Broker snap: Cash flow improves at Bunzl

19th Oct 2009 12:53

Broker Charles Stanley remains a buyer of Bunzl after the distribution group's interim management statement indicated margins are on the mend.'As expected, overall profit margins have improved compared to the first half largely due to the favourable impact of cost reduction initiatives already taken and a reduced negative transaction impact from foreign exchange,' said Tony Shepard, investment analyst at Charles Stanley.The company suffered currency hits in the latter half of 2008 and the first part of 2009 after it proved unable to pass on all of the increased raw material costs. 'Acquisitions remain an important part of the group strategy and although the group indicates that discussions continue with a number of potential targets, it feels vendors' valuations are too high which continues to be an impediment to completing transactions,' Shepard notes.The broker is looking for a further improvement in operating cash flow as the 'economic recovery eventually kicks in,' which will lead to an improvement in working capital.