Bunzl shares soar to record high as acquisitions help lift profit expectations

FTSE 100 Index listing Bunzl shares soared to a record high on Tuesday after the group raised 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” compared with 2023, having risen 7.4 percent in the six months to June 30.

Bunzl, which also announced a £250m share buyback plan and expects to raise a further £200m by the end of the year, has benefited from higher prices and greater market penetration for its own branded business supplies.

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

Bunzl said it intends to invest £700m a year through 2027 on further acquisitions and shareholder returns.

And boss Frank van Zanten told Reuters news agency the company is “quite interested” in expanding in the US, where it has been struggling with lower volumes as shortages and inflation hamper demand in the foodservice sector.

Bunzl shares rose as much as 12 percent on Tuesday and were trading around 8.2 percent higher at 3,476 pence at midday.

Shares have risen about 25 percent over the past year.

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

‘Our acquisition process remains active and our range of opportunities is substantial.

‘Today, the group is in an excellent position to continue our line of value-creating acquisitions within the very large and fragmented global markets in which we operate, and also return excess cash to shareholders.

‘We are committed to progressively returning leverage to our target range by the end of 2027 and are therefore announcing a significant share buyback that will commence with immediate effect.’