Bunzl stumbled from an all-time high share price this morning as the company’s margins were squeezed to a several-year low.

The figures

The distribution and sourcing firm grew revenue six per cent to £9.1bn in the 2018 financial year, it announce this morning.

Adjusted operating profit, which strips out acquisition costs, some pensions charges and customer relationships amortisation, also rose four per cent to £614m, while adjusted pre-tax profits grew three per cent to £559m.

Meanwhile, profit before tax and basic earnings per share both grew four per cent to £425m and 98.4p respectively.

The company said it was building over a quarter-century of dividend growth with a nine per cent increase last year.

Meanwhile, rising costs pushed operating margins down to the lowest point for five years.

Why it’s interesting

Acquisition-mania has long been established at Bunzl, with the company completing around 150 takeovers since 2004.

So it was fitting that on results day the company should announce its most recent buy, of Liberty Glove and Safety, a US seller of protective equipment which showed $93m (£71m) revenues last year.

The acquisition pace slowed since 2017 when chief executive Frank van Zanten took the company to a record year, spending £616m. In 2018 it committed to spend £183m.

Shares in Bunzl fell around 4.25 per cent this morning to 2,431p, after closing at an all-time high on Friday since listing in the 1980s.

The company said it was monitoring the risks from Brexit and would stockpile some products, however Bunzl believes its ability to serve customers is "unlikely to be affected materially by Brexit." 

What Bunzl said

Van Zanten said: “Bunzl has once again delivered another good set of results with adjusted earnings per share up 12 per cent at constant exchange rates. The strength, resilience and reliability of our consistent business model and strategy, together with the compounding effect of our ability to reinvest our strong cash flow to take advantage of market consolidation opportunities, have enabled Bunzl to produce a strong long term performance.

“Looking forward, despite mixed macroeconomic conditions, with an active pipeline of acquisition opportunities we believe that the prospects of the group are positive due to its strong market position and well established and successful strategy to grow the business both organically and by acquisition.”

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