Interactive Investor

ii view: blue-chip distributor Bunzl back in favour

An unrivalled business with an enviable dividend growth track record. We assess prospects.

29th August 2023 11:38

by Keith Bowman from interactive investor

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First-half results to 30 June

  • Currency adjusted revenue up 0.6% to £5.9 billion
  • Adjusted operating profit up 6.5% to £438 million
  • Adjusted pre-tax profit up 4% to £395.6 million
  • Interim dividend up 5.2% to 18.2p per share
  • Net debt excluding lease liabilities down 12% from late December to £1.02 billion

Chief executive Frank van Zanten said:

"The Group's performance continues to be supported by the strength of our customer focused value proposition, including our sustainability expertise and range of innovative products and solutions, and the continued success of our acquisition strategy.”

ii round-up:

Distribution company Bunzl (LSE:BNZL) today upped its full-year profit forecast and announced two new business acquisitions including its first move into Poland.

A 6.5% gain in first-half adjusted operating profit to £438 million marginally beat City forecasts, helped by management initiatives including a push towards selling its own higher profit margin branded goods. The agreement in July to purchase Poland's Safety First, a personal protective equipment supplier, now takes its countries of operation to 32. 

Shares in the FTSE 100 company rose by more than 3% in UK trading, with management now expecting annual adjusted operating profit to be moderately higher than in 2022. Shares came into this latest news down around 1% year-to-date, much the same as the 100 index itself during 2023, although down 15% since the April peak.  

Bunzl sells and distributes a wide range of products which other companies need to run their businesses. Customers include Walmart (NYSE:WMT), the National Health Service and Domino's Pizza (LSE:DOM)

Bunzl has announced 12 acquisitions year-to-date including the purchase of in the Netherlands, a specialist online distributor of tool accessories and industrial consumables, announced today alongside Safety First. Its year-to-date committed spend on acquisitions comes to more than £350 million. 

The interim dividend climbs 5.2% year-over-year to 18.2p per share. A third-quarter trading update is scheduled for 24 October. 

ii view:

Tracing its roots back to 1854, Bunzl today employs more than 20,000 people. Products it sells and distributes include food packaging, catering equipment, and cleaning and hygiene materials such as chemicals and hygiene tissue paper. North America accounts for its biggest slug of sales at around three-fifths, followed by Europe at a fifth, the UK and Ireland at just over a tenth and the rest of the world the balance.  

For investors, underlying revenues, which strip out acquisitions, declined 0.4% during the half-year given a 2% fall in pandemic related products such as masks year-over-year. Net financing costs rose £13.7 million to £42.7 million given higher interest rates in relation to group debt, while exposure to currency movements is worth remembering given that most of its sales are generated overseas.  

On the upside, Bunzl's geographic footprint has expanded following its move into Poland. The company also remains a global leader in its market with no competitors of a similar size, while this latest interim dividend increase follows 30 consecutive years of dividend rises, putting the shares on a modest forecast dividend yield of around 2.5%.  

In all, this highly diversified and unrivalled distributor looks to remain deserving of its place in diversified investor portfolios.    


  • Diversified customer type and geographical location
  • Continues to seek growth enhancing acquisitions


  • Uncertain economic outlook
  • Subject to currency volatility

The average rating of stock market analysts:


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