Bunzl hikes dividend despite revenue dip, expands with acquisitions

Bunzl (LSE: BNZL) increased its annual dividend despite a slight decline in revenue and announced two acquisitions.

The distribution and outsourcing company reported a 2.0% year-on-year revenue decrease to £11.8 billion in 2023, but pretax profit climbed 10% to £698.6 million. Bunzl attributed the revenue drop to its North American food service business, which faced deflationary pressure and post-pandemic normalisation trends.

Despite the dip in revenue, Bunzl’s operating margin improved to 8.0% from 7.4%. The company declared a final dividend of 50.1 pence, bringing the total dividend for 2023 to 68.3 pence, an 8.9% increase compared to 2022.

Bunzl also announced its acquisition of an 80% stake in UK-based catering equipment distributor Nisbets for £339 million, with the potential for an additional earn-out payment based on Nisbets’ 2024 performance. Additionally, Bunzl acquired Pamark, a distributor of cleaning, hygiene, healthcare, and food service products, marking its first venture into the Finnish market and expanding its reach to 33 countries.

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“Bunzl’s consistent, compounding model drives both growth and resilience,” said Chief Executive Frank van Zanten. “The progress we have made in recent years, combined with the strength of our financial position, means that we have a stronger platform than ever…”

While Bunzl’s share price dipped slightly on Monday, the company’s focus on growth and expansion through acquisitions suggests a positive outlook for the future.