By Yamini Kalia
(Reuters) – Britain’s Bunzl raised its annual adjusted operating profit forecast on Tuesday, benefiting from acquisitions and demand for its own brand business supplies, lifting it shares to a record high.
Bunzl’s shares rose by as much as 12% in early trading and were up 10.6% to 3,558 pence at 0743 GMT.
The supplier of everything from food packaging to stationery has profited from higher prices for daily-use items, increased penetration of its own brand and recently acquired businesses.
“We are quite keen to expand in the U.S.,” CEO Frank van Zanten told Reuters. Bunzl has announced seven bolt-on acquisitions in the past year but none in the U.S.
Bunzl, which has added over 170 businesses to its portfolio since 1940, has been struggling with lower volumes in the U.S. as destocking and inflation hampered demand in the food service sector.
North American revenue, its largest market by revenue, fell 5.1% during the first-half of the year.
The company expects adjusted operating profit in 2024 to show a “strong increase” in comparison with 2023, versus a prior forecast of slightly above the level reported for 2023.
Bunzl also announced a 250 million pound ($330 million) share buyback plan, with a further 200 million pound return expected by the end of the year.
The company said it will invest about 700 million pounds annually to 2027 in acquisitions and shareholder returns.
“This is a solid update from the group, with a step-up in its capital allocation strategy, coupled with the announcement of the buyback,” said Stifel analysts.
Bunzil, which expects “robust” annual revenue growth, with a small fall in underlying revenue, reported a 7.4% rise in adjusted operating profit for the six months ended June 30, with a slight decline in revenue.
($1 = 0.7576 pounds)
(Reporting by Yamini Kalia in Bengaluru; Editing by Rashmi Aich and Alexander Smith)
