Christmas comes early for Bunzl as staple goods supplier lifts profit guidance

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Transport Reporter

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Goods supplier Bunzl has gifted investors an early christmas present, raising its full-year profit guidance as it continues to weather macroeconomic headwinds and the fading Covid-era boom in PPE sales.
Goods supplier Bunzl has gifted investors an early christmas present, raising its full-year profit guidance as it continues to weather macroeconomic headwinds and the fading Covid-era boom in PPE sales.

Goods supplier Bunzl has gifted investors an early Christmas present, raising its full-year profit guidance as it continues to weather macroeconomic headwinds and the fading Covid-era boom in PPE sales.

Adjusted operating profit will come in slightly ahead of prior guidance. Moderate growth is forecast in group adjusted operating profit, while operating margins are expected to be slightly ahead of last year’s record level.

Revenues though will come in one to two per cent lower than 2022, reflecting anticipated “post-pandemic related normalisation trends,” primarily affecting a surge in sales of health related products during Covid-19 and falling inflation.

Frank van Zanten, Chief Executive Officer of Bunzl, said: “I’m pleased with the performance Bunzl has delivered this year, reflecting the dedicated efforts of our people in supporting our customers around the world.”

“The group is on track to deliver moderate adjusted operating profit growth, supported by a record operating margin, and we are guiding to further growth in 2024, continuing to build on the strong performance we have seen over recent years.”

Shares rose 1.2 per cent in early trading.

Bunzl has made a name for itself for its highly acquisitive strategy, which has seen it snap up 17 firms this year and more than 200 over the last two decades.

A pre-Christmas shopping spree saw Melbourne Cleaning Supplies, Flexpost Miracle Sanitation Supply, Safety First, Grupo Lanlimp and CT Group all fall under the Bunzl umbrella in November and December.

Some £1.7bn has been shelled out by the distribution specialist on acquisitions over the last few years. Bunzl said today this represented a significant “step-up in our spend, and with our pipeline remaining active and supported by our strong balance sheet.”

Matt Britzman, equity analyst, Hargreaves Lansdown: “Bunzl delivers an early Christmas present for investors with a small upgrade to margin guidance. Revenue weakness was expected, as Covid-related sales continue to normalise, and tailwinds from higher inflation fade away.”

He added: “Higher-margin acquisitions, along with some organic improvements, are doing their job to prop up the bottom line. As we move into 2024 comparable periods should ease on the top line, reflected in guidance for some revenue growth next year which is likely ahead of most analysts’ forecasts.”