Bunzl growth slows to 'more normal' level, with no acquisitions

Distribution and outsourcing group Bunzl slowed to a "more normal" pace of growth in the second quarter of the year, with a relatively rare absence of acquisitions.

After 2017 saw a record spend of £616m on acquisitions to take its completed deals to 150 since 2004, so far in 2018 Bunzl has spent just £105m on three purchases, with the second quarter relatively rare in seeing no additions.

But management assured that acquisitive growth remains a key plank in the strategy and assured that the pipeline for acquisitions "remains active and, with ongoing discussions taking place, the company expects to complete further transactions during the remainder of the year".

Bunzl revealed that it had made one disposal in the second quarter too, with the sale of its UK marketing services business, which has annual revenue of £46m, completed as it was felt to be "non-core as the opportunities to expand overseas in the short to medium term were limited".

Group revenue for six months ending 30 June is expected to have increased 5% at the reported level or 11% if the effect of currency swings is ignored. In the first quarter, the FTSE 100 group had reported revenue up 7% and 14% at constant exchange rates.

Underlying growth of roughly 5% in the first half was combined with around a 6% impact from acquisitions, net of disposals. Underlying growth was 7% in the first quarter.

"As anticipated, the underlying revenue growth has returned to more normal levels during the second quarter of 2018 as the additional grocery business won, albeit at lower margins, in North America towards the end of 2016 has now been fully absorbed," the company said.

Bunzl shares have been hit by concerns that the company will lose market share to Amazon Business, a new unit from the giant online retailer that allows businesses to purchase supplies.