From mops to surgical masks Bunzl knows how to clean up

HOPA Disposables was a Dutch family business selling soap, shampoo and other essentials to hotels and restaurants across the Netherlands. Run by Frank van Zanten and his father-in-law, Ad van Hoogstraten, the firm was acquired by Bunzl in 1994.

At the time, Bunzl was in the early stages of expanding internationally. Today, van Zanten is chief executive of Bunzl and the group operates in more than 30 countries worldwide, selling essential goods to 800,000 customers, including major grocery chains, construction firms, hotels, offices and hospitals.

Bunzl’s product range is vast, spanning packaging for supermarket goods, napkins for restaurants, boots and gloves for building sites, boxes for online deliveries, wipes and hairnets for food manufacturers, and dressings and mops for hospitals. The group specialises in masks and protective wear too, playing a key role during the Covid-19 pandemic.

This vast array of goods have one important point in common – they are all part and parcel of everyday life. Bunzl does not make the items in-house. Instead, the group works closely with selected manufacturers, designing and developing items for customers and distributing them round the world.

The strategy has helped Bunzl to expand consistently since the early 1990s, when van Zanten’s firm became part of the group. The company already boasts 29 years of dividend growth and further increases are forecast for the foreseeable future.

Robust interim figures were released last week, with sales, profits and dividends all up compared with last year. Critically too, van Zanten expressed confidence in Bunzl’s prospects, despite the worsening economic outlook and rising inflation.

Bunzl specialises in items that customers cannot do without, such as packaging for food, gowns for surgeons, and cones for building sites. These goods may be essential, but they form a small part of a business’s overall cost base, making it easier for van Zanten to raise prices when his own costs are rising.

Van Zanten has also been working with most large customers for years and many products have been tailor-made to suit their needs, so relationships are close and likely to withstand economic ups and downs. Bunzl’s spread of businesses is a source of strength, too. While some sectors, such as retail or restaurants, are more exposed to falling consumer confidence, others, such as healthcare and safety, are more resilient. And while some parts of the world seem to be heading towards recession, others are still making progress.

Acquisitions are a key component of the Bunzl recipe. The group has made around 200 over the past 20 years, buying firms just like Hopa – businesses that are doing well on their own but can do even better with a strong international parent. These deals enable the company to keep delivering growth, and there are often even more opportunities when times are hard.

Bunzl shares fell after last week’s interims, but there was no real catalyst and the price should rebound. Brokers expect a 14 per cent increase in this year’s sales to £11.7billion, with profits up 11 per cent to £773million and a 10 per cent hike in the dividend to 62.7p. Further growth is pencilled in for 2023 and beyond. Van Hoogstraten passed away earlier this month, aged 91, but van Zanten, 55, is determined to build on his fatherin-law’s legacy.

Traded on: Main market Ticker: BNZL

Contact: bunzl.com 020 7725 5000