27th Jun 2024 08:43
(Alliance News) - Bunzl PLC on Thursday raised its annual guidance to reflect an "improved margin performance" in its first half.
The London-based distribution and services provider now expects "robust revenue growth in 2024", its qualitative guidance comparing to its previous prediction of "slight revenue growth". Revenue in 2023 totalled GBP11.80 billion.
The operating margin is now expected to be slightly above 2023's level of 8.0%. It had previously forecast an outcome "slightly below".
The company was updating the market prior to entering its closed period for the six months ending June 30.
Shares in Bunzl rose 0.6% to 3,056.00 pence in London on Thursday morning.
For the first-half of the year, revenue is expected to decrease between 3% and 4% on-year, at actual exchange rates, and to decline by 0% to 1% at constant exchange rates.
Underlying revenue, which is organic revenue adjusted for trading days, is expected to decline by around 5%, mainly driven by the previously disclosed volume reductions and deflation in the US business.
"Group operating margin for the first half of 2024 is expected to show a strong improvement compared to the first half of 2023, resulting in robust adjusted operating profit growth at constant exchange rates," Bunzl added.
Bunzl said the decline in underlying revenue in North America in the first half of the year is driven by volume reductions in its US foodservice redistribution business. But second quarter revenue trends in North America are expected to improve compared to the first quarter, with volumes starting to recover.
The company also expects a moderate decline in underlying revenue in Continental Europe and UK & Ireland, and some growth in the Rest of the World segment.
Good margin growth is expected in North America in the first half of the year, and very strong margin growth in the UK & Ireland and Rest of the World. This is mainly due to the benefit from acquisitions and good ongoing margin management across the group, the firm added.
Chief Executive Frank van Zanten suggested further acquisitions could be in the pipeline.
"After an excellent start to the year for acquisitions, we maintain a strong balance sheet, providing us with significant optionality to continue to self-fund value-accretive acquisitions and our pipeline remains active," he said.
By Jeremy Cutler, Alliance News reporter
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