Distribution and outsourcing giant Bunzl has been branded ‘boring’ – but for investors its growth tells a different story.
Shares hit an all-time high last week after the distributor of everything from food packaging to toilet roll raised its dividend and said it was likely to make more profit than it previously expected.
While it is not a household name, Bunzl sells products to businesses that many Britons use every day.
That includes providing disposable cups to cafes, packaging to supermarkets, hard hats to builders and bandages to hospitals. The nature of the behind-the-scenes business has earned the FTSE 100 firm the nickname ‘boring Bunzl’.
But experts say the company has shown ‘exactly why boring can be best’ as it distributes goods its customers can’t do without.
In focus: Bunzl’s share price is up 25 per cent in the past year and 76 per cent over the past five
The share price is up 25 per cent in the past year and 76 per cent over the past five years, with analysts predicting that it has further to go.
The company last week hailed 31 consecutive years of dividend growth as it announced an interim half-year dividend of 21.1p a share – a 10.4 per cent rise on a year earlier – with its shares closing at £35.40 on Friday night.
And the distribution giant unveiled a £250million share buyback as it upped its profit and sales guidance for next year.
Bunzl is based in the UK but its origins date back to a haberdashery in present-day Slovakia founded in 1854.
It relocated to London in 1938 as Europe headed towards the Second World War and was listed in the City in 1957. Bunzl’s focus has shifted over the decades, and included making cigarette filters, crepe and tissue paper, and producing fibres, pulp, paper, building materials and plastic.
Growth has been boosted by acquisitions – 210 in the past 20 years – and Bunzl now operates in 33 countries and has 24,500 staff.
Susannah Streeter, head of money and markets at investment platform Hargreaves Lansdown, said: ‘Bunzl’s success shows how our need for everyday but essential items can be turned into a flow of profitable revenue. From food packaging to cleaning chemicals and safety equipment, these are a world away from the trend-setting products sold by influencers.
‘They may sound boring, but are goods customers can’t do without.’
Russ Mould, investment director at broker AJ Bell, added: ‘The required nature of the products it provides may shelter the firm from the vagaries of the economic cycle and also provide Bunzl with pricing power, a key ingredient during inflationary times.’
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