Bunzl Plc · LSE:BNZL
Bunzl — FY2023 Earnings Presentation
41 slides from Bunzl's earnings presentation, Feb 26, 2024
Slide 1: 2023 Full Year Results
BUNZL 2023 FULL YEAR RESULTS
Slide 2: Introduction
INTRODUCTION Frank van Zanten, Chief Executive Officer 2023 FULL YEAR RESULTS 2
Slide 3: Consistent and Proven Compounding Strategy
CONSISTENT AND PROVEN COMPOUNDING STRATEGY Confidence in our medium term growth opportunity KEY COMPONENTS OF OUR MEDIUM TERM OUTLOOK Supported by: Value-added proposition supports GDP+ growth Tailored solutions Organic providing customers with revenue essential products and Net inflationary environ
Slide 4: Full Year 2023 Financial Highlights
FULL YEAR 2023 FINANCIAL HIGHLIGHTS Record operating margin achieved Operating margin achieved Adjusted Strong growth despite due to good margin (0.4)% change in revenue2,3 Operating operating profit1 margin1 8.0% management including increased own brand growth year-on- 7.6% 2,3 due to normalisation
Slide 5: Full Year 2023 Performance Achievements
FULL YEAR 2023 PERFORMANCE ACHIEVEMENTS Continued success in pursuing our purpose-driven strategic goals Further two acquisitions announced 19 acquisitions agreed in 2023 since the start of 2024, including the including anchor acquisition in acquisition of Nisbets, and our first Poland acquisition i
Slide 6: Financial Results
FINANCIAL RESULTS Richard Howes, Chief Financial Officer 2023 FULL YEAR RESULTS 6
Slide 7: Revenue
REVENUE Resilient revenue despite impact of post-pandemic normalisation trends Revenue change1: (1.9)% Revenue change Revenue1 (£m) vs 2022 13,000 Revenue change excluding disposal1,2: (0.4)% (0.4)% 1,2 Growth: 29% 12,022 12,000 2.5% (1.5)% (1.5)% Impacted by volume loss in our (1.4)% North America
Slide 8: Income Statement
INCOME STATEMENT Strong adjusted operating profit growth and operating margin CONSTANT Operating margin1 EXCHANGE1 8.0% £m 2023 2022 REPORTED GROWTH CONSTANT EXCHANGE1 EXCLUDING DISPOSAL2 Supported by good margin Revenue 11,797.1 12,039.5 (2.0)% (1.9)% (0.4)% management initiatives, higher Adjusted
Slide 9: Cash Flow
CASH FLOW Strong cash generation and cash conversion Cash conversion over the last 10 years Cash conversion1 £m 2023 2022 96% Operating cash flow1,2 885.3 925.0 107% 103% 102% 101% Net interest paid (excluding lease liabilities) (53.2) (45.7) 99% 97% 97% 96% 95% 94% Strong cash conversion Income tax
Slide 10: Balance Sheet
BALANCE SHEET Substantial capacity for acquisitions and other capital allocation options Net debt : EBITDA1,2,3 Net debt : EBITDA1,2,3 £m DECEMBER DECEMBER 2023 2022 1.1x 2.3x Intangible assets 3,242.1 3,093.9 Right-of-use assets 616.3 529.6 LEVERAGE 2.1x Substantial capacity for self-funded TARGET
Slide 11: Business Review
BUSINESS REVIEW Richard Howes, Chief Financial Officer 2023 FULL YEAR RESULTS 11
Slide 12: Sector Performance
SECTOR PERFORMANCE Growth normalising, although well ahead of 2019 Sector commentary 2023 revenue as Underlying revenue1 Underlying revenue1 % of Group total 2023 vs 2019 2023 vs 2022 • Healthcare declined in Rest of the World, driven by normalising Covid-19 Healthcare related sales in Asia Pacific
Slide 13: Inflation Dynamics
INFLATION DYNAMICS Reducing inflation benefit over the year Product cost driven selling price inflation Operating cost inflation • Remained supportive, but with a reducing North America benefit over the year • Moderating operating cost inflation driven by • Inflation in North America fully annualise
Slide 14: Margin Drivers
MARGIN DRIVERS Benefit from margin management, acquisitions, and operational efficiency Operating margin1 progression BUNZL 2023 OPERATING MARGIN DRIVERS: Adjusted operating profit 1 8.0 Good margin Including focus on increasing own brand Growth year-on-year penetration and strong purchasing 7.7 7.3
Slide 15: North America / Continental Europe
NORTH AMERICA / CONTINENTAL EUROPE Strong operating margin performance in North America and Continental Europe North America Continental Europe CONSTANT CONSTANT £m 2023 2022 REPORTED EXCHANGE1 UNDERLYING1 2023 2022 REPORTED EXCHANGE1 UNDERLYING1 Revenue 6,973.5 7,366.0 (5.3)% (5.3)% (5.6)% 2,354.9
Slide 16: UK & Ireland / Rest of the World
UK & IRELAND / REST OF THE WORLD UK&I operating margin growth supported by inflation; high margins in RoW maintained UK & Ireland Rest of the World CONSTANT CONSTANT £m 2023 2022 REPORTED EXCHANGE1 UNDERLYING1 2023 2022 REPORTED EXCHANGE1 UNDERLYING1 Revenue 1,365.5 1,442.5 (5.3)% (5.4)% 6.1% 1,103.
