- Another year of strong revenue growth in 2022
- Dividend raised by 10% in line with earnings
- Shares top FTSE 100 early on
Specialist distribution group Bunzl (BNZL) posted strong revenue growth in the 12 months to December and pleased investors with its 30th consecutive increase in annual dividends.
The shares initially jumped to the top of the FTSE 100 leader board with a gain of 4% to £31.39 before easing slightly to trade up 2.5% at £30.86 by mid-morning.
SOLID UNDERLYING GROWTH
Thanks to a combination of underlying price and volume increases, growth from acquisitions and a tailwind from the strong dollar, the group reported a 17% jump in sales to £12 billion last year (sales were up just under 10% on a constant-currency basis).
The base business generated 11.6% growth in sales, which was more than enough to offset the 5% drop in Covid-related cleaning and hygiene orders leaving underlying revenue up 6.6% for the group.
The return of foodservice and retail had a big positive impact, with revenue from the business up 13%, followed by grocery which grew by 9%, both helped by higher prices.
North America, the company’s largest region, saw underlying revenue increase 6.1% to £7.4 billion, while growth accelerated to 12.2% in the UK and Ireland and 7.9% in Continental Europe.
The firm bolstered growth with 12 acquisitions during the year across multiple sectors and geographies as it took advantage of attractive prices for assets to build scale in its key markets.
At the same time, it optimized its portfolio with the sale of its relatively small UK healthcare division to Dutch firm Mediq.
AN ENVIABLE TRACK RECORD
On top of the strong underlying performance of the business, investors cheered the 11% increase in the final dividend to 45.4p which took the total payout for 2022 to 62.7p, a 10% increase on the previous year.
That means Bunzl has increased its dividend for 30 years in a row, a record which few other firms can equal or better.
While the firm cautioned this year’s earnings per share would be ‘moderately lower’ due to higher interest rates and a higher tax rate, with the pay-out more than twice covered last year (62.7p against basic EPS of 141.7p per share) it seems unlikely the board would want to break its long record of raising the dividend.
