Shares in Bunzl rose on Thursday after the support services business announced that 2023 profits would beat prior guidance.
At £31.84 per share, Bunzl’s share price was trading 2.1% higher.
The FTSE 100 company said that that it “expects to deliver another set of good annual results, with adjusted operating profit expected to be slightly ahead of prior guidance.
This follows a previous upgrade in August when Bunzl said it expected adjusted operating profit to be “moderately higher than in 2022 at constant exchange rates.” Comparable profits came in at £885.9 million last year.
Group revenue is also anticipated to be broadly in line with those reported last year, it said, excluding the impact of currency movements and the disposal of its UK healthcare business.
Accounting for the asset sale, group revenue is expected to be down 1% to 2% year on year.
Bunzl noted that “revenue growth from acquisitions is expected to be offset by the expected underlying revenue decline, reflective of lower Covid-19 related sales, reducing inflation benefit and wider post-pandemic related normalisation trends, particularly in North America.”
It added that operating margins are likely to be “slightly ahead” of the record 7.4% achieved last year.
Sales Growth Tipped For 2024
For 2024, Bunzl said that it expects to deliver “some revenue growth” at constant currencies “despite uncertainties relating to the wider economic and geopolitical landscape.”
This will be driven by previous acquisitions and “slightly positive” organic growth, it said.
Operating margins, meanwhile, are predicted to be broadly in line with 2022’s levels and well ahead of pre-pandemic levels. This is thanks to higher margin acquisitions following the Covid-19 crisis, the firm said, as well as an improvement in underlying margins.
Further Acquisitions
Bunzl also announced the completion of three more acquisitions since the beginning of November.
Last month it purchased Australian cleaning and hygiene product supplier Melbourne Cleaning Supplies. It also sealed the acquisition of Flexpost, a distributor of flexible signposts and bollards in North America.
And in December the business took over Miracle Sanitation Supply, a Canadian distributor of cleaning and hygiene products. This takes the number of acquisitions in the year to date to 17.
Pleasing Performance
Chief executive Frank van Zanten said that “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.”
He added that “over the last four years we have committed a cumulative £1.7 billion to acquisitions, reflecting a step-up in our spend, and with our pipeline remaining active and supported by our strong balance sheet.”
Royston Wild owns shares in Bunzl.