Bunzl Plc · LSE:BNZL
Bunzl — H1 2023 Earnings Presentation
32 slides from Bunzl's earnings presentation, Aug 25, 2023
Slide 1: Bunzl 2023 Half Year Results
BUNZL 2023 HALF YEAR RESULTS
Slide 2: Introduction
INTRODUCTION Frank van Zanten, Chief Executive Officer 2023 HALF YEAR RESULTS 2
Slide 3: Consistent and Proven Compounding Strategy
CONSISTENT AND PROVEN COMPOUNDING STRATEGY Confidence in our medium-term growth opportunity Organic Value-added proposition supports GDP+ growth revenue growth Net inflationary environment potentially a medium-term support Drivers Higher margin acquisitions delivered in recent years supporting our O
Slide 4: Half Year 2023 Highlights
HALF YEAR 2023 HIGHLIGHTS Strong operating margin achieved; substantial reduction in inventory vs. 7.3% in H1 22; Revenue growth Normalisation of wider Operating increase in FY23 year-on-year 2.4%1,2 Covid-19 related trends margin3 7.4% operating margin expectations Supported by Free cash flow3 Net
Slide 5: Financial Results and Outlook
FINANCIAL RESULTS AND OUTLOOK Richard Howes, Chief Financial Officer 2023 HALF YEAR RESULTS 5
Slide 6: Revenue Growth
REVENUE GROWTH Driven by acquisitions and base business growth £m Revenue growth1: 0.6% Revenue growth 7,000 vs H1 2022 Revenue growth excluding disposal1,3: 2.4% 0.6% 1 6,000 1.6% 2.8% Base business2 growth (1.8)% (2.0)% 1.6% 1 5,000 Underlying revenue change4 : (0.4)% Impacted by a reducing benefi
Slide 7: Income Statement
INCOME STATEMENT Strong margin growth vs pre-pandemic; a higher margin business today Adjusted operating CONSTANT EXCHANGE1 profit1 growth REPORTED CONSTANT EXCLUDING £m H1 2023 H1 2022 GROWTH EXCHANGE1 DISPOSAL2 4.1% 2,3 Revenue 5,906.8 5,650.8 4.5% 0.6% 2.4% Adjusted operating profit1 438.3 411.4
Slide 8: Cash Flow
CASH FLOW Strong free cash flow generation; supported by substantial reduction in inventory H1 cash conversion over the last 10 years Cash conversion1 £m H1 2023 H1 2022 93% Operating cash flow1,3 397.3 343.2 112% Net interest paid (excluding lease liabilities) (29.7) (24.2) 102% 100% Good cash conv
Slide 9: Balance Sheet
BALANCE SHEET Substantial headroom supports future growth from acquisitions JUNE DECEMBER Net debt : EBITDA1,2 Net debt : EBITDA1,2,4 £m 2023 2022 2.3x 1.1x Intangibles 3,011.6 3,093.9 2.1x Right-of-use assets 574.9 529.6 TARGET 2.0x 2.0x Property, plant and equipment 141.1 137.2 1.9x 1.9x Working c
Slide 10: Disciplined Approach to Capital Allocation
DISCIPLINED APPROACH TO CAPITAL ALLOCATION Highly cash generative model continues to drive stakeholder value Capital allocation Progressive dividend – Our acquisition pipeline remains priorities £2.1bn of dividend payments since 20041 active, with significant opportunities across our markets and sec
Slide 11: 2023 Outlook
2023 OUTLOOK Upgrading adjusted operating profit expectations Meaningful increase in operating margin expectations – We expect adjusted operating profit1 in 2023 to be moderately higher than in 20222, with operating margin1 remaining strong and moderately higher than that achieved in the prior year
Slide 12: Business Review and Strategy Update
BUSINESS REVIEW AND STRATEGY UPDATE Frank van Zanten, Chief Executive Officer 2023 HALF YEAR RESULTS 12
Slide 13: Sector Performance
SECTOR PERFORMANCE Growth normalising, although well ahead of 2019 Sector commentary H1 23 revenue Underlying Underlying as % of Group revenue1 H1 23 vs revenue1 total H1 19 H1 23 vs H1 22 Healthcare • Healthcare base business performing well, with the backlog of elective surgeries remaining a benef
Slide 14: Margin Drivers and Volume Dynamics
MARGIN DRIVERS AND VOLUME DYNAMICS Key focus on margin management and own brand penetration BUNZL H1 23 Good margin Increased own Continued strategic focus on OPERATING management brand penetration operational efficiencies MARGIN DRIVERS: INFLATION DYNAMICS REMAIN SOMEWHAT SUPPORTIVE: SHORT-TERM VOL
Slide 15: North America / Continental Europe
NORTH AMERICA / CONTINENTAL EUROPE Strong margin performance in North America; Inflation-driven growth in Continental Europe North America Continental Europe CONSTANT CONSTANT £m H1 2023 H1 2022 REPORTED EXCHANGE1 UNDERLYING1 H1 2023 H1 2022 REPORTED EXCHANGE1 UNDERLYING1 Revenue 3,514.4 3,435.9 2.3
Slide 16: UK & Ireland / Rest of the World
UK & IRELAND / REST OF THE WORLD UK & Ireland growth driven by inflation; Rest of the World impacted by Covid-19 related product decline UK & Ireland Rest of the World CONSTANT CONSTANT £m H1 2023 H1 2022 REPORTED EXCHANGE1 UNDERLYING1 H1 2023 H1 2022 REPORTED EXCHANGE1 UNDERLYING1 Revenue 663.8 687
Slide 17: Organic Growth Supported by Strong Value Proposition
