Bunzl: Giant on a shopping spree with two acquisitions and bumped

Jul 16, 2023

By: Guy Taylor

Acquisitive outsourcing giant Bunzl said it had snapped up two more companies this morning in Poland and the Netherlands, as the firm raised its profit guidance for the year ahead and bumped up its interim dividend by 5.2 per cent in its half year results.

The distribution company said it had signed an agreement to acquire Safety First in July, one of the largest distributors of Personal Protective Equipment (PPE) products in Poland and EcoTools, a Netherlands based distributor of tool accessories and industrial consumables in the Beneleux region.

Frank van Zanten, chief executive of Bunzl, hailed the companies acquisitive spree this year, with the two this morning taking its total to 12 acquisitions in the year prior to August.

“Our acquisition momentum has been strong this year and our total committed spend year-to-date is now more than £350 million. We have significant headroom to continue to self-fund value-accretive acquisitions and our pipeline remains active,” van Zanten said.

The news came alongside a 4.5 per cent jump in half-year revenues at the firm from £5.65bn to £5.90bn year on year, albeit slightly below analysts expectations.

Operating profits also rose 6.5 per cent from £411.4m to £438.3m, it said in a statement to markets this morning.

Matt Britzman, equity analyst at Hargreaves Lansdown, said “Bunzl generates most of its revenue and profit outside the UK, with the US a key region, so it’s not the economic conditions at home that turn the dial. Inflation easing in the US is a double-edged sword. On the one hand, lower input costs have helped margins push higher over the half, but the flip side is a drop in revenue as the pricing on a lot of Bunzl’s products can be linked to inflation.

“Add in a drop in COVID-related sales and the underlying business is seeing a bit of weakness creep in, comparable periods are tough though. Aside from lower costs, margins also got a bump from consumers shifting to own-brand products in response to ongoing pressures on income,” he added.

That success allowed the group to up its operating profit guidance for 2023 and van Zanten said he remains “confident in Bunzl’s medium-term growth opportunities.”

Bunzl has been attempting to drive growth through a string of takeovers this year, continuing a trend that has seen it secure 200 deals since 2004.

Big announcements include the acquisition of Leal Equipamentos de Proteção, a specialised safety distributor in Brazil, Irudek, a Spanish PPE maker and EHM, another distributor of PPE products based in the UK.

Seperately, the FTSE 100 firm has benefitted from price hikes and rising demand – particularly in its grocery and retail segments – which helped it net a turnover of £12bn last year.

Nonetheless, it has had to battle against cost inflation being a business which provides a host of crucial everyday equipments.

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