Bunzl (BNZL) had forewarned investors back in April that challenging macroeconomic and market conditions were dampening underlying revenue growth. Compared with the 1.5 per cent recorded for the first quarter of 2019, organic revenue growth of 0.8 per cent for the six months to 30 June implies the group experienced a significant slowdown in the second quarter.
This comes as the largest market, North America, saw sales growth slow to 0.7 per cent to £2.6bn. With product specification changes and price deflation triggering lower revenue from a large grocery customer, organic growth dropped from 1 per cent during the first quarter to just 0.1 per cent. In expectation of further deterioration, JPMorgan Cazenove forecasts a swing to negative 0.7 per cent for the full year.
Bolt-on additions have boosted top-line growth in the past, but the group has only committed £98m on two acquisitions so far this year, a reduction of over a quarter from the same point in 2018. Looking to kickstart growth in the second half, the group is in “active discussions with a number of acquisition targets”.
JPMorgan Cazenove anticipates adjusted pre-tax profit of £576m and EPS of 131p for the full year, rising to £598m and 135p in 2020.
| BUNZL (BNZL) | ||||
| ORD PRICE: | 2,013p | MARKET VALUE: | £6.78bn | |
| TOUCH: | 2,012-2,014p | 12-MONTH HIGH: | 2,554p | LOW: 1,967p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 487p* | NET DEBT: | 87%** | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 4.34 | 197 | 45.1 | 15.2 |
| 2019 | 4.53 | 201 | 46.5 | 15.5 |
| % change | +4 | +2 | +3 | +2 |
| Ex-div: | 14 Nov | |||
| Payment: | 2 Jan | |||
| *Includes intangible assets of £2.4bn or 721p a share. **Excludes lease liabilities of £504m | ||||
