Bunzl on Wednesday reported that underlying revenue for the first quarter rose by 2.0%. The company attributed that improvement to volume growth, favourable year-on-year comparisons and price increases related to tariffs.
Regionally, North America produced underlying revenue growth that was marginally ahead of the group's overall increase. Other business areas each contributed small amounts of underlying revenue growth, the company said.
At actual exchange rates, total revenue fell by 0.4%. That outcome reflected a negative trading days impact of 1.1%, a merger and acquisition contribution of 0.6% and a foreign exchange drag of 1.9%.
Bunzl repeated its guidance for the full year, stating it expects moderate revenue growth on a constant currency basis. The company qualified that outlook by noting it includes some underlying revenue growth and a modest benefit from mergers and acquisitions. Analysts following the company have modelled 1.7% growth for the year.
On margins, Bunzl said it expects adjusted operating margin to be slightly down relative to the prior year level of 7.6%. Analysts' consensus expectation for the adjusted operating margin stands at 7.5%.
In its financial assumptions, the company indicated it expects net finance expenses of approximately A3125 million and a tax rate of about 26%.
Context for market participants
The mix of a modest underlying revenue increase and an actual decline in reported revenue highlights the influence of calendar effects and currency movements on Bunzl's top-line. Management's decision to maintain its full-year guidance provides clarity on the near-term outlook while signalling expectations for a slightly lower margin compared with the most recent year.
What the company reported, in brief
- Underlying revenue growth: 2.0% in the first quarter.
- Total revenue at actual exchange rates: down 0.4%.
- Trading days impact: -1.1%; M&A impact: +0.6%; foreign exchange: -1.9%.
- Full-year guidance: moderate constant currency revenue growth including some underlying growth and a small M&A benefit.
- Adjusted operating margin: expected to be slightly down from prior year level of 7.6% (analysts expect 7.5%).
- Net finance expenses expected: approximately A3125 million; expected tax rate: approximately 26%.
Reporting on these figures provides investors and other stakeholders with the company's stated near-term expectations and the components that influenced first-quarter results.