Fundamental Insights About the Bunzl Plc (BNZL)

  • Mar 05, 2019 GMT
  • Team Kalkine
Fundamental Insights About the Bunzl Plc (BNZL)

Bunzl Plc is engaged in the B2B distribution and outsourcing services. It offers non-food consumables items like food packaging, napkins, disposable tableware, food service, heavy catering equipment, cleaning and hygiene products, safety items to the hospitality sector and leisure sector as well. Bunzl Plc got incorporated in 1854 (opened haberdashery business in Bratislava), employed approximately around 18,154 employees. Company headquarter located in London, UK. The company’s business operations spread across 30 countries - US, Europe, Australasia and Asia. Bunzl Plc is listed on the London Stock Exchange and a part of FTSE 100 Index. 

Recent Developments

  • On February 25, 2019, Bunzl notified the security exchange a final dividend of 35.0 pence per share for the year ended 31st December 2018. The ex-dividend date is scheduled to be 23rd May 2019.
  • On February 25, 2019, Bunzl Plc reported its full-year FY18 results for the year ended 31st December 2018, group’s revenue surged by 6% to £9,079.4 million vs £8,580.9 million in FY17.
  • On February 25, 2019, Company acquired a California based Liberty Glove & Safety company, and the transaction was a part of the company's strategy to expand its safety business in the United States.

Group’s Financial Performance – FY18 (year ended on 31st December 2018)

(Source: Company filings, LSE)

Financial Performance – Commentary

  • On a year-on-year basis, Bunzl's top-line grew 6% on account of strong organic growth and benefited from acquisitions in North America.
  • Bunzl Plc reported an adjusted operating profit of £614 million, up by 4% compared to the FY17 adjusted operating profit of £3 million.
  • The consistent business model and strategy of Bunzl Plc, in combination with their ability to reinvest strong cash flows, helped them to register an adjusted earning per share of 129.6 pence for the year ended 31st December 2018, up by 12% from FY17 adjusted EPS at constant currency exchange rates. Reported adjusted EPS growth stood at 9 per cent in FY18.
  • During the FY18 company reported strong cash conversion of 94%.
  • The dividend for FY18 stood at 50.2 pence increased 9.1% on a year-on-year basis.
  • At the financial ratio's standpoint, Bunzl reported an operating margin of 6.8% for FY18, decreased by 10 basis points primarily due to a decline in North America and the UK & Ireland business. For the year ended 31st December 2018, the company reported a 50.7% return on average operating capital and in the same period return on invested capital stood at 15.0%. For FY18, EBITDA margin stood at 7.3%, which was 200 basis points lower than the industry median of 9.3%.
  • In FY18, Group’s 58% of total revenue came from North America, 20% from Continental Europe, 14% from the UK and Ireland and 8% came from the Rest of the World.

Stock Performance

On 4st March 2019, Bunzl shares closed at GBp 2,416, up by 0.92% from its previous day close. The outstanding market capitalisation of the company stood at £8.14 billion and a dividend yield of 2.08 per cent. During the last one-year shares of Bunzl Plc have reached a 52w High of GBp 2,547 and a 52w low of GBp 1,963.50 At the closing, shares were trading 5.14% below its 52w high and 23.05% above its 52w low. One-year price return of the stock stood at 23.90%, and on a year-to-date basis, shares were up by 1.98% respectively. From a trading volume standpoint, 5 days average traded volume was up by 17.87% against the 30 days average traded volume. On the valuation front, the stock was trading at a trailing twelve months PE multiple of 18.5x as compared to the industry median of 18.5x. The company’s stock beta was 0.77, reflecting relatively less volatility as compared to the benchmark index.

Conclusion

The consistent business model and strategy of Bunzl Plc makes it attractive within the non-food consumable industry. At the current market price, the stock is hovering around its 52w high, the market can keep a watch on Bunzl Plc share in near future.

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