FX puts a dampener on growth at Bunzl in 2012

FTSE 100 distribution and outsourcing group Bunzl said that its 'significant' levels of investment helped to boost revenues in 2012, though foreign exchange rates put a dampener on reported growth.

FTSE 100 distribution and outsourcing group Bunzl said that its 'significant' levels of investment helped to boost revenues in 2012, though foreign exchange rates put a dampener on reported growth.

Revenues increased by 5.0% from £5.11bn to £5.36bn last year, helped by good organic growth and the committed acquisition spend of £272m which added record annualised revenue of more than £500m.

The firm, which supplies a range of products such as food packaging, catering equipment and healthcare consumables, announced 13 transactions during the period, spending the most on acquisitions since 2004.

Bunzl registered strong revenue growth in both North America and Continental Europe - though the latter reported a decline in gross margin owing to the "difficult economic environment - but sales in UK and Ireland were flat due to the impact of the sale of the vending business in August 2011. Nevertheless, the company said that it was able to achieve underlying growth in spite of "suppressed" demand in the region.

However, the firm said that translation effects of the weaker euro and other currency movements offset a stronger US dollar, meaning that growth rates of revenue and operating profit were affected. At constant exchange rates (CER), the top line rose 6.0% year-on-year.

Operating profit (CER) increased by 7.0% from £336m to £352m in 2012, helped by a 10 basis-point improvement in the group operating margin to 6.6%.

Profit before tax (CER) rose 8.0% from £306m to £324m, but basic earnings per share surged by 57% from 38.2p to 59.9p, as 2011 has significantly affected by the loss on the disposal of the vending business.

The full-year dividend was raised by 7.0% to 28.2p per share. Meanwhile, net debt increased by £85m to £738m over the year mainly due to acquisitions.

"I am pleased to report another good set of results for Bunzl due to a combination of organic revenue growth, good performance from the acquisitions made in 2011 and significant acquisition spend in 2012," said Chief Executive Officer Michael Roney.

"While the macroeconomic outlook remains challenging, particularly in Europe, we believe that our strong market position, growing and resilient customer base and the promising pipeline of opportunities for additional market consolidation will provide the group with a good platform for further growth."

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