MARKET REPORT: Bunzl soars on dividend hike and share buyback

Bunzl shares soared to a record high after the distribution group upped its dividend and unveiled a bumper share buyback.

The supplier of everything from food packaging to toilet roll will hike the dividend as it cashes in on recent acquisitions and soaring demand.

Announcing half-year results, the FTSE 100 company increased its shareholder payout by 10 per cent, from 18.2p per share in 2023 to 20.1p per share for this year.

Bunzl also revealed it intends to buy back £250million of stock in 2024 and a further £200million in the following year.

Record high: Bunzl, which supplies everything from food packaging to toilet roll, will hike the dividend as it cashes in on recent acquisitions and soaring demand

The distribution and outsourcing firm upped its annual profits forecast for 2024 and unveiled another acquisition – Australia’s garden blower seller PowerVac – the eighth addition of the year.

Chief executive Frank van Zanten said the group had been boosted by ‘increased own brand penetration and the impact of recently acquired businesses’.

The update sent shares up as much as 12 per cent and were trading up 8 per cent, or 256p, at 3470p, a record for the group.

Russ Mould, analyst at broker AJ Bell, said: ‘Bunzl’s business model remains very solid. 

Bunzl supplies the things that other firms need in order to do business, but not items they would sell to their customers.’

Airlines also enjoyed their own uplift as stocks start to bounce back. 

Shares across the industry rose as Easyjet surged 6.9 per cent, or 30.9p, to 478.8p, Wizz Air rose 5.3 per cent, or 6.7p, to 1337p, and IAG gained 2 per cent, or 3.55p, to 183.25p.

Stock Watch – Harbour Energy 

Harbour Energy soared after it announced that its £8.5billion takeover of German rival Wintershall Dea will be done ahead of schedule.

The FTSE 250 North Sea oil and gas producer expects to close the deal early next month after winning regulatory approval.

The deal includes production and exploration rights in Norway, Argentina, Germany, Mexico, Algeria, Libya, Egypt and Denmark.

Shares surged 8 per cent, or 22.4p, to 303.3p.

That followed recent turbulence as investors were left spooked by hints of softening demand.

Dublin-listed Ryanair last month warned it expected summer fares will be much lower than last year after profits at the budget airline fell by almost 50 per cent.

Susannah Streeter at investment platform Hargreaves Lansdown said its update ‘caused contagion to other airlines, pushing down their share prices’.

She added: ‘There have been concerns that customers are baulking at paying higher ticket prices, and that this trend could become deeper, leading to digit falls in fares but with demand for flights proving robust over the summer, that prospect is now fading.’ 

However, British luxury label Burberry is showing no sign of a comeback as investors brace for the group to be kicked out of the FTSE 100.

Known for its check print and trench coats, it has struggled with dire sales as a slowdown bites the luxury industry.

Now it looks likely the firm – worth £2.5billion – will move into the FTSE 250.

Shares fell 3.1 per cent, or 22.2p, to 692.8p, adding to their 50 per cent decline so far this year.

Provisional changes will be announced next week, with Hiscox, worth more than £4billion, taking its place. 

The insurer’s shares have risen 21 per cent over the past year. They fell 1.2 per cent, or 14p, to 1176p yesterday.

The FTSE 100 edged up 0.2 per cent, or 17.68 points, to 8345.46 and the FTSE 250 inched down by 0.1 per cent, or 27.41 points, to 21,162.07.