FTSE 100 specialist distribution group Bunzl (BNZL) marginally beat expectations in the year to 31 December 2020 and announced new acquisitions designed to bolster growth in 2021.

Full year revenues rose 8.4% to £10.1 billion, slightly above market forecasts, helped by orders for personal protective equipment (PPE). This offset declines in demand from its traditional foodservice and retail customers.

Thanks to the higher margin on these products, adjusted pre-tax profits were also ahead of market expectations at £716 million, an increase of 23.8%, and cash flow was higher than anticipated.

That allowed the firm to maintain its unbroken 28-year record of dividend increases with a 7% rise in the final payment, and to make three acquisitions after the period end in the UK, Netherlands and Canada. The trio will help to expand market share in healthcare, hygiene and foodservice ahead of a hoped-for reopening of global economies and societies.

Having initially fallen sharply in opening trading (plunging 4%), the stock recovered through the morning session to cap losses at 22p (about 1%) to £22.14.


So far, in large markets like North America and Australia, in areas where infections are low and people have been able to go back to work and to eat out the firm has seen no drop-off in demand for its hygiene products.

Thanks to its diversified customer base, the firm sells products like cleaners, sanitizers and toilet paper through most of its verticals and chief executive Frank van Zanten sees no sign of the high levels of demand caused by Covid dropping off in future.

‘Our business is extremely resilient, which means we always deliver’ says van Zanten. ‘Also, we are a real compounder, all of our revenues turn to cash which we can reinvest to grow our business.’

Shore Capital analyst Robin Speakman remains positive on Bunzl’s long-term growth prospects and while he sees orders from sectors impacted by the pandemic taking a while to come through, he expects to upgrade his earnings forecasts to take account of the better 2020 performance.

‘We see value in Bunzl at current levels reflecting the quality of the Group, the “flight from quality” provides investors with an opportunity in our opinion’ he adds.


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Issue Date: 01 Mar 2021