24th Aug 2020 08:30
(Alliance News) - Bunzl PLC on Monday lifted its interim payout - and reinstated a previously skipped dividend - as it posted a surge in profit but forecast challenging trading conditions in the second half of 2020 due to the Covid-19 pandemic.
Shares in the FTSE 100 distribution and services firm were trading 3.3% higher at 2,485.00 pence each on Monday morning in London.
For its financial year ended June 30, Bunzl posted pretax profit of GBP245.4 million, up 22% from GBP200.5 million. This was as revenue surged 7.0% year-on-year to GBP4.85 billion from GBP4.53 billion.
The London-based company said its performance was driven by a strong demand for Covid-19 related products, including masks, sanitisers, gloves, disinfectants, coveralls, disposables wipes, face shields and eye protection
An interim dividend of 15.8p was declared, up 1.9% from 15.5p paid out last year. Also, as a result of the better-than-expected trading performance during the first half of the year, Bunzl said it has decided to reinstate and pay the final dividend for 2019 at the same level as originally proposed of 35.8p.
As it is no longer possible for this dividend to be approved by shareholders at the annual general meeting, Bunzl said it will be paid as an additional interim dividend in November.
Looking ahead, Chief Executive Frank van Zenten said: "Although there remains considerable uncertainty, we expect to face challenging trading conditions during the second half of the year. However, the fundamental aspects of our business model remain attractive with the group's strong cash generation allowing us to maintain Bunzl's long track record of dividend growth and continue our compounding strategy of consolidating the group's fragmented markets through focused acquisitions."
Cash held as at June-end was GBP830.9 million.
In a separate statement, Bunzl said it has agreed to acquire a US-based safety business, as well as a flexible packaging distributor in Ireland.
MCR Safety - based in Memphis, Tennessee - supplies personal protective equipment and has operations in Arkansas, Mexico, Canada, the UK, the Netherlands, Colombia and Costa Rica. In 2019, the businesses posted revenue of USD248 million. No financial details were disclosed for the acquisition which is expected to complete at the end of August.
Dublin-based flexible package distributor Abco Kovex sells items such as stretch film, polythene & paper packaging and pallet wrap. It posted 2019 revenue of EUR23 million.
"The acquisition of MCR Safety is an important development for Bunzl. It is a high-quality business with a strong leadership team and well established portfolio of own brand products which will complement our existing product range and significantly strengthen and expand our safety operations both in the US and elsewhere. The proposed acquisition of Abco Kovex will also complement our existing operations as it will enhance our product offering and expand our customer base both in Ireland and the UK which in turn will allow some cross-selling opportunities," van Zanten said.
By Ife Taiwo; [email protected]
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