Acquiring higher-margin businesses in cleaning, hygiene, safety and healthcare and sourcing consumables at lower costs mean Bunzl will exceed last year’s profits, the FTSE 100 company said.
The news helped shares in Bunzl rise sharply from recent ten-month lows on fears that the perennially outperforming £9.2 billion business was stalling.
Bunzl is the world’s biggest distributor of everyday products, from workplace lavatory paper and cleaning products to safety gloves and recyclable cutlery and cups. It also packages goods for hotels, restaurants and supermarkets. It had a strong pandemic, sourcing items such as personal protection equipment and cleansing agents.
It grows by acquiring smaller local businesses and has closed more than 200 deals over the past 20 years.
Bunzl is loved by investors for the annual steady growth in dividends unbroken since way before the turn of the century. The shareholder dividend for the first half of the year will rise 5.2 per cent to 18¼p.
In the first half of 2023, its preferred measure of adjusted operating profit came in at £483 million, growth of 2.5 per cent at constant currency comparatives on revenues up at £5.9 billion.
More importantly, the figures showed better margins across the business which has led the company to upgrade its profit forecast for the full year.
In a statement, Bunzl said: “We now expect adjusted operating profit to be moderately higher than in 2022 at constant exchange rates, with operating margin remaining strong and moderately higher than that achieved in the prior year.”
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Date: 4 September