Bunzl profits climb as acquisitions drive growth

UK distribution and outsourcing firm Bunzl reported higher first-half revenue and profit on Tuesday, supported by its acquisition strategy. Bunzl shares rose 3.7% after it announced a dividend increase and two new deals.

The London-based company said revenue grew 4.5% to £5.91 billion in the six months to June, from £5.65 billion a year earlier. Pre-tax profit increased by 6.9% to £317.1 million, up from £296.6 million in the first half of 2022.

Bunzl noted the sale of its UK healthcare unit last December reduced its profit growth by 1.8%. But overall earnings still climbed thanks to improved margins and contributions from acquired businesses.

Bunzl shares (LSE: BNZL) gained 3.7% to 2,824p on Tuesday morning following the results statement. The company also announced a 5.2% rise in its interim dividend per share to 17.3p, saying it remains committed to growing dividends annually.

“I’m pleased with our first half performance, with good profit growth and margin significantly above pre-2019 levels,” said CEO Frank van Zanten. “The group’s strengths continue supporting performance.”

Bolt-on acquisitions have been pivotal to Bunzl’s expansion strategy. On Tuesday it announced two more purchases – its first foray into Poland by acquiring protective equipment distributor Safety First, and Dutch online industrial supplies seller EcoTools.nl.

The latest deals lift Bunzl’s total purchases completed so far this year to 12 across seven countries. But the company said organic revenue will likely see a minor decline in 2022 overall amid economic uncertainty.

Analysts said Bunzl’s defensive attributes should provide some resilience against the tough backdrop. Its diversified business supplies essential high-volume consumable products to customers globally.

“Bunzl’s defensive profile supports the investment case,” said RBC Capital Markets analysts, citing its strong market positions and consistent cash generation.