16th Dec 2020 09:07
(Alliance News) - Bunzl PLC on Wednesday said it expects a "strong performance" for 2020, with continued growth in Covid-19 related orders during the fourth quarter of the year amid pandemic-driven restrictions in some markets.
The London-based distribution firm's revenue for the year is expected to increase by 8% from GBP9.33 billion as a result of similar levels of growth from organic revenue increase and the impact of acquisitions. Bunzl said organic revenue growth continues to reflect diverging trends between the strength of Covid-19 related product sales and declines in other products, and expects the growth to be driven by smaller orders and larger orders continuing to slow.
The firm's operating margin is expected to be higher than the prior year as it has "significantly" benefited from a mix of products being sold.
Looking ahead, Bunzl said it expects revenue in 2021 to be lower than the current year, with "minimal benefit" from larger Covid-19 related orders which have strongly supported the performance in 2020. The company said it forecasts an underlying recovery in sales of other products to be offset by a decline in smaller Covid-19 related orders, with acquisitions made during 2020 contributing to its 2021 performance.
"The group's performance during the pandemic has demonstrated the resilience of the Bunzl portfolio, the strength of our supply chain and the agility of our decentralised operating model," said Chief Executive Frank van Zanten.
"This year has been one of the most acquisitive in our history, with more than GBP410 million of committed spend. The acquisition pipeline remains active with a number of discussions ongoing," he added.
Bunzl added that it has recently completed the purchase of Snelling Paper & Sanitation Ltd, a Canadian business focused on the sale of cleaning and hygiene products and industrial and foodservice packaging, which had a 2019 revenue of USD48 million.
It also completed the acquisition of SP Equipamentos, a personal protection equipment distributor based in Sao Paulo, Brazil, with 2019 revenue of BRL143 million, or GBP22 million.
Shares in Bunzl were down 4.8% at 2,358.00 pence in London on Wednesday.
By Zoe Wickens; [email protected]
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