FTSE 100 distribution company Bunzl said in a trading statement on Tuesday that their Q3 revenue was down 4.8% at a constant exchange rate.
Bunzl said the reduction of COVID-19 related sales hit revenue. Additionally, the current rate of inflation and “wider post-pandemic-related normalisation trends drove expected volume weakness consistent with the prior quarter,” Bunzl stated.
The reduced number of trading days had a negative 0.8% impact on revenue. Acquisitions contributed to 2.0% growth at constant exchange rates, but the disposal of the UK healthcare business lowered revenue by 1.3%.
Despite a decline of 8.8% in group revenue over the quarter at actual exchange rates, the operating margin remained very strong.
According to the statement, while announced acquisitions of enterprises, such as CT Group, a surgical and medical device distributor, will provide a boost, a decline, influenced by prior strong growth and the UK healthcare disposal, is expected.
The operating margin for 2023 is forecast to achieve a record level similar to recent years.
According to Frank van Zanten, Chief Executive Officer at Bunzl, “Our performance continues to highlight the strength and resilience of the Group’s business model, with revenue over the quarter 29% higher and operating margin substantially higher than the comparable period in 2019 at constant exchange rates.”
He added that “I remain confident in our ability to sustain a higher operating margin compared to pre-pandemic levels, supported by the acquisitions we have made over the period. Furthermore, today we announce our 13th and 14th acquisitions of 2023, with a total year-to-date committed spend of more than £425 million. I remain excited by the Group’s medium-term opportunities, which continue to be driven by our proven compounding growth strategy and active acquisition pipeline, supported by a strong balance sheet.”