ORGANIC GROWTH SUPPORTED BY STRONG VALUE PROPOSITION Case study: successful retender of key facilities management customer in Spain 7-year partnership Our value proposition drivers of the successful retender: Contract retained NETWORK CAPABILITIES & RELIABILITY OWN BRANDS AND DIGITAL CAPABILITIES fo
Slide 18: Continued Focus on Operational Efficiency
CONTINUED FOCUS ON OPERATIONAL EFFICIENCY Example of a technology solution improving our operational efficiency Investing in Automated supplier stock re-ordering technology to improve – Rolling out advanced demand planning tools to better service operational efficiency customer demand, manage suppli
Slide 19: Continued Acquisition Strategy Success
CONTINUED ACQUISITION STRATEGY SUCCESS 207 deals since 2004; pipeline remains active August year-to-date: Acquisitions across 7 countries and 4 sectors highlights range of consolidation opportunities 2022 2022 Acquisitions announced revenue Geography Sector Rationale revenue Geography Sector Rationa
Slide 20: Specialist Online Distributors
SPECIALIST ONLINE DISTRIBUTORS Investing in fast-growing, high margin businesses Bunzl’s specialist online businesses – Fast growing businesses, focused on Netherlands based online distributor of tool fragmented markets accessories and industrial consumables – Providing expert advice • Opportunities
Slide 21: Bunzl's Strategy Proven by Successful Track Record
BUNZL’S STRATEGY PROVEN BY SUCCESSFUL TRACK RECORD Consistent compounding growth model Historic building Customer-focused business model blocks of performance – Deep category knowledge Organic Driven by activity in our markets Growth • Attractive end markets with structural growth c.1/3 – Customer s
Slide 22: Q&A: Proven Compounding Growth Strategy
Q&A Revenue (£bn) Adjusted operating profit1 (£m) Proven compounding 12.0 886 growth strategy CAGR 2.4 169 c.9-10% 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 Adjusted EPS1 (p) Dividend per Share (p) 184.3 62.7 57.0 31.7 13.3 04 0
Slide 23: Appendices
Appendices 2023 2021 HALF YEAR RESULTS FULL YEAR RESULTS 23
Slide 24: Alternative Performance Measures
APPENDIX 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 are
Slide 25: Statutory P&L
APPENDIX 2 Statutory P&L £m H1 2023 H1 2022 Revenue 5,906.8 5,650.8 Adjusted operating profit1 438.3 411.4 Operating margin1 7.4% 7.3% Adjusting items (78.5) (83.9) Operating profit 359.8 327.5 Net finance expense (42.7) (30.9) Profit before income tax 317.1 296.6 Reported tax rate 25.2% 25.3% Profi
Slide 26: Acquisitions Agreed August Year-to-Date
APPENDIX 3.1 Acquisitions agreed August year-to-date • Capital Paper acquired in January 2023 • Arbeitsschutz-Express acquired in April • Dimasa acquired in April 2023 • Irudek Group acquired April 2023 • Distributor of foodservice packaging and 2023 • Distributor of cleaning and hygiene • Distribut
Slide 27: Acquisitions Agreed August Year-to-Date (continued)
APPENDIX 3.2 Acquisitions agreed August year-to-date • Groveko acquired August 2023 • PackPro acquired in August 2023 • Distributor of cleaning and hygiene products in the • Distributor of packaging solutions to a diverse Netherlands as well as robotic and smart cleaning customer base, including foo
Slide 28: Acquisition Growth
APPENDIX 4 Acquisition growth 207 23 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 YTD1 Number of announced 7 7 9 8 7 2 9 10 13 11 17 22 14 15 6 3 9 14 12 12 acquisitions acquisitions1 Committed acquisition 302 129 162 197 123 6 126 185 277 295 211 327 184 616 183 124 445 508 322 >350 spe
Slide 29: Significant Opportunities Remain to Expand Our Sector Presence
APPENDIX 5 Significant opportunities remain to expand our sector presence COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE USA ● ● ● ● ● Hungary ● ● ● ● Canada ● ● ● ● ● Romania ● ● ● Mexico ● ● ● Slovakia ● ● UK ● ● ● ● ● ● Israel ● I
Slide 30: Revenue by Customer Market in H1 2023
APPENDIX 6 Revenue by customer market in H1 2023 Safety Foodservice Personal protection and safety equipment, including 15% 29 % Non-food consumables, including food packaging, gloves, boots, hard hats, ear and eye protection and disposable tableware, guest amenities, catering other workwear, as wel
Slide 31: Dividend Track Record
APPENDIX 7 Dividend track record 9.6% 62.7 30-year dividend per share CAGR 30 years of consecutive annual dividend increases 4.0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 2023 HALF YEAR RESULTS 31
Slide 32: 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 2023. For the purposes of this disclaimer, “Presentation” shall mean this document, the oral presentation of the sli