Bunzl cashes in on outsourcing
increased interim profits as it continues to benefit from the trend
in outsourcing.
Bunzl, supplier of food packaging and carrier bags, reported increased interim profits as it continues to benefit from the trend in outsourcing.
London-based Bunzl reported pre-tax profit on continuing activities before goodwill and exceptionals of £104.2 million (€164.4m), up from €96.9 million a year earlier. Anthony Habgood, chairman, said: "These are good results in difficult economic conditions."
The company's outsourcing division generated more than €1 billion of its total €1.5 billion turnover, with the US accounting for an increasing proportion of sales.
Supermarkets such as Wal Mart are buying more specialised packaging for freshly prepared food. As a distributor, Bunzl also provides food and cleaning products. Habgood said: "Our customers continue to favour outsourced solutions as these are often the most cost-effective way of meeting their service requirements."
Bunzl, which grew from a 19th century haberdasher, in July completed the sale of its paper distribution subsidiary to Australia's largest paper maker, PaperlinX, for £138.8 million in order to focus on higher margin and growth businesses. Last year, Bunzl bought the carrier bag business of Greenock-based British Polythene Industries for £8.5 million.
The shares rose 4p to 474p yesterday. Francesca Raleigh, analyst at Investec Securities, with a "buy" recommendation on the shares, said: "It's more than just a defensive stock. It's got good opportunities, with the growth of outsourcing. And it's got the cash to make acquisitions."
Habgood said: "Despite the somewhat weaker dollar and mild dilution from selling paper distribution, volume growth in our major businesses, good cash generation and incremental growth from acquisitions give me confidence in the future satisfactory development of the group."
The company said it would combine its Filtrona arm, which supplies cigarette filters, and its plastics division, which supplies caps for protecting engineered products during manufacture or transit, in order to cut costs.
Finance director David Williams said the company expected to continue growing the business both organically and through acquisitions and also to develop geographically.
