LONDON BRIEFING: Bunzl holds guidance as Covid-19 related orders slow

(Alliance News) - Distribution and services firm Bunzl on Wednesday said its "diversified and resilient" business model delivered good overall growth during the first quarter of 2021, despite the boost from supplying PPE during the virus pandemic starting to fall away.

Revenue was up 5.4% at actual exchange rates and 10% at constant exchange rates. Underlying revenue growth at constant exchange rates increased by 1.4%, in line with expectations.

In addition, Bunzl said adjusted operating margin continued to be supported by demand for Covid-19 related products. The company delivered personal protective equipment to businesses to help combat the pandemic.

Looking ahead, Bunzl said guidance remains unchanged. At constant exchange rates, Bunzl continues to expect robust revenue growth in 2021 compared to the prior year, after excluding larger Covid-19 related orders, which contributed GBP550 million of revenue in 2020.

"A recovery in sales of other products is expected to be largely offset by a decline in smaller Covid-19 related orders, while recent acquisitions will further contribute to the group's performance in 2021. After excluding larger Covid-19 related orders, the group continues to expect good organic revenue growth in the first half of 2021 to be followed by a moderate decline in the second half. Group adjusted operating margin for the year is expected to return to a more historical level," Bunzl said.

Bunzl shares down 3.6% early Wednesday.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.4% at 6,885.84

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Hang Seng: down 1.6% at 28,659.33

Nikkei 225: closed down 2.0% at 28,508.55

DJIA: closed down 256.33 points, or 0.8%, at 33,821.30

S&P 500: closed down 0.7% at 4,134.94

Nasdaq Composite: closed down 0.9% at 13,786.27

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EUR: flat at USD1.2031 (USD1.2035)

GBP: flat at USD1.3945 (USD1.3940)

USD: flat at JPY108.01 (JPY108.03)

Gold: up at USD1,786.64 per ounce (USD1,776.45)

Oil (Brent): up at USD66.14 a barrel (USD65.71)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Wednesday's Key Economic Events still to come

0700 EDT US MBA weekly mortgage applications survey

1030 EDT US EIA weekly petroleum status report

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UK inflation rose slightly in March according to the latest figures from the Office for National Statistics, but the annual print just missed market estimates. On an annual basis, UK consumer prices rose 0.7% in March, accelerating from a rise of 0.4% in February. However, the latest reading was just shy of market consensus, cited by FXStreet, for an 0.8% increase. On a monthly basis, consumer prices grew 0.3% in March, rising slightly from inflation of 0.1% in February. The figure was in-line with the consensus estimate.

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Negotiators for the EU institutions have struck a deal on new climate rules, officials from the European Parliament and the EU Council told dpa, paving the way for at least a 55% emissions-reduction target to be enshrined in law. Representatives of the 27 governments, the European Parliament and the European Commission came to an agreement after months of fruitless negotiations behind closed doors. The new target is a significant jump from the current target of 40% emissions reductions, compared to 1990 levels.

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BROKER RATING CHANGES

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RBC CUTS LANCASHIRE HOLDINGS TO 'SECTOR PERFORM' ('OUTPERFORM') - TARGET 750 (900) PENCE

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BARCLAYS RAISES RYANAIR PRICE TARGET TO 18.20 (17.30) EUR - 'OVERWEIGHT'

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BARCLAYS RAISES IAG PRICE TARGET TO 230 (205) PENCE - 'OVERWEIGHT'

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COMPANIES - FTSE 100

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BHP Group said it is bringing new supply in copper, petroleum and iron ore, while coal production guidance has been lowered after wet weather hit operations. The global mining giant said copper production in the first quarter of 2020 fell 8% year-on-year to 391,400 tonnes. Petroleum production increased 1% compared to the year before to 25.4 million barrels of oil equivalent. Iron ore production was flat to the prior year. Metallurgical coal production increased 4% year-on-year to 9.6 million tonnes, while energy coal production sank 17% to 4.8 million tonnes. Nickel production slipped 2% year-on-year to 20,400 tonnes. Going forward, full-year production guidance for petroleum, nickel and iron ore was left unchanged, but it was lowered for metallurgical and energy coal.

