Specialist distribution group Bunzl has upgraded its profit guidance once more and reported a strong first half as its resilient business model continued to hold up.
The FTSE 100 company reported a decline in revenue of 0.4 per cent at constant exchange rates to reach £5.7b, with “underlying revenue trends improving in the second quarter [and] further improvement in July and August,” Bunzl said.
Adjusted operating profit increased by 7.4 per cent at constant exchange rates to £455.5m, while reported operating profit declined by 2.8 per cent.
Adjusted earnings per share increased by 6.2 per cent to 59.2p, and reported basic earnings per share declined by 16.4 per cent, largely due to the “currency translation driven loss” related to Bunzl’s disposal of its business in Argentina, the company said.
“I am very pleased with the performance of the Group during the first half of 2024, with strong growth in adjusted operating profit for the period,” chief executive Frank van Zanten said.
“I remain confident that the resilience of our business model, the diversification of our portfolio across sectors and regions, and the consistent focus on our strategic priorities will continue to support the Group’s performance and maintain our strong track record of value creation,” van Zanten said.
North America was the only region to show a fall in revenue at constant exchange rates, by 5.1 per cent to £3.2bn.
The drop was “driven by deflation” and volume reductions in our US food service redistribution business as the company “increased [its] own brand penetration,” it said.
Investors have pushed shares in the FTSE 100 company close to all-time highs this year, a performance which “owes much to the solid nature of the FTSE 100 member’s business model,” AJ Bell analysts Danni Hewson and Dan Coatsworth said.
“Bunzl supplies the things that other firms need in order to do business, but not items they would sell to their customers”, analysts said, adding that the required nature of the products it provides may “shelter the firm from the vagaries of the economic cycle.”
The firm has announced seven acquisitions in 2024 so far—including Powervac, announced on Tuesday—with total spending at a record high of £650m.
“Our acquisition pipeline remains active and our runway of opportunity is substantial,” van Zanten said.
Bunzl has traditionally used bolt-on deals to supplement growth and complement its business structure.
The company has slightly upgraded its 2024 profit guidance due to an increase in operating margin growth “due to good margin management and positive contributions from acquisitions,” it said.