Bunzl delivers in line trading statement, reports drop in organic revenue growth

23rd Jun 2015 07:56

International distribution and outsourcing group Bunzl said that revenue for the first half of 2015 is expected to have grown 6% due largely to growth at constant exchange rates thanks mainly to the positive impact of acquisitions.Organic revenue growth of 1% also contributed to the growth, but was lower than in 2014, mainly due to slower growth in North America caused by the net impact of some lost business and price declines on plastic resin based products.The FTSE 100 listed company, which also announced deals to purchase four new businesses, said: "Acquisitions are a key component of the group's growth strategy."Including the four acquisitions announced today, the company has acquired or agreed to acquire 10 businesses so far in 2015 with a total year to date committed acquisition spend of more than £210m. The pipeline for further acquisitions during the second half of the year is good."Looking ahead, the group expects its strong cash flow, balance sheet and continuing acquisition opportunities to enable the group to further consolidate the markets in which it competes and to increase shareholder value.RBC said the trading update was in line, adding: "We continue to believe the company is well run, but we see valuation as full (20.2x 2016 price-to-earnings ratio), and even factoring in a £250m acquisition spend per annum, we struggle to justify upside."We brought our forecasts down in our distributors note yesterday, but our 2.4% FY organic forecast is clearly now looking a stretch and would note recent currency moves are unhelpful. Expect the stock off today on the weak second quarter growth."