BUSINESS CASE - Bunzl/media/Files/B/Bunzl-PLC/... · This presentation is for information purposes...
Transcript of BUSINESS CASE - Bunzl/media/Files/B/Bunzl-PLC/... · This presentation is for information purposes...
APRIL 2019
BUSINESS CASE
Consistent and proven compounding strategy
OPERATIONAL FOCUS GLOBAL SOURCING ORGANIC GROWTH
STRONG FINANCIAL DISCIPLINE
ACQUISITION STRATEGY & TRACK RECORD
OUR PEOPLE
ATTRACTIVE CUSTOMER MARKETS
UNIQUE, CUSTOMER FOCUSED BUSINESS MODEL
BALANCED BUSINESS PORTFOLIO
BUNZL OVERVIEW
Bunzl plc is a focused and successful specialist international distribution and services group providing customised solutions to B2B customers in 31 countries and six market sectors
Headquartered in London and listed on the London Stock Exchange - FTSE100 ; Support Services sector
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a
One-stop-shop for essential everyday items supported by:
3,000 sales specialists and
2,600 locally based customer service specialists
SOU
RCE
CON
SOLD
ATE
DELI
VER
• Global suppliers • Low cost sources • Commodities • Own brands
INDIVIDUAL RANGES
CONSOLIDATED OFFER
Foodservice Grocery Cleaning & hygiene Safety Retail Healthcare
• Direct to site • Cross dock • Warehouse
replenishment
BUSINESS MODEL
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VALUE PROPOSITION
Outsourcing to Bunzl adds value for our customers
• 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 and
carbon emissions
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
PRODUCT COST
COST TO PROCESS
COST TO ACQUIRE
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BUNZL UNIQUE SERVICE OFFERING
APRIL 2019 BUSINESS CASE
OWN BRAND
CUSTOMISED SOLUTIONS
EXPERT KNOWLEDGE AND ADVICE
“QUASI MANUFACTURER”
OWN BRAND
EDI
PRODUCTS STOCKED IN
BUNZL WAREHOUSE
DELIVERY OPTIONS
OWN FLEET
INDIVIDUAL PRODUCT
KNOWLEDGE
CUSTOMISED MANAGEMENT INFORMATION
VALUE ALTERNATIVE OWN BRAND
APP
DEDICATED CALL CENTRES
MANUFACTURER BRANDED
LOCAL AND NATIONAL
DISTRIBUTION NETWORK
ONE ORDER ONE DELIVERY ONE INVOICE
ONE-STOP-SHOP ON-TIME IN-FULL
DELIVERY
DIRECT TO SITE
WAREHOUSE REPLENISHMENT
X DOCK
PRODUCT AVAILABILITY
DELIVERY BEYOND BACK
DOOR
FULL RANGE STOCKED
CUSTOMISED DELIVERY SLOTS
HEALTH AND SAFETY
REQUIREMENTS
CONSUMPTION VS CUSTOMER
BUDGET
COMPLIANCE BY UNITS TO HEAD
OFFICE
WEBSHOP
NATIONAL FOOTPRINT
MULTIPLE DELIVERY
LOCATIONS
SUSTAINABLE PRODUCT
SOLUTIONS
CONTRACT MOBILISATIONS
ASIA SOURCING CENTRE - QC/QA
DESIGN / INSTALLATION
SERVICES
RANGE RATIONALISATION
DIRECT DEALS WITH MANUFACTURERS
DELIVERED BY BUNZL
BULKY LOW VALUE
PRODUCTS
PRODUCT TRAINING
USAGE
EXCEED BUDGET ALERTS
CUSTOMISED DIGITAL
SOLUTIONS
BENEFIT OF BUNZL SCALE EXCLUSIVE
DISTRIBUTION
INDUSTRY LEADING
SPECIALISED SALES FORCE
MATERIAL CONSOLIDATION
VALUE ADDED SERVICES
ESSENTIAL ITEMS
COMPETITIVELY PRICED
PRODUCTS
MARKET INTELLIGENCE
MINIMISE CUSTOMERS’
WORKING CAPITAL
BESPOKE / PRINTED PRODUCT
MANAGEMENT
INNOVATION CENTRES
RIGHT PRODUCT RIGHT PRICE
SUPPLY CHAIN STUDIES
ECONOMIC DENSITY
ANALYSIS
LOCAL CUSTOMER
SERVICE SPECIALISTS
5
BUSINESS AREA ANALYSIS
Well diversified across:
31 Countries
6 Sectors
>85% of revenue generated outside the UK * Adjusted operating profit (alternative performance measure – see 2018 Annual Report) before corporate costs
REST OF WORLD 8% Revenue 9% Operating profit*
