Bunzl, the world’s biggest distributor of everyday workplace products, said a slowdown in price inflation, fluctuating currencies and disposals had resulted in an 8.8 per cent fall in quarterly revenue.
While the group said strong operating margins meants its hopes for higher full-year profits would not be affected, it was enough to spook investors, who marked the £10 billion company down more than 4 per cent, with the shares falling 133p to £27.81.
Bunzl shares are now close to the lows plumbed in August, which had been the worst level since this time last year.
The company distributes workplace products such as lavatory paper, cleaning products, safety gloves and helmets for the food processing and construction industry. It also packages goods for hotels, restaurants and supermarkets. It had a particularly strong pandemic sourcing PPE (personal protection equipment) and cleansing agents to ward off Covid-19 infection.
It grows by acquiring smaller local businesses — more than 200 deals over the past 20 years. It is much loved by investors for the annual steady growth in dividends, unbroken since way before the turn of the millennium.
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In a third-quarter trading update, the company said the fall in revenue was “driven by a continued decline in Covid-19 related product sales, a reduced level of inflation benefit, and wider post-pandemic related normalisation trends, which drove expected volume weakness.”
However, it insisted, that would not harm its earnings. It said: “Operating margin over the quarter was very strong, remaining substantially higher than compared to the pre-pandemic period in 2019, and slightly ahead of the group’s expectations. Operating margin in 2023 is now expected to reach the record level seen in recent years.”
That will mean, it said, “adjusted operating profit being moderately higher than in 2022 at constant exchange rates”. Adjusted operating profits for 2022 came in at £885 million, year-on-year growth of 11 per cent at constant exchange rates.
Frank van Zanten, Bunzl’s chief executive, said: “Our performance continues to highlight the strength and resilience of the group’s business model.”
