% 132.1)% Depreciation 12.1)% 11.2)% Working capital movement (7.5)% 17.3)% Other (1.2)% (2.7)% Cash flow from operations 143.9%) 157.9%) Net capital expenditure (12.2)% (8.8)% Operating cash flow 131.7%) 149.1%) Operating cash flow to operati
Slide 9: Cash Flow
Cash Flow £m June 10) June 09) Operating cash flow 131.7) 149.1) Interest (17.4) (18.1) Tax (37.2) (35.0) Free cash flow 77.1) 96.0) Dividends (20.0) (20.6) Acquisitions (76.7) (6.6) Other 4.6) 0.7) Net cash flow (15.0) 69.5) -8- 2010 Half Year Results Presentation
Slide 10: Cash Conversion Track Record
Cash Conversion Track Record 103% 102% 95% 94% 93% 92% 92% 2004 2005 2006 2007 2008 2009 H1 10 Cash conversion = operating cash flow (after capex) divided by operating profit before intangible amortisation and acquisition related costs 04-05 continuing operations only Average 96% cash conversion -9-
Slide 11: Financing
Financing Debt Maturity Profile (August 2010) • £160m of bank facilities 2016 maturing in 2010 have £m 2010 2011 2012 2013 2014 2015 - 2019 Bank facilities - 192 260 161 80 83 - recently been refinanced USPP - 52 - 153 35 37 253 Total - 244 260 314 115 120 253 • Funding headroom £532m at 30 June • F
Slide 12: Financial Summary
Financial Summary • Operating profit* up 7% • Adjusted EPS* growth 10% • Improved return on operating capital to 56.7% • Cash conversion remains strong at 94% • Net debt to EBITDA remains at 2.2x with £77m spent on acquisitions • Dividend increase 8% *Before intangible amortisation and acquisition r
Slide 13: Agenda
Agenda 1. Philip Rogerson, Chairman: Welcome 2. Brian May, FD: Financial Results 3. Michael Roney, CEO: Business Review 4. Q&A -12- 2010 Half Year Results Presentation
Slide 14: Business Review
Business Review 1. Operations Review 2. Group Operating Cost Reduction 3. Strategy 4. Prospects -13- 2010 Half Year Results Presentation
Slide 15: Revenue Growth Bridge
Revenue Growth Bridge £m 1.2% 1.2% 2.4% 2,300 2,200 2,290 2,345 2,100 2,000 Revenue Underlying Acquisitions Revenue H1 09 H1 10 (FX adjusted) -14- 2010 Half Year Results Presentation
Slide 16: H1 Business Area Analysis
H1 Business Area Analysis Revenue Operating profit* 5% 7% 20% 25% 54% 51% 21% 17% North America UK & Ireland Continental Europe Rest of the World Diversified by geography *Before intangible amortisation and acquisition related and corporate costs -15- 2010 Half Year Results Presentation
Slide 17: Overview
Overview • Progress in all business areas • Strong underlying revenue growth in NA • Significant improvement in operating margins in UK&I and ROW • Six acquisitions in Continental Europe • All business areas showed improvement in ROOC • Acquisitions to date add annualised revenue of £140m -16- 2010
Slide 18: North America
North America Growth % Constant £m June 10% June 09% Reported Exchange Revenue 1,269.8% 1,222.3% 4 5 Operating profit* 75.9% 74.3% 2 4 Margin* 6.0% 6.1% Return on operating capital 65.5% 63.5% • Underlying revenue growth of 5% • Current customer base driving most of the growth • Grocery and food pro
Slide 19: UK & Ireland
UK & Ireland Growth % Constant £m June 10% June 09% Reported Exchange Revenue 493.7% 523.0% (6) (5) Operating profit* 25.6% 24.2% 6) 6) Margin* 5.2% 4.6% Return on operating capital 49.9% 46.2% • Tough trading environment led to reduction in revenue • Good growth in food and non-food retail supplies
Slide 20: Continental Europe
Continental Europe Growth % Constant £m June 10% June 09% Reported Exchange Revenue 459.1% 449.2% 2 5 Operating profit* 37.4% 36.0% 4 7 Margin* 8.1% 8.0% Return on operating capital 54.1% 45.6% • Overall growth of 5% driven by acquisitions • Difficult trading in French cleaning and hygiene business
Slide 21: Rest of the World
Rest of the World Growth % Constant £m June 10% June 09% Reported Exchange Revenue 122.5% 98.8% 24 1 Operating profit* 10.2% 6.0% 70 40 Margin* 8.3% 6.1% Return on operating capital 61.9% 51.8% • Australasia • Increased profitability due to significant margin improvement • Largest business, Outsourc
Slide 22: Group Operating Cost Reduction
