BUNZL PLC BUSINESS CASE

Transcription

1 BUNZL PLC BUSINESS CASE March

2 About Us Bunzl is a growing and successful Group providing outsourcing solutions and value added distribution across the Americas, Europe and Australasia -1-

3 Business Overview Sales channel Products Sourcing Footprint Key Facts Business to business distribution 5.4bn revenue in 2012 Wide range of non-food consumable products From leading brand manufacturers Own brands and unbranded products Sourcing centre in Shanghai no own manufacturing More than 12,800 employees International diversification: 27 countries, 4 continents UK plc headquartered in London Listed on LSE; FTSE 100; Support Services sector Financials Revenue growth (CAGR 04-12): 11% Operating profit growth* (CAGR 04-12): 9% Average annual cash conversion (04-12) of 97% *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 continuing operations only -2-

4 Benefits to Customers: Supply Chain Global sourcing & procurement International warehousing & distribution infrastructure Consolidation of consumables Range of delivery options Customer Supported by an integrated I.T. platform -3-

5 Value Proposition 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 PRODUCT COST INVENTORY INVESTMENT 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 COST TO ACQUIRE COST TO PROCESS Outsourcing adds value to the customer -4-

6 Market Environment Growing market sectors Exposed to growing sectors including Foodservice away from home Cleaning & Hygiene away from home Healthcare demographics Safety increased legislation Outsourcing trend Customers and manufacturers focusing on their core business Fragmented competitors None do what we do, on our scale and across our markets Bunzl s national footprint provides competitive advantage Customer base Strong customer base Working with national and international leaders Aligned with customer growth Multiple growth drivers -5-

7 Strategy Operating Model Efficiencies GDP+ Organic Growth Acquisition Growth ROIC 17.9% Consistent and proven strategy -6-

8 Strategy Building Blocks Unique business model Attractive markets portfolio Balanced business portfolio Operational focus Global procurement Acquisition strategy & track record Experienced management Strong financial discipline & track record A platform for growth -7-

9 Business Model Suppliers Bunzl Customers Grocery Individual ranges TO Consolidated offer TO Foodservice Cleaning & Hygiene Safety Global suppliers Low cost sources Commodities Own brands International warehousing & distribution infrastructure Consolidation Supply chain management Range of delivery options Non-food Retail Healthcare One stop shop for non-food consumables -8-

10 Attractive Customer Markets Portfolio 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. 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 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 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 c.80% resilient Grocery, Foodservice, C&H, Healthcare -9-

11 Typical Products Grocery Foodservice Cleaning & Hygiene Safety Non-food Retail Healthcare -10-

12 Balanced Business Portfolio Geographic balance 19% 20% 7% 54% North America Continental Europe UK & Ireland Rest of the World Regional diversification Our markets are at different stages of maturity National footprints International brands and local products Customer markets balance 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 -11-

13 Operational Focus Decentralised operational structure Hands on management with clear customer focus Full P&L and working capital responsibility Aligned incentive measurement with profit and ROCE Investing 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 Sharing best practice -12-

14 Global Procurement Preferred suppliers Sourcing + Own brands Commodities Low cost sources Eco-friendly products -13-

15 Acquisition Strategy Key attributes Acquisition types Extracting value 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 Bolt-on existing geography and market Extending product range Consolidating markets Anchor new geography or market Entering new geographies Entering new markets Purchasing synergies Warehouse & distribution efficiencies Back office integration Customer overlays Product range extensions Sharing best practice Investment in infrastructure Acquired businesses continue to feel local -14-

16 Acquisition Track Record Number of acquisitions Committed acquisition spend ( m) Annualised acquisition revenue ( m) continuing operations only Average acquisition spend 167m p.a. -15-

17 Geographic expansion 27 countries 23 countries 18 countries 12 countries 7 countries 1997* 2003* 2005* Continuing geographic expansion * Continuing operations -16-

18 Experienced Management Michael Roney Chief Executive Brian May Finance Director Patrick Larmon Executive Director Experienced executive directors and management team -17-

19 Strong Financial Discipline High return on capital Return on operating capital 56.4% Return on invested capital (pre-tax) 17.9% Strong balance sheet Net debt/ebitda 1.8x year end 2012 Low working capital requirements Low capex High free cash flow yield Uniform financial reporting system Growing dividend stream Average working capital to sales at 9.6% in 2012 Average of 23m p.a. over past 3 years Operating cash flow to operating profit* average of 97% over past 9 years Across all geographies Dividend per share CAGR of 10% over past 8 years Strong financial model Before acquisition related costs *Before intangible amortisation and acquisition related costs -18-

20 Strong Financial Discipline Average Cash Conversion* 97% 110% 103% 102% 93% 95% 92% 92% 93% 93% 2004** 2005** Consistently strong cash conversion *Operating cash flow before acquisition related costs to operating profit before intangible amortisation and acquisition related costs **04-05 continuing operations only -19-

21 Financial Track Record Revenue ( bn) Operating profit ( m) continuing operations only 5.4 Before amortisation and acquisition related and corporate costs continuing operations only Adjusted eps (p) Dividend per share (p) As reported As reported CAGRs 9% to 11% -20-

22 Business Case Summary Clear strategy for growth Strong business model Attractive markets Balanced portfolio Robust financial performance Entering new markets/product groups Expansion/penetration of established markets Strong operational focus Clear value added for customers and suppliers Recurring revenues Big in the middle Resilient and growing markets Multiple growth drivers Fragmented with opportunity to consolidate Product diversification Geographical presence Independence from customers and suppliers Consistent revenue and earnings growth High cash generation Cash reinvested at high return on capital Strong and growing dividend stream Attractive business model -21-

23 Contacts Bunzl plc Michael Roney - Chief Executive Brian May - Finance Director investor@bunzl.com

24 Disclaimer No representation or warranty (express or implied) of any nature can be given, nor is any responsibility or liability of any kind accepted, by Bunzl plc with respect to the completeness or accuracy of the content of or omissions from this presentation. This presentation is for information purposes only and does not constitute and shall not be deemed to constitute an offer document or an offer in respect of securities or an invitation to purchase or subscribe for any securities in any jurisdiction. Persons in a jurisdiction other than the United Kingdom should ensure that they inform themselves about and observe any relevant securities laws in that jurisdiction in respect of this presentation. The presentation does not constitute an offer of securities for sale in the United States. None of the securities described in the presentation have been registered under the U.S. Securities Act of Such securities may not be offered or sold in the United States except pursuant to an exemption from such registration. This presentation contains forward-looking statements. They are subject to risks and uncertainties that might cause actual results and outcomes to differ materially from the expectations expressed in them. You are cautioned not to place undue reliance on such forward-looking statements which speak only as of the date hereof. Bunzl undertakes no obligation to revise or update any such forward-looking statements. Where this presentation is being communicated as a financial promotion it will only be made to and directed at: (i) those persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order ); (ii) those persons falling within Article 49 of the Order; or (iii) to persons outside of the United Kingdom only where permitted by applicable law (all such persons together being referred to as relevant persons ) and must not be acted on or relied on by persons who are not relevant persons. -23-