THE INVESTMENT COLUMN: Bunzl's double act well received
Yesterday, the group announced pre-tax profits up a third to pounds 106m, right at the top of expecations, and was rewarded with an 8p rise in the share price to 209p.
The medicine administered by Messrs Habgood and Williams has been to dump around a third of the business and concentrate on four areas, ranging from paper and plastic plates and the like to protective plastic caps for engineering parts, where it has leading positions. As a result, the group has seen net margins rise from 4.3 per cent in 1992 to 6.1 per cent last year, when return on capital topped a highly respectable 20 per cent, even after taking account of goodwill on acquisitions.
The problem for management now is how to maintain the momentum of growth. Profits have risen at a faster rate than sales since 1992, showing compound growth of 25 per cent over that period, some eight points ahead of the expansion in the top line. But fatter margins will be harder to come by from here on. The building supplies business, the last of the remaining serious underperformers, went in mid-1994.
Mr Habgood is confident that growth can continue and points to new business won in the key US market so far this year. Contracts with Supervalu, a grocery distributor, will alone be worth in excess of $400m over four years. But to get things going, Bunzl may need to use its minimal 11 per cent gearing to buy something bigger than the pounds 3.7m of bolt-on acquisitions announced yesterday.
Despite a lowly forward rating of 12, based on profits of pounds 116m this year, the shares may mark time until there are signs of further action. Hold.
Top Gear presenter is no stranger to foot-in-mouth controversy
Review: Mike Leigh biopic is a rambling, rich character study
Want to ward off (or welcome) trick-or-treaters? Here's how
- 1 'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
- 2 Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
- 3 Topshop at centre of row over body image as 'shocking' skinny mannequin photo goes viral
- 4 If you think Russell Brand’s new book is confused, you should read what his critics have to say about it
- 5 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
Topshop at centre of row over body image as 'shocking' skinny mannequin photo goes viral
Halloween 2014: From the Screaming Man of Pluckley to the 'White Lady' of the Tower of London - Britain's 20 most haunted places
Russian politician says Apple CEO Tim Cook should be 'banned' from country after coming out as gay
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Maureen Lipman says 'she can't vote Labour while Ed Miliband is leader'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
iJobs Money & Business
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...
£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...