Shares in international distribution group Bunzl (BNZL) rallied 5.4% to an all-time high of £26.92 after it posted a 4% increase in third quarter revenues at actual exchange rates and an 8% increase on an underlying basis.


The company attributed its growth to continued strong demand for Covid-related products such as masks, sanitisers, gloves and disinfectants, as well as the acquisition of MCR Safety, a US distributor of own-brand personal protection equipment (PPE), which completed at the beginning of September.

MCR made annual sales of roughly $250 million last year, 80% of which were in the US, strengthening and expanding Bunzl’s North American safety business.

Within the underlying revenue growth of 8% the firm said sales of its top Covid-related products, which are primarily own-brand, were up 17.5% which more than offset a 9.5% drop in sales of other products.


Looking forward the company was sanguine, saying ‘the outlook remains uncertain, particularly considering current pandemic trends and the increasing restrictions which are now being reintroduced in some markets that may limit the continued underlying recovery. In addition, larger Covid-related orders are expected to be more limited.’

However, thanks to recent acquisitions and its underlying performance over the last three months the firm said it expects revenues to grow ‘strongly’ in the second half and sees a ‘slightly higher’ second-half operating margin than last year thanks to higher sales of own-brand products.

Shore Capital analyst Robin Speakman nudged up his 2020 full year earnings forecast but left next year’s forecast unchanged. ‘Looking beyond the current year, we expect Bunzl’s underlying business to once again revert to tracking regional GDP trends – so we await economic recovery lifting sales across markets through 2021’.


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Issue Date: 14 Oct 2020