Slide 17: Strategy Update and Outlook
STRATEGY UPDATE AND OUTLOOK Frank van Zanten, Chief Executive Officer 2023 FULL YEAR RESULTS 17
Slide 18: Driving Organic Growth – UK & Ireland Case Study
DRIVING ORGANIC GROWTH – UK & IRELAND CASE STUDY Own brand focus to enhance our customer proposition and drive organic growth Cleanline is Bunzl’s own brand range of highly specialised workplace and industrial cleaning solutions sold throughout the UK & Ireland – Prior to 2019, Cleanline was viewed
Slide 19: Continued Focus on Operational Efficiency
CONTINUED FOCUS ON OPERATIONAL EFFICIENCY Focus on delivery efficiency to reduce costs and carbon footprint Investing in CASE STUDY: Route optimisation software in North America Results achieved since technology to improve implementation – Implemented improved route mapping operational efficiency so
Slide 20: Acquisition Success in 2023
ACQUISITION SUCCESS IN 2023 Record acquisition spend over a consecutive 4-year period of £1.7 billion Acquisitions in 2023 Acquisitions announced in 20231: 2022 revenue Geographies Sectors Rationale 19 acquisitions agreed in 2023 Germany, Brazil, 12 acquisitions Safety, C&H, Enhance sector presence,
Slide 21: Maintaining Acquisition Momentum into 2024
MAINTAINING ACQUISITION MOMENTUM INTO 2024 Successful start to 2024 with the acquisition of Nisbets Business overview Key strengths of Nisbets Alignment with Bunzl • A leading omnichannel distributor of catering • A high quality business • Operates in one of our core sectors and in equipment and con
Slide 22: Maintaining Acquisition Momentum into 2024
MAINTAINING ACQUISITION MOMENTUM INTO 2024 First acquisition in Finland A leading distributor of cleaning & hygiene, healthcare, foodservice and safety products to a broad range of customers in Finland • Anchor acquisition into Finland, offering attractive opportunity to expand in multiple end marke
Slide 23: M&A Opportunity
M&A OPPORTUNITY 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 ● ● ● ● ● Czech Republic ● ● Canada ● ● ● ● ● Hungary ● ● ● ● Mexico ● ● ●
Slide 24: Sustainability Remains a Key Competitive Advantage
SUSTAINABILITY REMAINS A KEY COMPETITIVE ADVANTAGE How we are helping our customers achieve their sustainability targets CASE STUDY: Reducing carbon footprint for Aramark in Spain – Partnered with Aramark in Spain to reduce their delivery Taking action on climate change carbon footprint 18% 141,320
Slide 25: 2024 Outlook
2024 OUTLOOK Maintaining our profit guidance from pre-close statement ‒ We are maintaining our 2024 profit guidance published in our pre-close statement1 ‒ Following a slower than expected start to the year in North America, we now expect to deliver slight revenue growth in 2024, at constant exchang
Slide 26: Disciplined Approach to Capital Allocation
DISCIPLINED APPROACH TO CAPITAL ALLOCATION Highly cash generative model continues to drive stakeholder value Progressive dividend Capital allocation – Acquisition pipeline remains active, with priorities £2.2bn of dividend payments since 2004 significant opportunities across our markets and sectors
Slide 27: Over Three Decades of Consecutive Dividend Growth
OVER THREE DECADES OF CONSECUTIVE DIVIDEND GROWTH Strong dividend growth; further dividend cover normalisation post-pandemic 8.9% 68.3 year-on-year dividend growth Dividend per share CAGR 9.6% 31 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
Slide 28: Bunzl's Model Drives Both Growth and Resilience
BUNZL’S MODEL DRIVES BOTH GROWTH AND RESILIENCE Achieving growth through periods of disruption highlights resilience CONSISTENT COMPOUNDING GROWTH MODEL ADJUSTED OPERATING PROFIT2,3 (£m) Organic Growth – Driven by activity in our markets c.1/3 Resilience proven during historic challenges of revenue
