Products supplier Bunzl forecasts solid turnover growth this year

Bunzl is set to post sizeable sales growth for this year, with the FTSE 250 group bolstered by price hikes and a suite of acquisitions.

The catering and hygiene products distributor expects total revenue to increase by around 17 per cent for 2022, while its adjusted operating margin is set 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 increase by around 17 per cent in 2022, while adjusted operating margin is set to modestly surpass previous guidance

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

Sales were lifted by a further series of takeovers. Bunzl announced on Tuesday a further four businesses had been acquired, taking the number of companies it has bought in the past 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 year has continued to demonstrate the strength and resilience of the Bunzl business model.

‘Our teams have successfully navigated the inflationary environment and supply chain disruption experienced this year to ensure customers have reliably received the essential products they need.’

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

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

But the company warned that turnover is forecast to be only marginally stronger in 2023 due to economic uncertainty, while higher interest rates and tax payments are set to result in 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 year, according to online trading platform AJ Bell, although this would still be more 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 year.

Victoria Scholar, the head 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.’

This post first appeared on Dailymail.co.uk