Bunzl Q1 Report 2023

Bunzl’s diversified business model has delivered resilient growth, with Group revenue in the first quarter up 8.4% at actual exchange rates and 1.2% at constant exchange rates. At constant exchange rates, organic growth of 0.6% was driven by underlying revenue growth of 1.5%, partially offset by a negative trading day impact of 0.9%. Underlying revenue growth benefitted from continued inflation support but was impacted by the expected decline in Covid-19 related sales. Acquisitions contributed further growth of 2.7% at constant exchange rates, whilst the disposal of our UK healthcare business impacted revenue by 2.1%. Adjusted operating margin over the quarter was slightly ahead of
expectations.

Underlying revenue growth in Continental Europe and UK & Ireland continued to be supported by very strong product cost inflation. Underlying revenue growth in North America, whilst benefitting from continued product cost inflation, was impacted by volume softness in our foodservice sector, some of which is anticipated to be temporary. Rest of the World was impacted by the decline in Covid-19 related sales, including the non-repeat of some larger orders made during the first quarter of last year.

While we see continued uncertainty relating to the macroeconomic environment, at constant exchange rates the Group continues to expect revenue in 2023 to be slightly higher than in 2022, driven by both organic growth and announced acquisitions, and partially offset by a small impact from the UK healthcare disposal. We expect Group adjusted operating profit to be resilient, with operating margin slightly higher than historical levels.

In April 2023, Bunzl entered into an agreement to acquire Dimasa, a distributor of cleaning and hygiene products in the Andalusia region of Spain. The business generated revenue of EUR 4 million (c.£3 million) in 2022. Since the start of the year, Bunzl has also completed the acquisitions of Arbeitsschutz-Express in Germany and Capital Paper in Canada.