Firm pound hits revenue but Bunzl expects sales to outrun GDP

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Business supplies distributor Bunzl expects underlying sales growth for the rest of its financial year to beat broader economic growth, after a strong pound dented first half revenue by 8 per cent.

Referring to like-for-like growth at constant exchange rates, chief executive Michael Roney said this should be ahead of the GDP forecasts in the countries in which it operates, and that acquisitions would help boost revenues further.

“We expect our underlying growth to be ahead of GDP – for example, if GDP growth is 2 per cent, we would expect to be somewhere around 2.5-3.5 per cent in that area,” he said.

The company, which supplies supermarkets, hospitals and hotels with products ranging from carrier bags to toilet rolls and generates 83 per cent of revenues abroad, said it had posted strong sales growth in North America, Britain and Latin America. But Australia and some parts of Continental Europe remained sluggish.

Helped by the impact of recent acquisitions in Brazil, Germany and the Netherlands, the company posted a 7 per cent rise in first-half revenue at constant exchange rates – just ahead of a forecast of 6 per cent it gave in June.

But adjusted for currency fluctuations, sales fell 1 per cent. Pre-tax profits rose 5 per cent to £176.6m.

The company has been on a steady acquisition drive, spending £1.7bn on 80 deals over the past ten years. Mr Roney said it would continue to look for new businesses in the second half of the year and that it was making progress in seeking out an anchor acquisition in Asia.

Bunzl has operations in Leeds and Castleford.