MARKET REPORT: Bunzl rises on dividend increase and share buybacks
Bunzl shares rose to a record high after the distribution group raised its dividend and announced a major share buyback.
The supplier of everything from food packaging to toilet paper is raising its dividend as it benefits from recent acquisitions and rising demand.
In announcing its half-year results, the FTSE 100 company increased its shareholder payout by 10 percent, from 18.2p per share in 2023 to 20.1p per share this year.
Bunzl also announced that it plans to buy back £250 million of its own shares in 2024, and another £200 million the following year.
Record high: Bunzl, supplier of everything from food packaging to toilet paper, will increase dividend as it benefits from recent acquisitions and rising demand
The distribution and outsourcing company raised its annual profit forecast for 2024 and announced a new acquisition: PowerVac, an Australian seller of garden blowers. It was its eighth addition of the year.
Chief Executive Frank van Zanten said the group was boosted by ‘increased penetration of its own brand and the impact of recently acquired companies’.
The update sent shares up as much as 12 per cent to trading up 8 per cent, or 256p, at 3,470p, a record for the group.
Russ Mould, analyst at broker AJ Bell, said: ‘Bunzl’s business model remains very sound.
Bunzl supplies the items other companies need to do business, but not the items they themselves sell to their customers.’
Airlines also benefited from their own rebound as stock prices began to recover.
Shares across the sector rose, with Easyjet up 6.9 percent, or 30.9p, to 478.8p, Wizz Air rose 5.3 percent, or 6.7p, to 1,337p and IAG gained 2 percent, or 3.55p, to 183.25p.
Share Price – Harbour Energy
Harbour Energy soared after the company announced its £8.5bn takeover of German rival Wintershall Dea would complete ahead of schedule.
The FTSE 250 North Sea oil and gas producer expects to complete the deal early next month after regulatory approval.
The agreement includes production and exploration rights in Norway, Argentina, Germany, Mexico, Algeria, Libya, Egypt and Denmark.
The shares rose 8 percent, or 22.4p, to 303.3p.
That followed recent unrest as investors feared signs of weakening demand.
Ryanair, the Dublin-listed airline, warned last month that summer fares would be much lower than last year after the budget carrier’s profits fell by almost 50 percent.
Susannah Streeter of investment platform Hargreaves Lansdown said the update “spread through other airlines, causing their share prices to fall”.
She added: ‘There are concerns that customers are reluctant to pay higher ticket prices and that this trend could continue, leading to lower fares. However, because demand for flights was high over the summer, that expectation is now disappearing.’
However, British luxury brand Burberry is showing no signs of a comeback as investors brace for the group’s removal from the FTSE 100.
The brand is known for its checked prints and trench coats, but sales have been poor due to the economic recession in the luxury industry.
Now it looks set to move the £2.5bn company to the FTSE 250.
The shares fell 3.1 percent, or 22.2p, to 692.8p, a further fall than the 50 percent the company has already seen this year.
Provisional changes will be announced next week, with Hiscox, a company worth more than £4bn, taking their place.
Shares in the insurer have risen 21 per cent in the past year, falling 1.2 per cent, or 14p, to 1,176p yesterday.
The FTSE 100 rose slightly by 0.2 percent or 17.68 points to 8,345.46 and the FTSE 250 fell slightly by 0.1 percent or 27.41 points to 21,162.07.
DIY INVESTMENT PLATFORMS
AJ-Bel
AJ-Bel
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free Fund Trading and Investment Ideas
interactive investor
interactive investor
Fixed investment costs from £4.99 per month
Saxo
Saxo
Get £200 back on trading fees
Trading 212
Trading 212
Free trading and no account fees
Affiliate links: If you purchase a product, This is Money may earn a commission. These deals are chosen by our editorial team because we think they are worth highlighting. This does not affect our editorial independence.