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(Alliance News) - Distribution and logistics firm Bunzl reported a strong rise in 2020 earnings as the distribution firm said it played a vital role in quickly sourcing and delivering significant quantities of personal protective equipment.
"As a result of our extensive supply chains and our Asia sourcing and auditing operation, we were able to quickly source and deliver significant quantities of quality assured Covid-19 related products, such as gloves and masks," said Chief Executive Officer Frank van Zanten. "Consequently, we were able to offset the negative impact that restrictions had on many of our customers' businesses, particularly in the foodservice and retail sectors."
For 2020, revenue was GBP10.11 billion, up 8.4% from GBP9.33 billion in 2019, and pretax profit was GBP555.7 million, up 23% from GBP453.3 million.
Bunzl raised its dividend for the year 5.5% to 54.1 pence from 51.3p paid out the year before, as the company hailed its 28-year track record of consecutive annual dividend growth.
In addition, Bunzl said it has completed three further acquisitions. In January it bought Deliver Net, a healthcare distributor to care home groups in the UK with 2020 revenue of GBP20 million. In February, the company completed the acquisition of Disposable Discounter, an online distributor of food-service disposable products which generated GBP18 million of revenue in 2020.
Finally, Bunzl completed the acquisition of Pinnacle, a leading distributor of cleaning & hygiene in Saskatchewan, Canada, in February. Pinnacle generated GBP11 million of revenue in 2020.
"Overall in 2021 we expect robust revenue growth over the prior year at constant exchange rates, after excluding larger Covid-19 related orders which we do not expect to repeat. We anticipate that the recovery in sales of other products, as restrictions ease, will broadly offset the decline of smaller Covid-19 related orders, with recent acquisitions making an increasing contribution to the group's performance. It is part of our proven and consistent strategy to use our strong balance sheet and cash flows to consolidate the fragmented markets we operate in," said CEO van Zanten.
"We committed GBP445 million to acquisitions in 2020, have announced three further acquisitions today and have an active pipeline supported by substantial financial headroom. Looking ahead, we also expect future growth to be supported by enhanced hygiene trends and our differentiated offering of sustainable and responsible solutions," he added.
Bunzl shares were down 1.8% early Monday. However, the stock is up 72% since last March.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 1.3% at 6,568.12
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Hang Seng: up 1.6% at 29,429.65
Nikkei 225: closed up 2.4% at 29,663.50
DJIA: closed down 469.64 points, or 1.5%, at 30,932.37
S&P 500: closed down 18.19 points, or 0.5% at 3,811.15
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EUR: down at USD1.2088 (USD1.2111)
GBP: up at USD1.3985 (USD1.3940)
USD: flat at JPY106.60 (JPY106.62)
GOLD: up at USD1,758.23 per ounce (USD1,728.20)
OIL (Brent): down at USD65.70 a barrel (USD66.10)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
0930 GMT UK CIPS-Markit manufacturing purchasing managers' index
0930 GMT UK money and credit
1100 GMT Ireland retail sales
0955 CET Germany manufacturing PMI
1000 CET EU manufacturing PMI
1400 CET Germany consumer price index
0945 EST US manufacturing PMI
1000 EST US ISM manufacturing PMI
1000 EST US construction spending
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The UK's coronavirus vaccine rollout will receive a GBP1.65 billion boost to help it meet the target of offering a dose to every adult by July 31. Chancellor Rishi Sunak will use his government budget on Wednesday to detail the plan for the new cash to aid the programme, which is a key factor in successfully easing lockdown restrictions. Sunak also will divert GBP22 million to fund a "world first" trial to test if different vaccines can be used together, or if a third dose is effective, the Treasury said. NHS England has begun inviting 60 to 63-year-olds to book jabs, with nearly 20 million people across the UK having received a vaccine. Ahead of his Commons speech, Sunak said it was "essential we maintain this momentum".
