Bunzl Share Price Dropped 5.53% Despite Upbeat FY 2023 Result

The Bunzl plc (LON: BNZL) share price dropped 5.53% after releasing its final results for the year ended 31 December 2023. Despite a slight revenue decline of 1.9% at constant exchange rates and a modest 0.4% dip, excluding the impact of the sale of its UK healthcare business, the company's revenue remains robustly higher than its 2019 figures. 

A notable achievement is the increase in adjusted operating profit, which rose by 6.2% at constant exchange rates and, even more impressively, by 7.6% when excluding the effects of the UK healthcare business disposal. This performance led to a reported operating profit surge of 12.5%. 

A significant factor in this success has been the improvement in operating margin, which climbed from 7.4% to 8.0%, reflecting the company's efficient management and strategic initiatives.

Shareholders have reasons to be optimistic, as Bunzl reported a 2.7% increase in adjusted earnings per share at constant exchange rates, with reported basic earnings per share jumping by 10.9%. The company's financial health was further evidenced by its continued strong free cash flow, boasting a cash conversion rate of 96%.

In a testament to its consistent performance and commitment to returning value to shareholders, Bunzl announced its 31st consecutive year of annual dividend growth, with a total dividend per share increase of 8.9%. This demonstrates not only the company's financial stability but also its confidence in its prospects.

Bunzl was particularly active on the acquisitions front, agreeing to 19 acquisitions in 2023 and committing £468 million in expenditures. The company also announced today the acquisition of an 80% stake in Nisbets for an initial consideration of £339 million. Nisbets is a highly respected omnichannel distributor of catering equipment and consumables.

The company's leverage remains well-managed, with a net debt to EBITDA ratio of 1.1 times, providing ample room for further acquisitions and strategic investments.

Frank van Zanten, Chief Executive Officer of Bunzl, said: “I am proud of the Group's performance during 2023; the efforts of Bunzl colleagues around the world have resulted in a strong profit performance for the Group, underpinned by a record operating margin of 8.0%. Over the year we saw overall good outcomes on tendering activity reflecting the strength of our value-added proposition, including our sustainability expertise and digital capabilities.”

Bunzl share price. 

The Bunzl share price dropped 5.53% to trade at 3116.0p from Friday’s closing price of 3298.5p.