EUR 850.00 For Business Accounts Only

Morningstar | Bunzl Company Report

Bunzl is the only global player in the nonfood consumables space, operating in more than 30 countries. The company sources, stores, and distributes thousands of products to its diverse customer base, essentially offering a one-stop shop for operating supplies. While Bunzl holds significant share, estimated to be close to 50% of the outsourced U.S. market, outside of Bunzl the market is extremely fragmented, with thousands of mom-and-pop or regional outfits meeting the needs of much of the industry. The company has successfully expanded through an almost even combination of organic and acquisition-led growth, with revenue and earnings having almost doubled over the past decade. Its strategy centres on targeting small companies that allow Bunzl access to new segments/geographies, as well as businesses that can be bolted on to existing segments. Value can then be added to these businesses by implementing Bunzl’s IT systems and exploiting economies of scale with existing businesses in the group. This has led to demonstrable improvements in margins and returns from these businesses in the years following acquisition.There are also several structural trends that we believe will benefit Bunzl. The outsourced market for nonfood consumables continues to grow as the trend to outsourcing gathers pace. For smaller companies, the scale at which they purchase nonfood consumables may not justify spending valuable staff time in sourcing products from individual suppliers, nor may they have the capabilities to effectively manage the process. For larger companies, such as grocery chains, Bunzl can prove to be more efficient than internal procurement systems and can free up valuable storage space and working capital through its distribution chain. In these instances, the decision to outsource this task to a company such as Bunzl can be an easy one to make, once confidence has been established in the company.