Bunzl shares surging as CEO focuses on 'growth through acquisitions'

The Bunzl share price could be heading for another bull run thanks to a positive pre-close statement. The distribution and services group announced that H1 revenue is expected to be up 7% thanks to new Covid-related investments.

  • Bunzl share price up 4.3% over the last five days.
  • Group revenue expected to increase 7% compared to 2019.
  • Will a £114 million investment in Covid-related services maintain bull run?
  • Ready to trade the Bunzl share price? Open an account today

Although the figures are subject to change, Bunzl’s CEO Frank van Zanten said that revenue is likely to improve by up to 7% at constant exchange rates compared to 2019. Based on actual exchange rates that equates to a 1% increase in group revenue. The uptick in revenue mirrors the Bunzl share price resurgence over the last 18 months. From a five-year low of £14.22 in March 2020, Bunzl shares have risen by more than 60%.

How much have Bunzl shares increased?

In fact, based on the 24 June opening price of £24.40, shares in Bunzl have surged 71.5%. The recovery has largely been driven by Covid-19 related deals. As well as using its distribution and services network to sell personal protective equipment (PPE), Bunzl completed two acquisitions at the end of May. The takeovers of Comax and Harvey Distributors have increased the company’s presence in the medical and hygiene space.

Comax is a distributor of cleaning and hygiene products in the leisure, care home and foodservice sectors. Harvey Distributors offers a similar service in Australia. Combined, the two companies have annual earnings of more than £21 million. Bunzl will integrate the businesses into its rapidly expanding PPE and hygiene distribution network.

CEO Frank van Zanten said: ‘Growth through acquisitions is an important part of the ongoing strategy for Bunzl and I am pleased to welcome both Comax and Harvey Distributors to the Bunzl family. Both businesses strengthen the Group’s cleaning & hygiene operations, an area we expect will be supported by enhanced hygiene trends.’

How much is Bunzl investing in covid-related services?

Van Zanten also confirmed that Bunzl will invest a total of £114 million in its cleaning and hygiene operations. With retail and medical distribution contracts secured and investments being made, the CEO struck an optimistic tone in the company’s pre-close report. However, he also noted that other areas of the business, specifically food service and retail, are recovering but still down. Moreover, there is an expectation that ‘larger Covid-19 related orders’ will begin to decrease in the coming months.

This could have an impact on the Bunzl share price. The current climate remains positive and that’s given Bunzl shares a boost over the last 18 months. However, a fall in demand for PPE and cleaning products could have a negative impact in the future, particularly if the core business hasn’t recovered to pre-pandemic levels. Shares in Bunzl have spiked 4.3% over the last five days and more upward motion could be on the horizon, but the latest report suggests there could be some levelling off.

Will new acquisitions keep Bunzl shares strong?

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