Bunzl warns of ‘slightly lower’ revenues

Bunzl has maintained annual profit expectations, despite forecasting ‘slightly lower’ revenues.

The business supplies distributor revealed turnover fell by 4.8 per cent in the third quarter due to softening price inflation and fewer orders for Covid-related products.

Sales were additionally impacted by the sale of its British healthcare division, which provided personal protection equipment to the National Health Service, to Dutch pharmaceutical supplier Mediq.

While the company has received a boost from acquisitions, it anticipates full-year turnover at constant exchange rates falling because of a drop in organic sales.

Yet the group still predicts adjusted operating profit will be ‘moderately higher’ than the previous year’s total of £885.9million.

Bunzl upgraded its profit guidance in August thanks to operating margins receiving a boost from lower freight costs in its North American market and solid underlying sales growth across the British Isles.

The London-based firm also said its margins since the Covid-19 pandemic began had been supported by a sizeable volume of acquisitions, with 14 completed this year alone.

On Tuesday, Bunzl announced it had bought Pittman Traffic & Safety Equipment, a road safety equipment provider in Ireland, at the end of August.

More recently, it has agreed to buy CT Group, a distributor of surgical and medical devices in Brazil, which achieved revenue of around £42million last year.

Frank van Zanten, its chief executive, said: ‘I remain excited by the group’s medium-term opportunities, which continue to be driven by our proven compounding growth strategy and active acquisition pipeline, supported by a strong balance sheet.’

Initially founded in Hungary in 1854, the FTSE 100 company sells everything from food packaging to disposable tableware, hard hats, limescale remover and latex gloves to around 800,000 customers in 31 countries.

During the height of the pandemic, it benefited considerably from supplying PPE equipment, like masks, gloves and hand sanitisers, to hospitals desperate to keep Covid-19 at bay. 

While demand for such products has fallen, the firm has continued to grow through price hikes and an ambitious acquisition-led strategy.

Bunzl shares were 4.4 per cent down at £27.86 on late Tuesday morning, although they have still doubled since the pandemic began.