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(Alliance News) - Bunzl PLC on Wednesday maintained full-year profit guidance despite a dip in first quarter revenue as US volumes fell.
The London-based distribution and services company said first quarter revenue fell 2.4% at constant exchange rates, with underlying revenue, which is organic revenue adjusted for trading days, declining by 5.4%, as expected.
Acquisitions contributed growth of 2.9% at constant exchange rates, Bunzl said.
At actual exchange rates, group revenue declined by 5.9%.
Bunzl said this was mainly driven by volume reduction in its US foodservice redistribution business, the ongoing impact from transitioning customer specific inventory in its US retail business, and deflation.
Despite the sales fall, operating margin over the quarter was strong, supporting the outlook for the year, it noted.
Bunzl said its guidance remains unchanged. It continues to expect to deliver slight revenue growth in 2024, at constant exchange rates, driven by acquisitions already completed in 2023 and 2024; with underlying revenue declining slightly.
Group operating margin is expected to be slightly below the record level reported for 2023.
Chief Executive Frank van Zanten said: "I am pleased with the strategic progress that we continue to make after achieving a strong margin performance in 2023. We are taking appropriate action to pursue the opportunities for volume growth in our foodservice redistribution business in North America and this focus on organic growth, alongside our ongoing actions to further improve profitability and returns will enhance the group's prospects over the medium term. After a strong start to the year for acquisitions, our pipeline is active and our balance sheet remains strong."
Bunzl also updated regarding the acquisition of an 80% stake in catering equipment and consumables distributor Nisbets for GBP339 million, announced in February.
Bunzl said the UK Competition and Markets Authority has indicated in a response to a briefing paper from Bunzl that it has no further questions on the transaction.
The acquisition is still subject to clearance by the Irish competition authority which is expected during the first half of 2024.
Shares in Bunzl rose 0.9% to 3,082.00 pence in London on Wednesday morning.
By Jeremy Cutler, Alliance News reporter
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