MARKET REPORT: Bunzl rises on dividend increase and share buybacks

Bunzl shares rose to an all-time high after the retail group raised its dividend and unveiled a large share buyback.

The supplier of everything from food packaging to toilet paper will boost its dividend as it capitalizes on recent acquisitions and rising demand.

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

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

The distribution and outsourcing company raised its annual profit forecast for 2024 and announced another acquisition: Australian garden blower seller PowerVac, its eighth addition of the year.

Chief executive Frank van Zanten said the group had been boosted by “increased private label penetration and the impact of recently acquired businesses”.

The upgrade sent shares up as much as 12 percent and they were trading up 8 percent, or 256 pence, at 3,470 pence, a record for the group.

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

Bunzl supplies the things other companies need to do business, but not the items they would sell to their customers.

Airlines also enjoyed their own rally as stocks began to recover.

Shares across the sector rose: Easyjet rose 6.9 percent, or 30.9 pence, to 478.8 pence, Wizz Air rose 5.3 percent, or 6.7 pence, to 1,337 pence, and IAG gained 2 percent, or 3.55 pence, to 183.25 pence.

This came after recent turmoil as investors were spooked by signs of waning demand.

Dublin-listed Ryanair warned last month that it expected summer fares to be much lower than last year after the budget carrier’s profits fell by almost 50 percent.

Susannah Streeter, of investment platform Hargreaves Lansdown, said its upgrade “caused contagion to other airlines, pushing down their share prices”.

He added: “There have been concerns that customers are reluctant to pay higher ticket prices, and that this trend could deepen, leading to multi-digit falls in fares, but with demand for flights proving robust over the summer, that outlook is now fading.”

However, British luxury brand Burberry is showing no signs of recovery as investors brace for the group to be ousted from the FTSE 100.

Known for its plaid prints and trench coats, the brand has struggled with dire sales as the slowdown hits the luxury industry.

The £2.5bn company now looks likely to move into the FTSE 250.

The shares fell 3.1 percent, or 22.2 pence, to 692.8 pence, adding to their 50 percent drop so far this year.

Interim changes will be announced next week and Hiscox, valued at more than £4bn, will take its place.

The insurer’s shares have risen 21 per cent in the past year. They fell 1.2 per cent, or 14 pence, to 1,176 pence yesterday.

The FTSE 100 rose 0.2 percent, or 17.68 points, to 8,345.46 and the FTSE 250 fell 0.1 percent, or 27.41 points, to 21,162.07.