North America Weakness Results In Slow Growth For Bunzl (BNZL)

  • Apr 18, 2019 BST
  • Team Kalkine
North America Weakness Results In Slow Growth For Bunzl (BNZL)

Bunzl plc (BNZL) is an international distribution group which is focussed on providing customised solutions to its B2B customers. The company have operations all around the globe and are providing support to customers with a wide variety of products essential for their business’s successful operations. The company currently caters multiple markets segments such as Foodservice, Grocery, Safety, Retail and Healthcare, etc and operates in multiple geographic areas and divided them into four segments being North America, UK and Ireland, Continental Europe and Rest of the world.

North America is the biggest market for Bunzl, as the company is generating the majority of its revenue from North America with 59 per cent approximately and adjusted operating profit of 52 per cent approximately. On 17 April 2019, the company released its first-quarter results. Slow growth in retail and grocery business in North America impacted the company’s revenue and the results remained sluggish. There was a small rise in the group’s revenue in the first quarter.

Bunzl Plc Share Price Performance

Daily Chart as at April-17-19, before the market close (Source: Thomson Reuters)

On 17th April 2019, at the time of writing (before the market close, GMT 12:25 AM), Bunzl Plc shares were trading at GBX 2,283.00, down by 10.5 per cent against its previous day closing price. Stock's 52 weeks High and Low is GBX 2,554.60.00/GBX 2,050.00. The outstanding market capitalisation was around £7.78 billion with a dividend yield of 2.17 per cent.

Bunzl Plc’s total revenue increased partially by 2.5 per cent at constant currency bases as compared with a 14 per cent growth for the same period of last year. As a result of slow growth, the company’s share fell by 10 per cent approximately. As per the company’s statement, the North American market is hampered by week demand and lack of price inflation in the first quarter. Currently, the company is having operations in nearly 30 countries and it has to operate in wider economic conditions across different nations which is also one of the reasons for slower growth.

According to the Analyst, the company has not lost any contract due to the slower growth. The company is still supplying a variety of products for its customers. Bunzl Plc is also known for making small acquisitions to increase its business performance. The company supplies to its customers from different sectors which include healthcare, food service and government. Recently the company acquired Coolpack a packaging supplies company based out of the Netherlands. After the acquisition, the company consolidate its fragmented end markets.

The company since 2004 had made over 150 acquisitions to expand into North American retail and grocery market. As an outcome of these acquisitions, the company’s costs increased, and margins were declined for the segments which in return also hampered the overall margins of the company.

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