Bunzl share price: 3 things to watch out for in its Q1 results

The distribution and outsourcing company saw growth driven by acquisitions and after a strong end to 2018 investors are hoping momentum from last year will carry forward into the first quarter 2019.

Bunzl Source: Bloomberg

Bunzl will hold its annual general meeting (AGM) and release its Q1 trading update on Wednesday, with the company expecting to carry its good fortune last year into 2019 and deliver strong growth over the next 12 months of trading.

Margins under pressure

Bunzl ended 2018 on a high, with the company exceeding its earnings expectations in its full-year results in in February, with the company’s revenue increasing 9% at constant currency, while adjusted earnings per share rose by 12%.

However, the packing and distribution firm has seen its profit margins shrink slightly, due to a less than desirable growth from its UK unit, with investors hoping that other areas of the business will perform well enough to offset its weak performance.

Inorganic growth pipeline

The distribution and outsourcing company recorded strong organic growth across its various business units, with them all contributing at least 4% to revenue growth in 2018.

However, it was acquisitions that really propelled the company forward in last year, with takeover of Revco helping to boost sales in the company’s safety division.

Investors will be keeping a close eye on the company’s Q1 trading update for any signs of further acquisitions, considering it has been such a strong source of growth for the company in recent years.

Speaking on the earnings call in February, Bunzl CEO Frank van Zanten said: ‘The pipeline for acquisitions remains active, and with ongoing discussions taking place, we expect to complete further transactions during the remainder of the year.’

Bunzl shines as rivals struggle

The company’s healthy mix of inorganic and organic growth has helped Bunzl grow its share price by around 22% over the last 12 months and has become an interesting asset at a time when a number of its rivals have struggled to find their footing.

Not only that, but the company’s boast a healthy balance sheet with positive cash flow that will allow it to make further acquisitions over the course of 2019 and its Q1 trading update is unlikely to throw up any major surprises.


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