Bunzl Expects To Deliver ‘Very Strong Growth’

Bunzl (LON: BNZL) shares opened Wednesday's session higher after releasing a trading update for the year ending December 31,2022, stating it expects to deliver “very strong growth” over the year.

The specialist international distribution and services group told investors the strong growth reflects the resilience and strength of its business model, with revenue in 2022 expected to increase by approximately 17% year-on-year, with inflation propelling underlying revenue growth and the impact of acquisitions further supplementing its growth.

On Tuesday, Bunzl announced it had signed agreements to acquire four businesses and agreed to sell its UK healthcare division, which generated £216 million in revenue in 2021, to Mediq.

In 2022, Bunzl expects its adjusted operating margin to be slightly ahead of prior guidance, in-line with 2021, and above historical levels. Meanwhile, the company is in ongoing negotiations with its largest customer by revenue.

Looking forward, Bunzl said it continues to see uncertainties relating to the macroeconomic environment. However, at constant exchange rates, it expects revenue in 2023 to be slightly higher than in 2022, driven by organic growth and previously announced acquisitions and partially offset by a minor impact from a previously announced disposal. 

Adjusted operating profit in 2023 is expected to be “resilient,” with operating margin slightly above historical levels. Furthermore, adjusted earnings per share are expected to be moderately lower year-on-year as a result of higher interest rates and an increased effective tax rate.

“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,” commented Frank van Zanten, Chief Executive Officer of Bunzl.

“We have continued to deliver on key strategic objectives, including supporting customers with innovative products that are better suited to a circular economy, and have had our ambitious carbon emission reduction targets approved by the Science Based Targets initiative (SBTi). In addition, we have committed more than £280 million of spend to acquisitions over the year, with our pipeline remaining active and supported by our strong balance sheet.”