Slide 29: Q&A
Q&A Proven Revenue (£bn) Adjusted operating profit1 (£m) 944 compounding 11.8 growth strategy CAGR c.9-10% 2.4 169 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Adjusted EPS1 (p) Dividend per Share (p) 68.3 191.1 31.7 13.3 04
Slide 30: Appendices
Appendices 2021 FULL 2023 FULL YEAR YEAR RESULTS RESULTS 30
Slide 31: 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 32: Statutory P&L
APPENDIX 2 Statutory P&L £m 2023 2022 Revenue 11,797.1 12,039.5 Adjusted operating profit1 944.2 885.9 Operating margin1 8.0% 7.4% Adjusting items (155.1) (184.3) Operating profit 789.1 701.6 Net finance expense (90.5) (67.9) Disposal of business - 0.9 Profit before income tax 698.6 634.6 Reported t
Slide 33: Acquisitions Announced in 2023
APPENDIX 3.1 Acquisitions announced in 2023 • Capital Paper acquired in January 2023 • Arbeitsschutz-Express acquired in April 2023 • Dimasa acquired in April 2023 • Distributor of foodservice packaging and consumables, • Online distributor of workwear and personal protective • Distributor of cleani
Slide 34: Acquisitions Announced in 2023
APPENDIX 3.2 Acquisitions announced in 2023 • EcoTools.nl acquired in July 2023 • Groveko acquired in August 2023 • PackPro acquired in August 2023 • High growth Netherlands based, specialist online • Distributor of traditional cleaning & hygiene products in • Distributor of packaging solutions to a
Slide 35: Acquisitions Announced in 2023
APPENDIX 3.3 Acquisitions announced in 20231 • Safety First acquired in November 2023 • Melbourne Cleaning Supplies acquired in November • Grupo Lanlimp acquired in November 2023 2023 • A market leading distributor of cleaning & hygiene • One of the largest distributors of PPE in Poland to a range o
Slide 36: Acquisition Growth
APPENDIX 4 Acquisition growth 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 231 Number of 7 7 9 8 7 2 9 10 13 11 17 22 14 15 6 3 9 14 12 19 acquisitions Committed acquisition 302 129 162 197 123 6 126 185 277 295 211 327 184 616 183 124 445 508 322 468 spend (£m) Annualised acquisition 43
Slide 37: Revenue by Customer Market in 2023
APPENDIX 5 Revenue by customer market in 2023 Safety Foodservice Personal protection and safety equipment, including 16% 29% Non-food consumables, including food packaging, gloves, boots, hard hats, ear and eye protection and disposable tableware, guest amenities, catering other workwear, as well as
Slide 38: Packaging Categorisations
APPENDIX 6 Packaging categorisations Packaging1 categories Description 1. Consumable products Plastic products most commonly being addressed by facing regulation legislation in our markets 2. Consumable products likely to Plastic products that have measures in place (driven by legislation or volunta
Slide 39: Progress Against Our Sustainability Commitments
APPENDIX 7 Progress against our sustainability commitments Better packaging solutions Responsible supply chain Investing in our people Focus on Climate Change We are committed to supporting our Our supply chain in Asia2 is covered by direct We are focused on engagement and diverse Our consolidation
Slide 40: Taking Action on Climate Change: Net Zero Transition Plan
APPENDIX 8 Taking action on climate change: publishing our net zero transition plan Our climate change commitments: 2030 Scope 1 and 2: 50% more efficient by 18% 141,320 30% 13.8 9.7 Engaged with 750 suppliers in 2023, 20301, equivalent to a 27.5% absolute 115,382 Reduction Improvement reduction acc
Slide 41: 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 year ended 31 December 2023. For the purposes of this disclaimer, “Presentation” shall mean this document, the oral presentation of the s