Bunzl profits boosted by acquisitions

24th Feb 2014 08:00

Global outsourcing and distribution group Bunzl said it lifted 2013 operating profit by 18 per cent to 414m pounds boosted by acquisitions, but warned that adverse exchange rate movements could hit future earnings if they remained at current levels.Pre-tax profits rose to £372.2m, an increase of 18% on the back of increased revenues of £6.1bn against £5.3bn in 2012.Chief Executive Michael Roney said the improving macroeconomic outlook, Bunzl's strong competitive position and the full year impact of the 11 acquisitions made in 2013 "should lead to good growth at constant exchange rates in 2014"."However, with the recent strengthening of sterling, our reported results will be negatively affected by foreign exchange translation if exchange rates remain at their current levels," he said."Positive currency translation movements, principally in the US dollar and euro, which were partly offset by adverse exchange rate movements elsewhere, increased the reported group growth rates by around a further 2%."The company increased the dividend to 32.4p, up 15%. In a separate statement, Bunzl said it had bought two more companies in Germany and the Czech Republic and expected to complete further acquisitions "in the coming months".Bunzl's free cash flow was up £67.1m to £301.8m. Net cash outflow was £113.2m after dividend payments of £91.8m in 2012, £280m spent on acquisitions and a further £43.3m on employee share schemes. "At constant exchange rates each of our business areas is expected to grow. In North America, we expect good growth as a result of both organic revenue growth and the acquisitions made in 2013. Even though the economic environment continues to be sluggish in Continental Europe, we expect to see continued growth this year," the company said."In UK & Ireland, after a long period of time with a weak revenue line, we expect to see some sales growth in 2014 with margin stability. Rest of the world should show significants increases in revenues and profits, especially in Latin America, due to a combination of underlying growth and the impact of recent acquisitions."Bunzl shares were up 45p to 1528p at 8.01. FP