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."

Recommended

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Why investors should be “cautiously bullish” for 2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

How the stamp duty holiday is pushing up house prices
Stamp duty

How the stamp duty holiday is pushing up house prices

Stamp duty is an awful tax and should be replaced by something better. But its temporary removal is driving up house prices, says Merryn Somerset Webb…
25 Sep 2020
The electric-car bubble could get an awful lot bigger from here
Renewables

The electric-car bubble could get an awful lot bigger from here

The switch to electric cars is driving a huge investment bubble. But that’s not necessarily a bad thing, says John Stepek. Fortunes will be made and l…
24 Sep 2020
Can Rishi Sunak’s winter plan save the UK economy?
UK Economy

Can Rishi Sunak’s winter plan save the UK economy?

With his Winter Economic Plan, chancellor Rishi Sunak is hoping to support the economy through the dark months ahead as restrictions tighten again. Jo…
25 Sep 2020