Growth-by-acquisition pays off for Bunzl

The FTSE 100 distribution and outsourcing firm saw revenue grow 5% in both reported and constant currency terms, to £6.49bn, from £6.16bn in 2014. Adjusted operating profit rose by a reported 6% to £455m, adjusted profit before income tax was also up 6% to £411.2m, and adjusted earnings per share rose by 6% as well, to 91p.

Bunzl's board recommended a final dividend of 26.25p, taking the total dividend for the year to 38p - an increase of 7% on 2014.

"I am pleased to report that Bunzl has once again delivered a good set of results with adjusted operating profit and earnings per share up 7% at constant exchange rates as a result of the continued successful implementation of the Group's consistent and proven strategy," said chief executive Michael Roney.

"Following on from a record year for acquisitions in 2015, we have announced further acquisitions today and, with a promising pipeline, we expect to complete additional transactions as the year progresses," he added.

On a statutory basis, Bunzl's operating profit rose 7% to £366.5m, its profit before income tax 8% to £322.7m, and its basic earnings per share 10% to 71p.

Bunzl spent a record £327m on acquisitions during the 12 month period, including the December purchase of Dental Sorria revealed in a separate announcement on Monday, with entry into two new markets - Turkey and Austria.

The group's operating margin of 7.0% was an increase of 10 basis points at constant exchange rates, with operating margins up in its North America, Continental Europe and UK & Ireland regions, but down in Rest of World.

Bunzl's board also reported continued strong cash conversion, with an operating cash flow to operating profit ratio of 97%. Operating cash flow was up 9% to £442.6m.

"We believe that Bunzl's strong competitive position, the impact of the significant acquisition spend in 2015 and the opportunities to consolidate our fragmented markets further will lead to continued growth in 2016," Roney said.

The separate acquisition announcement from Bunzl revealed two completed transactions, the first being the December acquisition of Dental Sorria in Brazil, expanding the group's Brazilian operations into dental supplies. Revenue at Dental Sorria in 2015 was BRL 29.2m (£5.26m).

The second, completed in early February, was the purchase of Earthwise Bag Company, a California-based supplier of reusable bags. Revenue at the operation was $18m (£12.97m).

Bunzl also announced it had agreed to acquire Bursa Pazari İnşaat Sanayi ve Ticaret AS, an Istanbul-based packaging and food service supply firm to wholesalers, retailers and hospitals throughout Turkey. Revenue in 2015 at the company was TRY 131m (£31.8m).

Completion of the purchase was expected to take place by April, subject to the clearance of the Turkish Competition Authority. Bunzl had agreed to acquire 80% of the share capital, with an option to purchase the remaining 20% in the future.

"Dental Sorria has further enhanced our product offering in the healthcare sector in Brazil while Earthwise Bag has broadened our product range and complements our business serving the grocery and retail sectors in the US," said Michael Roney.

"The proposed acquisition of Bursa Pazari is also an important development for Bunzl as it will extend our operations in Turkey, being a market that we entered for the first time in May 2015, into the food service and healthcare sectors. We are pleased to welcome each of the businesses and their employees to the group," he added.