By Anthony O. Goriainoff
Bunzl shares fell after the company guided for lower revenue and operating margin for this year due to a slower-than-expected start to trading in North America.
Shares at 0953 GMT were down 160 pence, or 4.8%, at 3,146 pence. However, they are currently up 4.4% over the past 12 months.
The London-listed distribution-and-outsourcing group said Monday that it expects underlying revenue–which is organic revenue adjusted for trading days–this year to fall slightly, with operating margin also slightly below 2023.
The warning comes after revenue in North America, around 59% of group revenue, fell to 6.97 billion pounds ($8.83 billion) from GBP7.37 billion. The company attributed the decline to volume weakness in the foodservice redistribution business, a reduction in retail revenue from planned strategic actions, and a decline in Covid-19 related product sales. It said that these factors were partly offset by a slight product cost inflation benefit in the base business.
Still, the company said organic growth was supported by new business opportunities stemming from acquisitions, continued product innovation and its sustainability expertise. The company made 19 acquisitions over the course of last year. On Monday, it announced that it had bought a further two companies.
Meanwhile, pretax profit for the year ended Dec. 31 was GBP698.6 million pounds compared with GBP634.6 million the year before, the company said.
Adjusted pretax profit–which strips out exceptional and other one-off items–was GBP853.7 million compared with GBP818 million and consensus of GBP799.9 million, taken from FactSet and based on seven analysts’ forecasts.
Revenue fell to GBP11.80 billion from GBP12.04 billion. Visible Alpha revenue consensus was GBP11.84 billion. Despite the fall, revenue was supported by 2.5% growth from acquisitions partially offset by a 1.5% negative impact to revenue from a disposal in 2022.
Operating margin increased to 8.0% from 7.4% and was 7.6% compared with 6.9% in North America.
Bunzl proposed a final dividend of 50.1 pence a share, bringing the total for the year to 68.3 pence, an 8.9% increase on 2022.
“Bunzl’s consistent, compounding model drives both growth and resilience, and 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 to drive market share, consolidate fragmented markets and continue to extend our successful track record for creating long term sustainable value,” Chief Executive Frank van Zanten said.
Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com
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