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Antofagasta said copper production in the first quarter was in line with guidance at 183,000 tonnes, 5.7% lower than in the same quarter in 2020 and 5.0% lower than in the fourth quarter, mainly due to expected reduced grades at the Los Pelambres mine. Gold production was 59,100 ounces in the first quarter, 9.2% lower than in the same period in 2020 and 8.0% higher than in the fourth quarter, mainly due to changes in grade at the Centinela mine. Looking ahead, Antofagasta said full-year guidance is unchanged at 730 tonnes to 760,000 tonnes of copper at a net cash cost of USD1.25 per pound and capital expenditure of USD1.6 billion. CEO Ivan Arriagada said: "Labour negotiations were successfully concluded at Los Pelambres and no further negotiations are scheduled at our mining operations until next year. "The copper market continues to perform strongly, and we expect this to continue as structural supply and demand dynamics support a tight physical market."

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Hikma Pharmaceuticals said it has that it has resumed the launch of its generic version of GlaxoSmithKline's Advair Diskus in the in the US. The move follows the US Food & Drug Administration's approval of an amendment that Hikma had submitted to its Abbreviated New Drug Application in January. The amendment reflected enhanced packaging controls to meet new industry standards adopted since the initial submission of its application, Hikma said. Chief Executive Officer Siggi Olafsson said: "We appreciate the FDA's timely review and approval of our amendment and are now immediately resuming the launch of our high quality, substitutable generic version of Advair Diskus."

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COMPANIES - FTSE 250

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Hochschild Mining said it has made a strong operational recovery from the Covid-19 disruption in 2020. Hochschild has silver and gold mines in Peru and Argentina. It said it is on track to deliver on its 2021 production target of 360,000 to 372,000 ounces of gold equivalent and 31.0 million to 32.0 million ounces of silver equivalent. In the first quarter, Hochschild produced 85,738 ounces of gold equivalent and 7.4 million of silver equivalent.

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COMPANIES - MAIN MARKET AND AIM

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Coca-Cola European Partners said it will change its name to Coca-Cola Europacific Partners following the completion of its acquisition of Australia's Coca-Cola Amatil on May 10.

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COMPANIES - GLOBAL

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The European Super League will consider "the most appropriate steps to reshape the project" after the so-called Big Six English football clubs withdrew from the controversial new competition following widespread outrage and the prime minister's threats of legislative action. Manchester City were the first to confirm their departure from the proposed competition before Arsenal, Manchester United, Liverpool and Tottenham announced their withdrawals late on Tuesday, with Chelsea announcing their exit in the early hours of Wednesday. Those behind the Super League said it had proposed the new league "because the existing system does not work". US investment bank JPMorgan on Monday had confirmed to AFP it was financing the breakaway league.

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Roche Holding confirmed its outlook for 2021 after saying that its first-quarter sales were hurt by the appreciation of the Swiss franc against many other currencies. The Basel, Switzerland-based pharmaceutical company said its sales for the three months to the end of March declined by 1% to CHF14.93 billion from CHF15.1 billion a year before. On a constant currency basis, sales rose by 3% year-on-year.

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Discussion platform Discord, popular among amateur video game players, has halted acquisition talks with Microsoft and is instead considering its options for a public offering, the Wall Street Journal reported. Media reported last month that the social platform, created in 2015, was engaged in discussions about a transaction with the technology giant that would have valued Discord at USD10 billion. Discord, which is based in San Francisco, allows its 140 million monthly users to exchange text, audio and video for free. The platform, which is not yet profitable, generated about USD130 million in revenue in 2020 from USD45 million the year before as it grew beyond just "gamers" to other users as well during the pandemic, according to the Journal.

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Wednesday's Shareholder Meetings

Biome Technologies PLC - AGM

Bunzl PLC - AGM

DP Eurasia NV - EGM re appointment of non-executive directors

Drax Group PLC - AGM

EP Global Opportunities Trust PLC - AGM

Hunting PLC - AGM

Serco Group PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

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