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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 paper raised its dividend and said it would likely make more profit than it previously expected.
Although not a well-known brand, Bunzl sells products to companies that many Britons use every day.
This includes supplying disposable cups to cafes, packaging to supermarkets, safety helmets to construction workers and bandages to hospitals. The behind-the-scenes nature of its activity has earned the FTSE 100 company the nickname “boring Bunzl”.
But experts say the company has shown “exactly why boring can be the best” by distributing products its customers can’t live without.
In focus: Bunzl’s share price is up 25 percent in the past year and 76 percent in the past five years
The share price has risen 25 per cent in the past year and 76 per cent in the past five years, and analysts predict it still has plenty of room for growth. Last week, the company celebrated 31 consecutive years of dividend growth by announcing a half-yearly interim dividend of 21.1 shares per annum (up 10.4 per cent on the previous year), and its shares closed at £35.40 on Friday evening.
And the retail giant announced a £250m share buyback as it raised its profit and sales forecast for next year.
Bunzl is based in the UK but can trace its origins back to a haberdashery in present-day Slovakia founded in 1854. It moved to London in 1938, as Europe was heading towards the Second World War, and was listed in the City in 1957. Bunzl’s focus has changed over the decades to include the manufacture of cigarette filters, crepe paper and tissue paper, and the production of fibres, pulp, paper, building materials and plastics.
Growth has been driven by acquisitions (210 in the past 20 years) and Bunzl now operates in 33 countries and has 24,500 employees.
Susannah Streeter, head of money and markets at investment platform Hargreaves Lansdown, said: “Bunzl’s success shows that our need for everyday but essential items can be turned into a profitable revenue stream. From food packaging to cleaning chemicals and safety equipment, these products are a far cry from the trend-setting products sold by influencers.
“They may sound boring, but they are products that customers cannot do without.”
Russ Mould, investment director at broker AJ Bell, added: “The required nature of the products it offers can protect the company from the vagaries of the economic cycle and also provide Bunzl with pricing power, a key ingredient in inflationary times.”
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