2023 Earnings Roundup from British Companies
2 very good results
This week I am going to cover earnings from my British holdings in the Coffee Can Portfolio.
Legal & General (LON:LGEN) 😥
(Previous Note here)
Legal & General switched to IFRS 17 on Jan 1 2023, and that has meant a rebase of their financial numbers. They have only provided restated values for 2022 and 2023, which renders all my long term projections totally useless.
I am going largely by company provided top level guidance:
PBT is down from £939 Mn to £195 Mn, Adjusted OPAT marginally up, EPS down 7.35p (down from 12.84p previous year). Full year dividend has been upped to 20.34 (up from 19.37 in 2022) and that represents a 7.98% yield at today’s prices.
Between the restatement and the mix-bag of numbers, I am filing this under the “Keep in View” bucket and moving on. Put another way, I am likely to buy very little and hence dilute its weight in my portfolio in the coming buying cycles.
Unilever (LON:ULVR) ❤️
(Previous Note here)
Unilever’s results are very very flat. The business didn’t move much last year, with Revenue, net of CoGS, inching up 4%, FCF up by 15% or so, but OPAT declining by 10%. Dividends were held flat for 2023, but are expected to inch up in 2024 based on the recommendations for the shareholder’s vote.
The business retired about 1% of the shares, and there is some currency conversion issues popping up across the financial statements. Cut it whichever way, the business is having a tough time growing and if nothing much changes, I expect the business to trade for its earnings/FCF/dividend yield, which are within acceptable range at the moment.
This is another stock I am not getting too excited about.
Bunzl (LON:BNZL) ❤️❤️
(Previous Notes here)
If you look at outperforming factors in stock markets that succeed on historical basis, you will generally hear the usual suspects: cheap outperforms costly; small outperforms big; consistent outperforms inconsistent etc.
However putting this insight to use is harder said than done, specifically for retail investors who don’t have the troves of information available to institutional investors, and the quality of much of the stock screeners I have found in practice are passable at best.
What if I say I have already found one company, purely by chance, that ticks not one successful factor, but 3 of them? What would you do with this information? You will load up on the stock and stash it away at your brokerage, your wardrobe, your locker, your empty suitcases, your garden shed - you get the point.
For me, that stock is Bunzl, which had another great year1.
Over the past 15 years, OPAT, EPS, FCF etc have all grown between 8.5%-10% per year. It converts a lot of earnings into cash and returns it back to shareholders, with another solid increase in dividend this year, marking 31 years of increasing dividend.
It is small, it is well run, it is consistent, and trades consistently around 8-10x FCF and 20x earnings. I don’t know what else to look for. I am emptying space in my car boot to load up more of this stock.
BAE Systems (LON:BA) ❤️❤️
(Previous Notes here)
I recently wrote about how BAE Systems was well placed to make use of increased defence spending over the next few years. The company published it’s 2023 results immediately thereafter and posted wonderfully good results.
Again, all the metrics are to the up and to the right!
Revenue up 8.7%, OPAT up 16% and FCF up 31% and that’s in a year where the company reduced share count by 2.6%, and increased dividends by 11.1%.
I am loading up on this company’s shares too. Where should I find place in the house to stack up these share certificates?
Summary
I am obviously thrilled about BAE and Bunzl. Unilever and LGEN’s results are meh - but as mentioned in many of my previous posts, I expect only a few of the companies in my portfolio to stand out in the long run and I am happy to just own and build those positions over time.
As always, happy investing!