BUNZL PLC/media/Files/B/Bunzl-PLC/reports-and... · Brian May - Finance Director [email protected]...
Transcript of BUNZL PLC/media/Files/B/Bunzl-PLC/reports-and... · Brian May - Finance Director [email protected]...
Bunzl Business Case March 2013
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Bunzl is a growing and successful Group providing
outsourcing solutions and value added distribution
across the Americas, Europe and Australasia
About Us
Bunzl Business Case March 2013
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Sales channel
Business Overview
Business to business distribution
£5.4bn revenue in 2012
Revenue growth (CAGR 04-12): 11%
Operating profit growth* (CAGR 04-12): 9%
Average annual cash conversion† (04-12) of 97%
Products Wide range of non-food consumable products
Sourcing From leading brand manufacturers
Own brands and unbranded products
Sourcing centre in Shanghai – no own manufacturing
Footprint More than 12,800 employees
International diversification: 27 countries, 4 continents
Key Facts UK plc headquartered in London
Listed on LSE; FTSE 100; Support Services sector
Financials
*Before intangible amortisation and acquisition related and corporate costs †Operating cash flow before acquisition related costs to operating profit before intangible amortisation and acquisition related costs
04-05 continuing operations only
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Supported by an integrated I.T. platform
Global sourcing
& procurement
International
warehousing
& distribution
infrastructure
Consolidation
of consumables
Customer Range of
delivery options
Benefits to Customers: Supply Chain
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Outsourcing adds value to the customer
Value Proposition
INVENTORY INVESTMENT PRODUCT COST
COST
TO
ACQUIRE
COST
TO
PROCESS
INVENTORY INVESTMENT
CASH FLOW
DIRECT LABOUR & OVERTIME
INVENTORY FINANCE COST
EXPEDITED ORDERS
INBOUND FREIGHT
PURCHASE ORDER ADMINISTRATION
INVENTORY DAMAGE & SHRINKAGE
ACCOUNTS PAYABLE ADMIN
STORAGE SPACE
CAPITAL EMPLOYED
• In-house procurement and
self distribution is costly
• Bunzl applies its resources
and expertise to reduce or
eliminate many of the
“hidden” costs of in-house
procurement and self
distribution
• The benefits to customers are
a lower cost of doing business
and reduced working capital
Bunzl Business Case March 2013
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Market Environment
Multiple growth drivers
Customer base
Fragmented competitors
• Exposed to growing sectors including
• Foodservice – away from home
• Cleaning & Hygiene – away from home
• Healthcare – demographics
• Safety – increased legislation
Growing market sectors
Outsourcing trend
• Customers and manufacturers
focusing on their core business
• None do what we do, on our scale
and across our markets
• Bunzl’s national footprint provides
competitive advantage
• Strong customer base
• Working with national and
international leaders
• Aligned with customer growth
Bunzl Business Case March 2013
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Strategy
Consistent and proven strategy
ROIC
17.9%
GDP+ Organic Growth
Operating Model
Efficiencies
Acquisition Growth
Bunzl Business Case March 2013
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Strategy Building Blocks
Unique
business
model
Balanced
business
portfolio
Operational
focus
Attractive
markets
portfolio
Acquisition
strategy &
track record
Global
procurement
Strong financial
discipline &
track record
Experienced
management
A platform for growth
Bunzl Business Case March 2013
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Business Model
TO TO
• Global suppliers
• Low cost sources
• Commodities
• Own brands
• International warehousing
& distribution infrastructure
• Consolidation
• Supply chain management
• Range of delivery options
Consolidated
offer
Individual
ranges
Suppliers Bunzl Customers
One stop shop for non-food consumables
Safety
Foodservice
Cleaning & Hygiene
Healthcare
Non-food Retail
Grocery
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Attractive Customer Markets Portfolio
c.80% resilient – Grocery, Foodservice, C&H, Healthcare
Non-Food Retail 8%
Goods not for resale, including packaging
and full range of cleaning and hygiene
products, to department stores, boutiques,
office supply companies, retail chains
and home improvement chains
Safety 9%
A complete range of personal protection
equipment, including hard hats, gloves,
boots and workwear, to industrial and
construction markets.
Cleaning & Hygiene 14%
Cleaning and hygiene materials, including
chemicals and hygiene paper, to cleaning and
facilities management companies, and industrial
and healthcare customers.
