Bunzl withstands currency headwinds

However, as at the full-year, foreign exchange movements remained a challenge. While constant-currency revenue, profits and EPS were all up by double-digits in percentage terms, the strengthening pound weighed heavily on international performance. 

The operating margin was 6.6 per cent, flat on the same period last year, but down on 2016’s level. The decline was due to a large North American grocery contract won at a lower margin last year, as well as an increase in operating costs. Despite this, cash conversion remains as strong as ever at 94 per cent – albeit only if you strip out acquisition-related costs. That continued to support a rise in the dividend, which has continued uninterrupted for 25 years.

Acquisitions remained a crucial part of the group’s strategy. Four deals have been announced to date, representing a total committed spend of £132m. The most recent deal – which Bunzl announced alongside these results – was the purchase of light catering equipment supplier Enor. The acquisition was the group’s first foray into Norway, which became the 31st country in which it operates. Management disposed of two businesses in the period, a UK marketing company and French SodaStream seller OPM. That was an uncommon occurrence, but chief executive Frank Van Zanten said it was a natural consequence of having acquired 155 business over the last 13 years, and that the companies no longer fitted in with the group’s strategy.

More acquisitions are inevitably on the way and, as Mr Van Zanten is fond of saying, BNZL has a lot of "firepower” to take advantage of opportunities as they arise. However, as many of the opportunities are dependent on a one-off event such as an owner's retirement to initiate discussions, their frequency and size are difficult to predict, he says. 

Analysts at Stifel are forecasting adjusted pre-tax profit of £550m, giving EPS of 126p for the year to December 2018 (from £543m and 119p in 2017).