2nd Apr 2020 08:46
(Alliance News) - Bunzl PLC on Thursday said its first quarter revenue rose, but the FTSE 100 distribution firm withdrew its guidance and its final dividend due to the Covid-19 outbreak, which has particularly hit its foodservice and retail sectors.
In the quarter to March 28, revenue rose by 4.5% at actual exchange rates. Adjusted for currency, and the numbers of trading days, revenue was about 6% higher, Bunzl said.
"Underlying revenue growth in continental Europe was strong and North America saw some growth despite the impact of the previously announced price and product specification changes with a large grocery customer. Revenue growth in rest of the World was particularly strong due to growth in our safety businesses in Latin America and UK & Ireland experienced a slight decline, principally due to further weakness in the hospitality sector during the quarter," it said.
"Trading has been strong in safety across the quarter and has strengthened more recently in grocery, healthcare and cleaning & hygiene. The foodservice and retail sectors, which together account for around 35% of group revenue, have been increasingly negatively impacted by the Covid-19 crisis in the latter part of March."
Foodservice and retail will be hurt further due to lockdown measures imposed across the globe to halt the spread of Covid-19, Bunzl said.
"The cleaning & hygiene and safety sectors are expected to see a mixed trading picture as a result of the end-markets served. Sectors such as grocery and healthcare are expected to deliver a robust performance. Given the unprecedented uncertainly around the impact of Covid-19, it is not possible to assess with certainty the impact this will have on the group's financial performance for the year. As such, the company is withdrawing its previous guidance for the year ending December 2020," it said.
"In light of the evolving Covid-19 situation, the company has moved quickly to protect profitability, liquidity and cashflow while seeking to ensure it is well placed to benefit when the recovery takes place. The group is acting responsibly with regard to its employees and is accessing employee-related government support packages where appropriate."
Bunzl has put the brakes on all acquisition activity and is deferring the purchase of Danish work equipment maker ICM.
It will also no longer propose a final dividend.
"The board recognises the importance of dividends to shareholders and, as such, it intends to consider the appropriateness, quantum and timing of an additional interim dividend payment relating to the financial year ended December 31, 2019 when it has a clearer view of the effects of Covid-19 on the company's business," Bunzl said.
Shares were up 0.4% at 1,571.50 pence each in London on Thursday morning.
By Eric Cunha; [email protected]
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