Bunzl’s annual revenue hits £12bn on back of price increases

Bunzl’s turnover exceeded £12bn last year as price increases and a recovery in core business offset falling demand in the healthcare division.

The corporate supplier, which distributes products such as hard hats, disposable tableware and packaging to businesses, revealed that its annual turnover is up around £1.75bn from £10.3bn last year.

Trading was hit by rising demand in all regions and higher orders from sectors such as grocery, food service and retail offset the loss of covid-related business.

Underlying sales contributed about two-thirds of total growth, driven in part by price increases in response to inflationary pressures, particularly fuel and freight costs in North America.

The British Isles division saw the fastest increase in core sales at 12.2 percent, thanks to the return of leisure and sports activities, employees commuting to the office and consumers dining out in on-trade outlets.

In addition, Bunzl recorded impressive performance in the cleaning and hygiene segments in the UK and Ireland.

The remaining third of sales growth was attributable to acquisitions. The group agreed on 12 acquisitions in 2022, having spent more than £500m buying 14 companies last year.

Last year’s acquisitions included PM Pack, a supplier of packaging and butchery equipment in Denmark, Corsul Group, a major distributor of personal protective equipment in Brazil, and professional shoemaker VM Footwear.

On Monday, the company also announced it had agreed to acquire German online workwear and PPE retailer Arbeitsschutz-Express and finalized the purchase of Canadian packaging distributor Capital Paper.

Mergers and acquisitions are a core element of Bunzl’s long-term strategy to expand into new markets and industries, although it has recently divested its UK healthcare business. The division contributed £216 million in revenue in 2021.

Together with strong organic sales growth, this has helped the group’s net profit to increase for the past 11 years in a row and annual dividend per share to increase for three consecutive decades.

The company expects sales to be “slightly higher” in the coming year, despite heightened economic uncertainty due to rising inflation and the war in Ukraine.

Bunzl shares were up 2.1 per cent on Monday morning to £30.77, meaning their value has risen by about a third over the past two years.

Russ Mold, director of investment at AJ Bell, said Bunzl’s robust results and near-record share price highlight the “key virtues” that define the company’s success.

These include ‘a strong competitive position; the careful use of acquisitions to increase the company’s organic momentum; and a consistent record of increased dividend payments,” Mold said.