3rd Mar 2025 09:35
(Alliance News) - Bunzl PLC on Monday reiterated annual guidance but said profit and sales fell in 2024, held back by a sluggish performance in North America.
In response, shares in Bunzl fell 5.6% to 3,178.00 pence each in London on Monday morning. It was the worst-performing stock on the FTSE 100, which was up 0.3%.
The London-based distribution and outsourcing company said pretax profit fell 3.6% to GBP673.6 million in the financial year ending December 31 from GBP698.6 million a year prior. Adjusted pretax profit rose 2.2% to GBP872.9 million from GBP853.7 million, or 6.2% at constant currency.
Adjusted operating increased 3.4% to GBP976.1 million in 2024 from GBP944.2 million in 2023, with adjusted earnings per share up 1.7% to 194.3 pence from 191.1p. Operating margin improved to 8.3% in 2024 from 8.0% a year prior.
Sales were broadly flat at GBP11.78 billion in 2024, down 0.2% from GBP11.80 billion in 2023, or 3.1% higher at constant currency.
Bunzl said underlying sales trends improved in the second half of the year driven by slight volume growth and a small easing of deflation.
In North America, Bunzl saw slight operating profit growth at constant exchange, despite underlying revenue decline. Moderate revenue growth at constant exchange rates was seen in continental Europe, driven by the contributions from acquisitions, with underlying revenue impacted by deflation.
The UK & Ireland saw "very strong" revenue growth driven by acquisitions, with a decline in underlying revenue driven mainly by deflation and soft volumes. The Rest of the World also saw "very strong" revenue growth driven by acquisitions and good underlying revenue growth, driven by strong volume growth in Latin America.
Looking ahead, Bunzl reiterated guidance for 2025.
"Despite significant uncertainties relating to the wider economic and geopolitical landscape, the group expects robust revenue growth in 2025, at constant exchange rates, driven by announced acquisitions and slight underlying revenue growth," it said.
Group operating margin is expected to be maintained in-line with 2024 and to remain substantially higher compared to pre-pandemic levels, driven by higher margin acquisitions, as well as a good underlying margin increase.
The dividend for the year was increased by 8.2% to 73.9p from 68.3p, the 32nd year of consecutive annual dividend growth.
In addition, Bunzl said it had completed the first GBP50 million tranche of its GBP200 million share buyback. The remaining GBP150 million buyback is to be completed by the end of 2024, the firm added.
Dividend cover reduced to just over 2.6 times, with further "normalisation" of dividend cover expected in 2025. "The group remains committed to ensuring sustainable dividend growth," it added.
Chief Executive Officer Frank van Zanten said 2024 had been a year of "significant strategic progress", supported by further expansion in operating margin.
The CEO said Bunzl has "substantial headroom" for continuing to "self-fund value-accretive acquisitions alongside additional returns of capital to shareholders, and our acquisition pipeline remains active."
Bunzl has committed to allocate around GBP700 million per annum, to invest in value-accretive acquisitions and, if required, returns of capital, in each of the three years to December 2027.
In 2024, Bunzl made 13 acquisitions with a record annual spend of GBP883 million.
By Jeremy Cutler, Alliance News reporter
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