(Sharecast News) - Distribution and services group Bunzl lifted its full-year margin outlook on Tuesday as it posted a jump in first-half profit and revenue, with product cost inflation and volume growth more than offsetting an expected decline in Covid-related sales.
In the six months to 30 June, adjusted pre-tax profit grew 12.2% to £411.4m, with revenues up 16.1% at £5.7bn.
Bunzl said the base business saw very strong revenue growth across North America, Continental Europe and UK & Ireland, driven by strong product cost inflation. This was complemented by volume recovery in Continental Europe and UK & Ireland, as Covid restrictions eased versus the prior year.
The interim dividend was lifted by 6.8% to 7.3p a share.
The company also said that given its performance year-to-date, it now expects the group operating margin in 2022 to be higher than historical levels and only slightly lower than that achieved in 2021.
Chief executive Frank van Zanten said: "Over the period, our teams have been agile in navigating substantial inflation and supply chain disruption, while supporting recovery in the base business and continuing to provide our customers with essential products and services that are crucial to their operations. Our good performance has also been enabled by the depth and flexibility of our global supply chains.
"While mindful of the economic outlook, I believe our talented teams, the inherent resilience of our business model and diversification of our portfolio across sectors and regions, as well as our consistent focus on our strategic priorities, will continue to support the group's performance and maintain our strong track record of value creation."
At 1245 BST, the shares were down 6% at 2,926.0p.
Victoria Scholar, head of investment at Interactive Investor, said: "Shares in Bunzl are trading lower after its first half earnings report disappointed investors. Although it raised its operating margin outlook, it is still expected to fall in the full year versus 2021.
"The supplies distributor enjoyed a boost in demand for its products during the pandemic but has since struggled during the post-Covid economic normalisation. The global geopolitical uncertainty and equity market turmoil weighed on the stock between April and June but since the lows, Bunzl has enjoyed a strong uptrend, rallying by more than 20%. Shares are giving back some of those gains today."
Bunzl (BNZL)