Bunzl's static organic growth disappoints

Third-quarter results from Bunzl disappointed as the distribution group saw underlying revenue remain stuck flat against last year, with a new Canadian acquisition announcement not lifting sentiment.

Thanks to acquisitions, the FTSE 100 company said its revenue for the third quarter had increased 4% on the same period last year compared, which it argued was consistent with the guidance it had given at its half year results announcement in August.

It said underlying revenue for the quarter had continued at a similar level as last year and was also consistent with the second quarter of the current year.

Analysts said the level of organic growth was disappointing, suspecting weak trends from Continental Europe and perhaps the UK, with evidence only of some contract losses reported in the first half.

Bunzl also revealed it had bought Canadian hygiene products distributor Planet Clean Canada, the group's six purchase in the sector in the last two years, and completed the purchase of Meier Verpackungen in Austria.

An "active acquisition pipeline" is expected to lead to a number of additional acquisitions during the rest of the year, with ongoing discussions said to be taking place.

Planet Clean, which booked revenue of C$25.6m in 2014, sells and distributes cleaning and hygiene supplies and equipment to a variety of customer markets including the healthcare, hospitality, food processing, government, building maintenance and industrial sectors.

Broker Shore Capital said the level of organic growth appeared to remain disappointing.

"We suspect that weak organic trends continue to weigh on the group reported level from Continental Europe and from RoW (for example including Brazil) regions, with perhaps some weakness returning to the UK, but North America reflecting lower plastics prices, mix and the effects of a couple of contract losses here as reported in the H1 period."

Shares in Bunzl were down 2% to 1,809p by 0855 BST on Wednesday.