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A key indicator of manufacturing strength in Ireland gave mixed signals for February. The AIB Ireland manufacturing purchasing managers' index edged up to 52.0 points last month from 51.8 in January, both readings above the neutral score of 50 and so indicating growth. However, in the survey conducted for lender AIB and data provider IHS Markit, two key components of the index, new orders and output, signalled decline. Irish manufacturers received a lower volume of new work in February due to tougher lockdown measures put in place to combat the spread of coronavirus, as well as post-Brexit friction. "Supply chains remained under severe pressure, with Brexit widely cited as the main cause of major delays, leading to a further marked lengthening in delivery times," commented AIB Chief Economist Oliver Mangan.
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The Japanese manufacturing sector improved in February, passing into expansion levels as firms started to recover from their pandemic woes, survey data from au Jibun Bank and IHS Markit showed. The headline au Jibun Bank Japan manufacturing purchasing managers index rose to 51.4 index points in February from 49.8 points in January, marking growth in the sector. The improved performance was attributed to a rise in production volumes for the first time since the end of 2018, driven by recovering demand and increased orders for manufactured goods. In addition, new orders expanded at the fastest rate since October 2019, on increased orders for new products, and higher demand from key external markets, especially China.
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BROKER RATING CHANGES
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DEUTSCHE BANK RAISES JUST EAT TAKEAWAY.COM TO 'BUY' (HOLD) - PRICE TARGET 10,500 PENCE
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BARCLAYS RAISES PENNON GROUP TO 'OVERWEIGHT' ('EQUAL WEIGHT') - TARGET 1,060 PENCE
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JEFFERIES CUTS SUPERDRY TO 'HOLD' ('BUY') - TARGET 280 (198) PENCE
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COMPANIES - FTSE 100
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BT said Chair Jan du Plessis intends to retire from the role in 2021 once a successor has been appointed. Du Plessis joined BT as a non-executive director in June 2017 and was appointed chair in November 2017. The board will now start a process for the appointment of a successor led by its senior independent director, BT said.
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Wm Morrison Supermarkets and convenience store operator McColl's Retail Group are extending their wholesale supply partnership. Morrisons said that, over the next three years, 300 McColl's convenience stores are to be converted to the Morrisons Daily convenience store brand. The stores will offer a full Morrisons convenience range and will be branded as Morrisons Daily, but will continue to be owned and operated by McColl's. The roll-out follows over 30 successful McColl's to Morrisons Daily conversions in recent months. McColl's said the Morrisons Daily stores have "consistently delivered the strongest like-for-like sales performance" within the McColl's estate, driven by the higher mix of grocery sales, a range of offerings and value products. In addition, Morrisons and McColl's have extended their partnership by a further three years, with Morrisons to act as McColl's sole wholesale supplier out to 2027, the blue-chip grocer noted. "Today's agreement is another example of Morrisons extending the reach of our popular brand. In doing so, we are building a broader, stronger Morrisons for customers, and leveraging our existing assets to achieve capital light, profitable growth," said Morrisons CEO David Potts.
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COMPANIES - FTSE 250
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Temporary power generation provider Aggreko declared a 10.00 pence final dividend, lifting its annual payout in 2020 by 60% to 15.00p from 9.38p in 2019. Aggreko said the dividend proposal reflected a confident outlook and strong financial position, despite a negative 2020. The company swung to a pretax loss of GBP73 million from a GBP199 million profit, mostly due to GBP175 million in impairments. Revenue fell 15% to GBP1.37 billion from GBP1.61 billion.
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COMPANIES - MAIN MARKET AND AIM
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Publisher Reach reported 2020 revenue of GBP600.2 million, down 15%. Digital revenue was up 11% but print was down 19%. Reach barely stayed in profit at the pretax level, reporting GBP400,000 in profit after GBP130.9 million exceptional items, down from GBP120.9 million in 2019. Reach will pay a 2020 dividend of 4.26p, up from 2.50p in 2019, after the 2019 final dividend was withheld due to Covid-19. Reach said current trading is in line with expectations.
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Monday's Shareholder Meetings
GCM Resources PLC - AGM
Driver Group PLC - AGM
TalkTalk Telecom Group PLC - GM re acquisition by Tosca IOM
Target Healthcare REIT PLC - GM re issue of new shares
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By Tom Waite; thomaslwaite@alliancenews.com
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