Bunzl shares at report excessive as takeovers assist elevate revenue expectations

FTSE 100-listed Bunzl shares soared to a record high on Tuesday after the group hiked full-year profit expectations.

The supplier of everything from food packaging to stationery said it expects adjusted operating profit in 2024 to show a ‘strong increase’ in comparison with 2023, after jumping 7.4 per cent in the six months to 30 June.

Bunzl, which also announced a £250million share buyback plan, with a further £200million expected by the end of the year, has benefited from higher prices and increased market penetration for its own brand business supplies.

Bunzl shares hit record high after business supplies firm lifts profit expectations 

The firm has also seen profitability boosted by an inorganic growth strategy, with Bunzl acquiring or buying stakes in other businesses.

Bunzl said it intends to invest £700million annually to 2027 on further takeovers and shareholder returns.

And boss Frank van Zanten told the Reuters on news agency that the firm is ‘quite keen’ to expand in the US, where it has been struggling with lower volumes as destocking and inflation hamper demand in the food service sector.

Bunzl shares were up as much as 12 per cent on Tuesday and were trading around 8.2 per cent higher to 3.476p approaching midday.

The shares are up by around 25 per cent over the last year.

Van Zanten said: ‘Despite a material increase in the amount of capital we have allocated towards self-funding value-accretive acquisitions, our consistently strong cash generation means that leverage has remained below our target range for some time.

‘Our acquisition pipeline remains active and our runway of opportunity is substantial.

‘Today the group is in an excellent position to pursue our pipeline of value-accretive acquisitions within the very large and fragmented global markets that we operate in, and also return excess cash to shareholders.

‘We are committing to steadily return leverage to our target range by the end of 2027, and therefore announce a substantial share buyback that will commence with immediate effect.’