(Alliance News) - Distribution firm Bunzl PLC on Tuesday said its third-quarter performance was helped by diversification, as a recovery in its base business offset a decline in sales of Covid-19 related products.
Revenue rose 7.8% in the three months to September 30 from the same period last year at actual currency rates and rose by 13% at constant rates. Underlying revenue growth at constant currency was 2.5%, as acquisitions contributed 4.2% to the revenue growth and extra trading days 6.2%. However, this growth was largely offset by a decline in sales of top eight Covid-19 related products.
Underlying revenue for the third quarter was 10% higher than the comparable 2019 period.
Bunzl, which saw strong demand for its services in supplying Covid-19 personal protective equipment, noted adjusted operating margin was hurt by ongoing price deflation in pandemic-related products.
Looking ahead, Bunzl expects "slight" underlying revenue growth in 2021 compared to 2020 at constant exchange rates. Margin expectations for the year remain unchanged, with adjusted operating margin expected to be only slightly ahead of historical levels. It expects the group operating margin to revert toward its historical level in 2022.
The London-based distribution and outsourcing company also said it has completed the acquisition of US agricultural supplies distributor Intergro LLC. Bunzl said Intergro, with GBP17 million in revenue in 2020, is complementary to its existing agriculture business in North America. Bunzl didn't disclose the purchase price.
In addition, Bunzl noted that it completed the previously announced acquisition of McCue Corp during October following competition clearance. US-based safety business McCue has operations in the UK and international markets alongside its US bases in Massachusetts, Texas and California. No financial details of the deal were disclosed.
Chief Executive Officer Frank van Zanten said: "At our recent capital markets day, as well as providing insights into the opportunity that sustainability presents to Bunzl, we highlighted the strength of our compounding strategy which has delivered strong shareholder returns for many years. This track record of success continues with another good trading performance in the third quarter and the acquisition of Intergro, which is our 11th acquisition year to date. Intergro is complementary to our existing agricultural business and broadens the group's product offering to customers. Our acquisition pipeline remains active, supported by the strength of our balance sheet."
Bunzl shares were trading 1.3% higher in London on Tuesday morning at 2,619.00 pence each. The wider FTSE 100 was up just 0.2%.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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