British business supplies distributor Bunzl has forecast that its first-half underlying revenue growth would be 'broadly flat', while for the full-year it will be slightly higher than in 2022.
Shares in the distributor of products from plastic spoons to PPE fell 2% to 3,042 pence by 09:15 GMT after Bunzl highlighted weak volumes in North America and as COVID-19 related demand for protective marks and gloves ebbed.
Bunzl said in a statement that a slowdown in global volumes in the food service sector due to inflationary pressures had stalled underlying sales in North America, its biggest market.
'Underlying revenue in North America is expected to decline moderately, driven by volume weakness in our food service sector, some of which is anticipated to be temporary, and with reducing benefit from inflation over the period,' Bunzl said.
Betting On Inflation And Acquisitions
London-listed Bunzl is betting on elevated inflation levels and acquisitions to 'drive good underlying revenue growth in continental Europe and strong growth in UK & Ireland'.
Frank van Zanten, chief executive officer of Bunzl, said, "Our acquisition momentum remains strong, with the acquisition of EHM, announced today, enhancing our safety offering in the UK. Year-to-date we have announced six acquisitions, including Bunzl's 200th since 2004, with our pipeline remaining active and supported by a strong balance sheet.
Bunzl, whose customers range from hotels to supermarkets, said full-year revenue growth will be slightly higher than 2022, while operating margins will be slightly lower.
'We expect an end to de-stocking, most pronounced in North American food service, and lapping COVID-19 sales should support moderate organic growth in the second half of the year,' Credit Suisse analysts said in a note.
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