23rd Jun 2015 11:27
LONDON (Alliance News) - Bunzl PLC on Tuesday said trading in the first half of the year has been in line with its expectations, as it announced the acquisition of four businesses in the US, Colombia, Canada and France, but shares in the company were trading lower throughout the day as its organic growth in the first half was dragged back by soft market conditions in North America.
Bunzl shares were down 1.6% to 1,861.00 pence early Tuesday afternoon, the worst performer in the FTSE 100.
The distribution and outsourcing company said overall trading in the first half of 2015 has been in line with its expectations, with revenue in the first half set to grow by around 6%, including a one-percentage-point benefit from positive exchange rate movements.
But the total growth in the half has been driven primarily by acquisitions, with organic revenue rising by only 1%, compared to 2% growth in the first quarter of the year. The lower organic growth rate year-on-year, Bunzl said, is down to slower growth in North America due to some lost business and pricing pressures on plastic resin-based products.
Bunzl said acquisitions remain a key part of its growth strategy and, including the four deals announced on Tuesday, it has acquired or agreed deals to buy ten companies in 2015 so far, spending a total of GBP210 million. It added the pipeline for further acquisitions in the remainder of 2015 also looks good.
In a separate statement on Tuesday, Bunzl said it has acquired four new businesses. It has agreed a deal to buy Memphis, Tennessee-based International Sourcing Company Inc, which makes a range of personal protection equipment, and has acquired Importadores Exportadores Solmaq SAS, a Bogota, Colombia-based personal protection equipment maker. Both deals are expected to complete by the end of this month.
It also has completed the acquisition of GF Inc, a Calgary, Canada-based industrial packaging and warehouse supplies company, and has acquired Ligne T SAS, a Montauban, France-based personal protection equipment manufacturer.
No financial details were provided on any of the transactions.
"The acquisition of Cordova Safety Products, Solmaq and Ligne T each represent an extension of our existing safety businesses in the US, Colombia and France as we continue to look to expand and develop our operations in this important sector. The purchase of GF is the sixth acquisition we have made in Canada since 2013 as a result of which we have developed a national business in Canada with annual revenue in excess of CAD700 million," said Bunzl Chief Executive Michael Roney.
Investec and Shore Capital both have Hold recommendations on Bunzl, with both noting concerns about slowing organic growth in the half.
Investec kept a 2,000 pence price target on the company, saying that while the company remains a strong business, softer underlying trading conditions provide reason for caution.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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