Distribution giant Bunzl reinstates dividend as profit soars

Distribution giant Bunzl reported a strong first half of the year as it was buoyed by sales of cleaning products and a massive order of face masks placed by the Dutch government.

The company said it would pay back furlough money to governments, reverse an earlier decision not to pay a dividend for last year, and that it has two acquisitions lined up.

Profit before income tax rose 22.4% to £245.4 million on revenue of £4.8 billion, up 7%.

The company reinstated its dividend for 2019, and said it would increase the interim dividend to 15.8p for this year.

“Despite the unprecedented challenges experienced as a result of the Covid-19 pandemic during the first half of the year, these results have once again demonstrated the strength of our customer proposition and supply chain and the resilience of our business model and consistent and proven strategy,” said chief executive Frank van Zanten.

“Looking forward, although there remains considerable uncertainty, we expect to face challenging trading conditions during the second half of the year.”

The company said it is in discussions with “a promising pipeline” of potential targets for takeovers.

It came as it announced the acquisition of MCR Safety, a US-based safety expert, and Abco Kovex, an Irish packaging distributor.

“We look forward to welcoming both businesses and their employees to Bunzl,” Mr van Zanten said.

Underlying revenue grew 2.5% in the UK, while adjusted operating profit dropped significantly in the country as food service businesses and retailers closed down during the pandemic.

Mr van Zanten added: “The fundamental aspects of our business model remain attractive with the group’s strong cash generation allowing us to maintain Bunzl’s long track record of dividend growth and continue our compounding strategy of consolidating the group’s fragmented markets through focused acquisitions.”

Shares rose 2.5% on the news on Monday morning.Bunzl