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Products supplier Bunzl forecasts solid turnover growth this yr

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Bunzl forecasts solid turnover growth on back of takeovers and inflationary boost to underlying performance

  • The hygiene products seller expects its revenue to extend by c.17% in 2022 
  • Demand soared for the group’s medical products at the peak of the pandemic 
  • Bunzl revealed yesterday that it had bought 4 firms in October and November

Bunzl is ready to post sizeable sales growth for this yr, with the FTSE 100 group bolstered by price hikes and a set of acquisitions.

The catering and hygiene products distributor expects total revenue to extend by around 17 per cent for 2022, while its adjusted operating margin is ready to modestly surpass previous guidance and be ahead of historical levels.

It said inflation had helped drive expansion in underlying turnover, with strong demand for its cheaper and high-margin products. 

Forecast: Bunzl expects total revenue to extend by around 17 per cent in 2022, while adjusted operating margin is ready to modestly surpass previous guidance

Bunzl’s trading has also been assisted by a robust performance from its base business, and a recovery in volumes across the British Isles and Continental Europe.

Sales were lifted by an additional series of takeovers. Bunzl announced on Tuesday an additional 4 businesses had been acquired, taking the variety of firms it has bought previously two years to 25.

In October and November, Bunzl acquired two specialist healthcare providers: ophthalmology products provider Toomac Ophthalmic & Solutions and GRC, an Australian medical devices seller.

It also bought Czech-based VM Footwear, which makes occupational shoes, and PM Pack, a supplier of packaging machines and butchery equipment to the Danish food processing sector.

Chief executive Frank Van Zanten said: ‘Bunzl’s performance over the yr has continued to exhibit the strength and resilience of the Bunzl business model.

‘Our teams have successfully navigated the inflationary environment and provide chain disruption experienced this yr to make sure customers have reliably received the essential products they need.’

Among the many items sold by Bunzl include disposable coffee cups and tableware, food wrapping, hard hats and private protection equipment.

Throughout the height of the pandemic, demand skyrocketed for its medical products, akin to visors, gloves and masks, before slipping as lockdown restrictions were loosened.

But the corporate warned that turnover is forecast to be only marginally stronger in 2023 resulting from economic uncertainty, while higher rates of interest and tax payments are set to lead to lower adjusted earnings per share.

Analysts are predicting Bunzl will see its profits rise by only 3 per cent year-on-year to £706million after growing by a fifth to £689million this yr, based on online trading platform AJ Bell, although this may still be greater than 50 per cent above pre-pandemic levels.

Bunzl shares fell back 0.5 per cent to £28.07 on Wednesday morning, yet their value has only declined by about 2 per cent overall this yr.

Victoria Scholar, the top of investment at Interactive Investor, said: ‘Shares in Bunzl have proven to be relatively resilient to the equity market volatility, inflationary pressures and global supply chain bottlenecks.’

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