Bunzl – Price Hikes Keep Inflation At Bay, 30 Years Of Dividend Growth

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Bunzl plc (LON:BNZL) reported revenue growth, ignoring the effect of exchange rates, of 9.8% to £12.0bn. That was driven by higher prices, volume recovery in the first half and a 3.1% contribution from acquisitions. In 2022, there were 12 acquisitions with total committed spend of £322 million.

Underlying operating profit rose 11.1% to £885.9m, outpacing revenue growth as margins rose from 7.3% to 7.4%. Over the year, price increases more than offset cost inflation.

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Free cash flow of £705.7m was £180.3m higher than the prior year. Net debt, including lease liabilities, was £1.7bn, down from £1.8bn.

The 2023 outlook remains unchanged, with the group expecting to slightly higher revenue than 2022 and robust margins.

The board has recommended a final dividend of 45.4p, up 11.3%.

Bunzl's Dividend Growth

Matt Britzman, equity analyst at Hargreaves Lansdown

“Bunzl marks its 30th consecutive year of dividend growth, an impressive feat by anybody’s standards, underpinned by a well-oiled, cash generative machine. 2022 was another strong year for growth on both the top and bottom-line, price hikes and acquisitions did their jobs to keep inflation at bay and margins were even able to creep up.

At a reported level, exchange rates helped the cause too – contributing 6-7% to profit growth as around 90% of earnings come from outside the UK.

Looking at demand, Covid related orders continue to trend back to more normal levels following the peak seen over the pandemic which has been a drag on revenue growth. Nevertheless, that’s being more than offset by growth in the core business - the essential nature of Bunzl’s portfolio should hold it in good stead through a variety of economic conditions.”