Group Operating Cost Reduction H1 2010 Increase/(Decrease) in Operating Costs* vs. H1 2009 £m 5 3 (9) (2) (8) 0 -5 -10 Headcount Fuel Reduction in other Net reduction in reductions operating costs operating costs Well controlled cost base *Excluding acquisitions -21- 2010 Half Year Results Presentat
Slide 23: Strategy
Strategy Organic Growth Acquisition Growth Operating Model Efficiencies Consistent strategy -22- 2010 Half Year Results Presentation
Slide 24: Organic Growth - Business Model
Organic Growth - Business Model Suppliers Bunzl Customers Grocery Individual Consolidated Foodservice ranges offer TO TO Cleaning & Hygiene Safety Non-Food Retail • Global suppliers • International warehousing • Low cost sources Healthcare & distribution infrastructure • Commodities • Consolidation
Slide 25: Organic Growth - Value Proposition
Organic Growth - Value Proposition • Self distribution is costly COST TO PRODUCT COST ACQUIRE • Bunzl applies its resources and INVENTORY INVESTMENT expertise to reduce or eliminate many of the “hidden” INBOUND FREIGHT costs of self-distribution PURCHASING ADMIN DIRECT LABOUR COSTS COST INVENTORY IN
Slide 26: Organic Growth - Attractive Portfolio
Organic Growth - Attractive Portfolio Other 6% Some of the product ranges into other markets such as government and education establishments Healthcare 7% Disposable healthcare consumables Grocery 30% range, including gloves, swabs, gowns Goods not for resale (items grocers and bandages, to the heal
Slide 27: Organic Growth - Typical Products
Organic Growth - Typical Products Grocery Foodservice Cleaning & Hygiene Safety Non-Food Retail Healthcare -26- 2010 Half Year Results Presentation
Slide 28: Organic Growth - Market Environment
Organic Growth - Market Environment Growing market sectors Fragmented competitors • Exposed to growing sectors e.g. • None do what we do, on our scale • Foodservice – away from home and across our markets • Cleaning & Hygiene – away from home • Bunzl’s national footprint • Healthcare – demographics
Slide 29: Acquisition Growth
Acquisition Growth Business Acquired Country Sector Revenue Clean Care Jan 2010 Denmark Cleaning & Hygiene DKK60m Hamo Feb 2010 Denmark Horeca DKK43m Weita Mar 2010 Switzerland All CHF71m Silco Apr 2010 Israel Horeca ILS64m Juba May 2010 Spain Safety €22m Global Net Jul 2010 Belgium Cleaning & Hygie
Slide 30: Operating Model Efficiencies
Operating Model Efficiencies • Ongoing initiatives: • Warehouse consolidation projects • North America • UK & Ireland • Headcount reductions • Investment in IT Ongoing focus on cost efficiencies -29- 2010 Half Year Results Presentation
Slide 31: Prospects
Prospects North America • Expect good underlying growth to continue UK & • Revenue affected by difficult economic conditions Ireland • Continued improvement in operating margins expected • Underlying revenue will be held back by lack of H1N1 Continental Europe product sales • Current year acquisitio
Slide 32: Financial Track Record
Financial Track Record Revenue (£bn) Operating profit (£m) 312 4.6 00-05 continuing operations only Before amortisation and corporate costs 297 4.2 00-05 continuing operations only 259 3.6 241 CAGR = 11% 3.3 CAGR = 10% 218 2.9 183 2.4 171 2.3 158 164 2.1 2.2 1.8 128 2000 2001 2002 2003 2004 2005 200
Slide 33: Half Year Results 2010
HALF YEAR RESULTS 2010 -32- 2010 Half Year Results Presentation
Slide 34: Appendix - Acquisitions Track Record
Appendix 1 – Acquisitions Track Record 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Number of Acquisitions 4 5 6 2 7 7 9 8 7 2 Acquisition Spend (£m) 156 89 77 29 302 129 162 197 123 6 Annualised Acquisition 248 112 145 51 430 270 386 225 151 27 Revenue (£m) 2000-2005 continuing operations only
Slide 35: Appendix - Net Debt
Appendix 2 - Net Debt £m Six months) Year to) to June 10) Dec 09) Opening net debt (716.8) (870.7) Net cash (outflow)/inflow (15.0) 126.3) Currency movement (13.4) 27.6) Closing net debt (745.2) (716.8) -34- 2010 Half Year Results Presentation
Slide 36: 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 half year ended 30 June 2010. For the purposes of this disclaimer, “Presentation” shall mean this document, the oral presentation of the