Bunzl shares falter on growth pains

Shares in Bunzl came under selling pressure on Wednesday after the outsourcing and distribution firm posted slowing first quarter growth.

The company saw sales rise 4% in the period, which the firm said represents a slowdown that it linked to “mixed macroeconomic and market conditions”.

Bunzl pointed in particular to its business in North America, which experienced slower underlying growth of approximately 1% as a result of lower sales to customers in the grocery and retail sectors.

Investors reacted badly to the news, sending shares down nearly 10% to 2,310p in morning trade.

Russ Mould, investment director at AJ Bell, said: “Markets have been right to worry about a global economic slowdown if you look at Bunzl’s gloomy update.

“It supplies goods to companies so they can do business, rather than items they sell on to their customers.

“For example, this includes coffee cups for cafes, cleaning products for hospitals and food wrap for supermarkets to protect their goods.

“Therefore, it can be considered an economic bellwether.

“The fact that underlying revenue growth during its first quarter seems to have slowed in all markets is a major alarm bell.

“The big question is whether life is getting to get even tougher in its second quarter.”

But Bunzl added that it has seen good growth in the safety, processor, agriculture and convenience store sectors, and flagged 2% underlying revenue growth in Continental Europe, UK and Ireland and the rest of the world.

The group also said that it has acquired Dutch distributor Coolpack for an undisclosed amount.

Coolpack is engaged in the supply of specialist packaging to supermarkets and the pharmaceutical, food processor and foodservice sectors.

“Growth through acquisitions to consolidate the markets in which the company operates is an important part of Bunzl’s consistent and proven strategy,” Bunzl added.