21st Dec 2022 15:38
(Alliance News) - Bunzl PLC failed to "muster any enthusiasm from investors" despite expecting to deliver strong growth in 2022, AJ Bell said on Wednesday.
The London-based distribution services company said it anticipates a 17% revenue rise year-on-year in 2022, due to "inflation driving underlying revenue growth and the impact of acquisitions further supplementing growth". At constant currency, Bunzl said the 2022 revenue increase would be 10%.
For 2021, Bunzl recorded total revenue of GBP10.29 billion, so a 17% increase would raise the figure above GBP12 billion.
AJ Bell Investment Director Russ Mould said: "While it has shown to be resilient during inflationary times, markets no doubt don't like the news that next year's earnings per share will be moderately lower than 2022's because of higher interest and tax rates."
Bunzl said its adjusted operating margin for 2022 is expected to be slightly ahead of prior guidance, and will be in line with 2021, when it was 7.3%, down from 7.6% in 2020.
Looking ahead to 2023, Bunzl expects revenue to grow slightly, with adjusted operating profit to be "resilient". Adjusted earnings per share are expected to be "moderately" lower from 2022, however.
Jeffries said: "Bunzl has issued a resilient year-end trading statement. In our view, consensus FY22 EPS may drift up by low single digits today, driven by slightly stronger revenue growth and Ebita margins, but FY23 expectations are likely to remain unchanged."
"Even in a recessionary scenario, Bunzl has comfortable leverage and dividend cover. We remain somewhat concerned about margins and competition, but the business model has proven resilience during previous downturns and the balance sheet provides optionality," Jeffries added.
Chief Executive Officer Frank van Zanten said: "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."
On Tuesday, Bunzl had announced four acquisitions, as well as the sale of its UK healthcare division, to generate a "small cash inflow".
Bunzl shares were down 1.4% at 2,781.00 pence each on Wednesday afternoon in London.
By Sophie Rose, Alliance News reporter
Comments and questions to [email protected]
Copyright 2022 Alliance News Ltd. All Rights Reserved.
Related Shares:
Bunzl