UK & IRELAND 14% Revenue 13% Operating profit*
CONTINENTAL EUROPE 20% Revenue 28% Operating profit*
NORTH AMERICA 58% Revenue 50% Operating profit*
BUSINESS CASE APRIL 2019 6
3%
29%
26% 12%
12%
11%
7%
Foodservice Non-food consumables, including food packaging, disposable tableware, guest amenities, catering equipment, cleaning products and safety items, to hotels, restaurants, contract caterers, food processors and the leisure sector
CUSTOMER MARKETS
resilient Foodservice Grocery Cleaning & hygiene Healthcare
74%
Cleaning & hygiene Cleaning and hygiene materials, including chemicals and hygiene paper, to cleaning and facilities management companies and industrial and public sector customers
Grocery Goods not for resale (items which are used but not actually sold), including food packaging, films, labels and cleaning and hygiene supplies, to grocery stores and supermarkets
Retail Goods not for resale, including packaging and other store supplies and a full range of cleaning and hygiene products, to retail chains, boutiques, office supply companies, department stores, home improvement chains and related e-commerce sales channels
Other A variety pf product ranges to other end user markets
Safety A complete range of personal protection equipment, including gloves, boots, hard hats, ear and eye protection and other workwear, to industrial and construction markets
Healthcare Healthcare consumables, including gloves, swabs, gowns, bandages and other healthcare related equipment and cleaning and hygiene products to hospitals, care homes and other facilities serving the healthcare sector
Based on 2018 FY Revenue APRIL 2019 BUSINESS CASE 7
TYPICAL PRODUCTS
6%†
A broad range of essential every day items
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GLOBAL SOURCING
Partner with leading manufacturers Sourcing via our own Asia sourcing and QA/QC centre
GLOBAL BRANDED SUPPLIERS IMPORTED AND OWN BRANDS
Own brands Commodities
Low cost sources Sustainable products
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SUSTAINABLE PRODUCT SOLUTIONS
Proactively working with customers, suppliers and other stakeholders to promote and support a sustainable approach to single use plastics
BUSINESS CASE APRIL 2019
Reusable cups made from coffee husks
Food containers made from polylactic acid (PLA), a
compostable and renewable plastic
Cups made from recycled PET
Compostable coffee cups
Paper based food packaging
1
2
3
4 5
• Essential food and beverage packaging for practical, safe and hygienic transit
• Actively promoting sustainable alternatives
• Unique position at the centre of the supply chain
• As a distributor (not a manufacturer) agile in adapting product offering
• Working with customers, suppliers and other stakeholders
• Opportunity for growth
SINGLE USE PLASTICS
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CONSISTENT AND PROVEN COMPOUNDING STRATEGY
High ROIC despite significant acquisition spend
PROFITABLE ORGANIC GROWTH
Use competitive
advantage to grow market
share in a profitable way
OPERATING MODEL IMPROVEMENTS
Daily focus on making
our business more efficient
ACQUISITION GROWTH
Use strong balance sheet and excellent
cash flow to consolidate
our markets further
ROIC 15.0%
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12
ORGANIC GROWTH
