27 June 2024
BUNZL PRE-CLOSE
STATEMENT
CONTINUED MARGIN GROWTH
DRIVES PROFIT UPGRADE FOR FULL YEAR
Bunzl plc, the specialist
international distribution and services Group, is updating the
market today prior to entering its closed period for the six months
ending 30 June 2024.
The Group is upgrading its guidance
for the year based on improved margin performance, driven by good
margin management, including increased own brand penetration, and
acquisitions. The Group now expects to deliver robust revenue
growth in 2024, at constant exchange rates, driven by acquisitions
already completed in 2024; with a small decline in underlying
revenue. Group operating margin is now expected to be slightly
above the level reported for the full year 2023.
Group revenue in the first half is
expected to decrease year-on-year by 3% to 4% at actual exchange
rates and to decline by 0% to 1% at constant exchange rates.
Underlying revenue, which is organic revenue adjusted for trading
days, is expected to decline by around 5%, mainly driven by the
previously disclosed volume reductions and deflation in our US
business. Group operating margin for the first half of 2024 is
expected to show a strong improvement compared to the first half of
2023, resulting in robust adjusted operating profit growth at
constant exchange rates.
As expected, the decline in
underlying revenue in North America in the first half of the year
is driven by volume reductions in our US foodservice redistribution
business, as we transition towards an increased own brand
proposition; the ongoing impact from transitioning customer
specific inventory in our US retail business; and deflation. Second
quarter revenue trends in North America are expected to improve
compared to the first quarter, with volumes starting to recover. We
also expect a moderate decline in underlying revenue in Continental
Europe and UK & Ireland, and some growth in Rest of the World.
Good margin growth is expected in North America in the first half
of the year and very strong margin growth in the UK & Ireland
and Rest of the World. This is mainly due to the benefit from
acquisitions and good ongoing margin management across the Group,
following the strong margin performance in the second half of
2023.
In April, Bunzl signed an agreement
to acquire RCL Implantes, a Brazilian distributor specialising in
surgical and medical devices. This higher margin business generated
revenue of BRL 112 million (c.£18 million) in 2023 and strengthens
our position in this fragmented market. Competition authority
clearance has now been received and the acquisition is expected to
complete in the near future.
In June, Bunzl completed the
acquisition of Clean Spot, a distributor of cleaning and hygiene
products and equipment in Canada. The acquisition further enhances
Bunzl's footprint in Canada and expands our product offering. In
2023 the business generated revenue of CAD 7 million (c. £4
million).
Commenting on today's announcement,
Frank van Zanten, Chief Executive Officer of Bunzl,
said:
"Our agile and entrepreneurial teams
continue to deliver robust profit growth. I am delighted with the
ongoing successful margin management, including increasing
penetration of own brands, demonstrated across the Group, allowing
us to upgrade our full year profit outlook today. I am also pleased to welcome two more businesses to the
Bunzl family, taking our total committed spend on acquisitions to
around £600m so far this year. After an excellent start to the year
for acquisitions, we maintain a strong balance sheet, providing us
with significant optionality to continue to self-fund
value-accretive acquisitions and our pipeline remains
active."
Enquiries:
Bunzl plc
Frank van Zanten, Chief Executive
Officer
Richard Howes, Chief Financial
Officer
Tel: +44 (0)20 7725 5000
|
Teneo
Martin Robinson
Olivia Peters
Tel: +44 (0)20 7353 4200
|