23rd Feb 2015 07:25
LONDON (Alliance News) - Bunzl PLC Monday raised its dividend for a 22nd consecutive year after reporting higher 2014 earnings on the back of a further 17 acquisitions, and said it expects further earnings growth in 2015 as it announced two further deals.
The distribution and outsourcing company is highly acquisitive, snapping up small bolt-on acquisitions, particularly overseas in growth markets like the Americas. It said it spent GBP211 million on the 17 acquisitions in 2014, as it also snapped up a Spanish healthcare products company with annual revenue of EUR18 million and a Canadian cleaning and hygiene supplier with annual revenue of CAD12 million.
The acquisitions it made in 2014 helped lift pretax profit to GBP299.8 million, from GBP289.9 million in 2013, as revenue rose to GBP6.16 billion, from GBP6.10 billion. Its closely-watched adjusted pretax profit, which excludes acquisition costs and amortisation, rose to GBP387.8 million, from GBP372.2 million.
Currency movements went against the company. Adjusted pretax profit growth was 4% at actual rates, but would have been up 11% if exchange rates had remained unchanged.
Still, Bunzl raised its total dividend for 2014 to 35.5 pence, from 32.4p, marking a 22-year run of dividend growth.
"We are announcing two acquisitions today and with a promising pipeline we expect to complete further transactions as the year progresses. This acquisition activity, together with the ongoing development of the underlying business, should lead to further growth in 2015," Chief Executive Michael Roney.
When Bunzl buys up companies, it sets about improving margins at the acquired companies, using its greater heft to get better deals with suppliers and clients and cutting costs. It said its group operating margin rose 20 basis points in 2014 to 7.0%, buoyed by "significant" increases in the UK and Ireland as well as in continental Europe. Its return on average operating capital was up 80 basis points on the year at 57.7%.
The Spanish healthcare company it said it had acquired Monday is called Quirumed SL, while the Canadian company is Jan-Mar Sales Ltd. It didn't say how much it has paid for those businesses.
"The acquisition of Quirumed is an important development for Bunzl as it takes us into the healthcare sector in Spain for the first time, having previously acquired businesses there in the cleaning and hygiene, safety and foodservice sectors. The purchase of Jan-Mar complements our existing cleaning and hygiene business in Canada and strengthens our position in the Toronto region," Roney said.
By Steve McGrath; [email protected]; @stevemcgrath1
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