Organic growth typically real GDP +
SELL MORE TO EXISTING CUSTOMERS
EXPAND PRODUCT RANGE
WIN NEW CUSTOMERS
MARKET LEADING CUSTOMERS
GROWING SECTORS
TREND TO OUTSOURCING
INFLATION / DEFLATION
MARKET DYNAMICS
OWN BRAND / IMPORTS
MANUFACTURER BRANDS
GEOGRAPHIES AND SECTORS
VOLUME
MIX
PRICE
FX IMPACT
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• Consolidation of warehouse footprint
• Continually evaluate and upgrade facilities including environmental initiatives
OPERATING MODEL IMPROVEMENTS
Small improvements every day everywhere lead to significant progress over time
WAREHOUSING
• Warehouse management systems
• Vehicle routing and safety systems
• CRM systems
ERP IMPLEMENTATIONS
• Investment in e-commerce capabilities
• Focus on digital marketing
• Opportunity for efficiency gains
DIGITAL CAPABILITIES
• Make use of collective resources, experience and expertise
• Global collaboration
SHARING BEST PRACTICE
• Substantial purchasing synergies with suppliers
• Benefit from Bunzl Asia sourcing centre based in Shanghai (sourcing, QA and QC)
GLOBAL PURCHASING
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ACQUISITION GROWTH
157*
acquisitions 2004 - 2018
£3.3bn total committed spend
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Number of acquisitions 7 7 9 8 7 2 9 10 13 11 17 22 14 15 6
Committed acquisition spend (£m)
302 129 162 197 123 6 126 185 277 295 211 327 184 616 183
Annualised acquisition revenue (£m)
430 270 386 225 151 27 154 204 518 281 223 324 201 621 148
BUSINESS CASE APRIL 2019
* Includes the acquisition of Volk do Brasil committed to in 2018 which completed in January 2019
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• Anchor − New geographies − New sectors
• Bolt-on − Existing geographies or sectors − Extending product range − Consolidating markets
Disciplined approach to acquisitions
FURTHER MARKET CONSOLIDATION AND SYNERGIES
RESILIENT AND GROWING MARKETS
FRAGMENTED CUSTOMER BASE
ATTRACTIVE FINANCIAL RETURNS (ROIC, ROACE)
SMALL % OF TOTAL CUSTOMER SPEND
OPPORTUNITY FOR ‘OWN LABEL’ PRODUCTS
CONSOLIDATED PRODUCT OFFERING (‘ONE- STOP-SHOP’)
B2B GOODS NOT-FOR-RESALE
ACQUISITION PARAMETERS
• Extracting Value − Purchasing synergies − Warehouse & distribution
efficiencies − Back office integration − Product range extension − Sharing best practice − Investment in infrastructure, IT
& e-commerce
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North America Continental Europe UK & Ireland Rest of World
COUNTRIES
COUNTRIES 7 1997*
COUNTRIES 12 2003*
COUNTRIES 18 2005*
COUNTRIES 27 2012
COUNTRIES 31 2018
GEOGRAPHIC EXPANSION
Significant scope for future geographic expansion
Revenue
2004*
2010
2018
* Continuing operations only APRIL 2019 BUSINESS CASE 16
SIGNIFICANT OPPORTUNITIES TO GROW IN EXISTING COUNTRIES
COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE
USA ●
Canada ●
Mexico ● ● ●
UK
Ireland
Germany ● ●
France ● ●
Italy ● ● ● ●
Spain ●
Netherlands
Belgium ●
Denmark ● ●
Norway ● ● ● ● ●
Switzerland
Austria ● ● ● ● ●
Czech Republic ● ● ● ●
COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE
Hungary ● ●
Romania ● ● ●
Slovakia ● ● ● ●
Israel ● ● ● ● ●
Turkey ● ● ● ●
Brazil ● ●
Chile ● ● ● ●
Colombia ● ● ● ● ●
Argentina ● ● ● ● ●
Peru ● ● ● ● ●
Uruguay ● ● ● ● ●
Australia
New Zealand ●
China / Hong Kong ● ● ● ●