Foodservice 29%
Non-food consumables, including food
packaging, disposable tableware, guest
amenities, catering equipment,
cleaning products and safety items, to
hotels, restaurants, contract caterers,
leisure sectors and food processors
Grocery 29%
Goods not for resale (items grocers
use but do not actually sell), including
food packaging, films, labels and cleaning
and hygiene supplies, to
grocery stores, supermarkets
and retail chains
Healthcare 7%
Disposable healthcare consumables
range, including gloves, swabs, gowns
and bandages, to the healthcare sector
Other 4%
A variety of product ranges supplied
to other markets such as government
and education establishments
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Typical Products
Foodservice
Non-food Retail Healthcare
Cleaning & Hygiene Safety
Grocery
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Regional diversification
Geographic balance
Balanced Business Portfolio
• 6 market sectors with numerous sub-sectors
• Products and markets - specialist distributors
• Direct to customer or through a sub-distributor
Diversified by geography and sector
54%
20%
19%
7% North America
Continental Europe
Rest of the World
UK & Ireland
• Our markets are at different stages of maturity
• National footprints
• International brands and local products
Customer markets balance
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Investing
Decentralised operational structure
Sharing best practice
Operational Focus
• Hands on management with clear customer focus
• Full P&L and working capital responsibility
• Aligned incentive measurement with profit and ROCE
• Majority of capex spend on IT systems and warehouse facilities
• Robust IT and systems strategy e.g. Warehouse management,
order systems and vehicle routing
• Continually evaluating and upgrading our warehousing facilities
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+
Global Procurement
Preferred suppliers Sourcing
Own brands
Commodities
Low cost sources
Eco-friendly products
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Acquisition Strategy
Acquired businesses continue to feel ‘local’
• Purchasing synergies
• Warehouse & distribution
efficiencies
• Back office integration
• Customer overlays
• Product range extensions
• Sharing best practice
• Investment in infrastructure
• Bolt-on – existing geography
and market
• Extending product range
• Consolidating markets
• Anchor – new geography or
market
• Entering new geographies
• Entering new markets
• Financial returns
• In resilient and growth markets
• Business to business
• Consolidated “not-for-resale”
product offering
• Similar model – no manufacturing
• Fragmented customer base
• Strong local management
• Scope for further consolidation
Key attributes Acquisition types Extracting value
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Acquisition Track Record
2004-2005 continuing operations only
Average acquisition spend £167m p.a.
2004 2005 2006 2007 2008 2009 2010 2011 2012
Number of acquisitions 7 7 9 8 7 2 9 10 13
Committed acquisition
spend (£m) 302 129 162 197 123 6 126 185 272
Annualised acquisition
revenue (£m) 430 270 386 225 151 27 154 204 518
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Geographic expansion
* Continuing operations
Continuing geographic expansion
1997* 2003* 2005* 2008 2012
7 countries
23 countries
18 countries
12 countries
27 countries
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Brian May
Finance Director
Michael Roney
Chief Executive
Patrick Larmon
Executive Director
Experienced executive directors and management team
Experienced Management
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Strong Financial Discipline
Return on operating capital 56.4%
Return on invested capital (pre-tax) 17.9%
Strong financial model
High return on capital
†Before acquisition related costs
*Before intangible amortisation and acquisition related costs
Strong balance sheet Net debt/EBITDA 1.8x year end 2012
Average working capital to sales at 9.6% in 2012 Low working capital requirements
Low capex Average of £23m p.a. over past 3 years
High free cash flow yield Operating cash flow† to operating profit* average
of 97% over past 9 years
Uniform financial reporting system Across all geographies
Growing dividend stream Dividend per share CAGR of 10% over past 8 years
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*Operating cash flow before acquisition related costs to operating profit before intangible amortisation and acquisition related costs
**04-05 continuing operations only
Average Cash Conversion* 97%
Strong Financial Discipline
Consistently strong cash conversion
93% 95%
92%
103%
92%
102%
93%
110%
93%
2004** 2005** 2006 2007 2008 2009 2010 2011 2012
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Revenue (£bn)
2.4
2.9
3.3 3.6
4.2
4.6 4.8
5.1 5.4
2004 2005 2006 2007 2008 2009 2010 2011 2012
Operating profit (£m)
183
218
241 259
297 312
323
353 371
2004 2005 2006 2007 2008 2009 2010 2011 2012
32.1
38.7 41.7
45.1
52.7 55.9
60.6
68.5 71.8
2004 2005 2006 2007 2008 2009 2010 2011 2012
04-05 continuing operations only Before amortisation and acquisition
related and corporate costs
04-05 continuing operations only
As reported
Adjusted eps (p)
Financial Track Record
13.3
15.7 17.0
18.7
20.6 21.6
23.4
26.4 28.2
2004 2005 2006 2007 2008 2009 2010 2011 2012
As reported
Dividend per share (p)
CAGRs 9% to 11%
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• Clear value added for customers and suppliers
• Recurring revenues
• “Big in the middle”
Clear strategy for growth
Strong business model
Attractive markets
Balanced portfolio
Robust financial performance
Business Case Summary
• Entering new markets/product groups
• Expansion/penetration of established markets
• Strong operational focus
Attractive business model
• Product diversification
• Geographical presence
• Independence from customers and suppliers
• Resilient and growing markets
• Multiple growth drivers
• Fragmented with opportunity to consolidate
• Consistent revenue and earnings growth
• High cash generation
• Cash reinvested at high return on capital
• Strong and growing dividend stream
Bunzl Business Case March 2013
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Bunzl plc +44 20 7725 5000
Michael Roney - Chief Executive
Brian May - Finance Director
www.bunzl.com
Contacts
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liability of any kind accepted, by Bunzl plc with respect to the completeness or accuracy of the content of
or omissions from this presentation.
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might cause actual results and outcomes to differ materially from the expectations expressed in them.
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of the date hereof. Bunzl undertakes no obligation to revise or update any such forward-looking
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