Bunzl, a prominent UK distribution and outsourcing company, anticipates revenue growth at constant exchange rates in 2024, fueled by its recent acquisitions. The company cautioned that ongoing deflation may slightly affect the growth of its group adjusted operating profit. In a trading statement released on Tuesday, Bunzl forecasted a 3% year-over-year increase in group revenue at constant exchange rates, with a potential decline of zero to 1% when considering actual exchange rates in 2024.
The company noted volume growth in underlying revenue during the third quarter, a trend expected to continue into the fourth quarter, although deflation seems more persistent than previously forecasted. Despite this 'slight impact' from deflation, Bunzl anticipates a significant rise in group adjusted operating profit year over year at constant exchange rates.
'2024 will be another year of significant progress for Bunzl, showcasing the ongoing growth and resilience of our business model,' stated Bunzl Chief Executive Officer Frank van Zanten. 'Overall, the Group has committed an unprecedented expenditure of over 850 million pounds sterling on 13 acquisitions made so far this year, and our acquisition pipeline remains robust.' Looking ahead to 2025, Bunzl expects considerable revenue growth at constant exchange rates, primarily driven by acquisitions, including the recently finalized purchase of specialist foodservice company C&C Group and French distributor Comodis, which specializes in cleaning and hygiene products. Analysts from RBC Capital Markets remarked that while deflation might dampen Bunzl's results for 2024, the outlook for 2025 remains solid.
They project 'slight' underlying revenue growth for FY25 at approximately 1.7%, with stable year-over-year margins, although BNZL usually takes a conservative approach to guidance regarding margins. This aspect could present an upside potential as FY25 progresses, as BNZL executes its mergers and acquisitions strategy alongside its organic growth plan. Regarding capital allocation, Bunzl has executed 200 million pounds of its 250 million-pound share buyback program initiated in August, and it plans an additional buyback of 200 million pounds for 2025..