Singapore ● ● ● ● ●
● No existing presence
BUSINESS CASE APRIL 2019 17
EXPERIENCED MANAGEMENT
service on average within the management team
>15 yrs
Brian May Finance Director
Frank van Zanten Chief Executive
Jim McCool CEO North America
Diana Breeze Director of Group Human Resources
Paul Hussey General Counsel & Company Secretary
Andrew Tedbury Managing Director
UK & Ireland
Andrew Mooney Director of Corporate
Development
Alberto Grau Managing Director Continental Europe
Jonathan Taylor Managing Director
Latin America
Kim Hetherington Managing Director
Australasia
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• Flat organisational structure
• Clear lines of responsibility
• Excel at customer service
VALUING OUR PEOPLE
Our people are our greatest asset c. 19,000 employees
CLEAR ROLES AND OBJECTIVES
• High retention rate of owners post acquisition
• Business model relies on knowledge and expertise in local markets
• Ensures customer relationships maintained
RETENTION OF FORMER OWNERS
• Sharing of best practice across the Group
• Facilitating collaboration across sectors via formal and informal forums
GLOBAL COLLABORATION
• Make use of collective resources, experience and expertise
• Focus on career development and succession plans
• Management development programmes at various levels across the Group
• Targeted activities to increase the number of women in senior leadership roles
DEVELOPMENT AND TRAINING OPPORTUNITIES
APRIL 2019 BUSINESS CASE 19
STRONG FINANCIAL DISCIPLINE
* Alternative performance measure – see 2018 Annual Report (04-05 continuing operations only) All data FY 2018 unless otherwise stated
6%†
HIGH RETURN ON CAPITAL • RETURN ON AVERAGE OPERATING CAPITAL* : 50.7% • RETURN ON INVESTED CAPITAL (PRE-TAX)* : 15.0%
NET DEBT / EBITDA • TARGET RANGE: 2.0x – 2.5x
LOW WORKING CAPITAL AND CAPEX REQUIREMENTS
• AVERAGE WORKING CAPITAL TO SALES AT 11.8% • AVERAGE CAPEX OF £30M OVER PAST 3 YEARS
HIGH LEVEL OF CASH CONVERSION *
• OPERATING CASH FLOW TO ADJUSTED OPERATING PROFIT* AVERAGE : 97% 2004 -2018
GROWING DIVIDEND • DIVIDEND PER SHARE CAGR > 10% (92-18) • 26 CONSECUTIVE YEARS OF DIVIDEND GROWTH
UNIFORM FINANCIAL REPORTING SYSTEM • ACROSS ALL GEOGRAPHIES
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CASH CONVERSION
Average cash conversion*
97% TARGET 90%
* Alternative performance measure – see 2018 Annual Report
BUSINESS CASE APRIL 2019 21
DIVIDEND PER SHARE (p)
of consecutive dividend increases
26 years
4.0
50.2
CAGR
>10%
BUSINESS CASE APRIL 2019 22
2.4
9.1
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
FINANCIAL TRACK RECORD 2004 - 2018
Proven compounding growth strategy CAGR
* Alternative performance measure – see 2018 Annual Report
REVENUE (£bn) ADJUSTED OPERATING PROFIT* (£m)
ADJUSTED EPS* (p) DIVIDEND PER SHARE (p) 04-12 restated on adoption of IAS 19 (revised 2011)
169
614
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
31.7
129.6
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
13.3
50.2
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
c. 10%
BUSINESS CASE APRIL 2019 23
CONTACTS
Bunzl plc +44 20 7725 5000
Frank van Zanten – Chief Executive Brian May – Finance Director
[email protected] www.bunzl.com
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DISCLAIMER
APRIL 2019 BUSINESS CASE 25