Bunzl Acquires Catering Distributor Nisbets

By Reuters
Bunzl Acquires Catering Distributor Nisbets

Britain's Bunzl said on Monday it had acquired catering distributor Nisbets in the UK and Finland-based Pamark but warned its operating margin would dip slightly from 2023 as inflation falls and after a slower start to the year in North America.

The company has benefited from higher prices for items such as plastic spoons, food packaging and latex gloves but the COVID-led surge in demand for personal protective equipment (PPE) has disappeared while price pressures are easing across the globe.

Bunzl's shares, which have risen almost 10% over the past year, were 4.6 % lower at 0930 GMT.

'Potential Headwind'

"Looking forward, volumes should come back but the pricing weakness is a potential headwind for the new year," Matt Britzman, equity analyst at Hargreaves Lansdown, said in a note.

"If Bunzl can contain the ongoing pricing weakness, then the pipeline of accretive acquisitions can do its job to prop up margins over the coming year."

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Destocking And Inflation

For the year ended December 31, the company reported an operating margin of 8% and a 3.4% rise in adjusted profit before tax at constant exchange rates, while revenue slipped 2%.

In North American, Bunzl's largest market by revenue, underlying revenue growth declined 5.6%, hit by lower volumes as destocking and inflation hampered demand in the food service sector. Still, profit in the region rose 3% as input cost pressures eased.

Bunzl, which added 19 businesses to its portfolio in 2023, said it had paid £339 million ( €396.6 million) for Nisbets, it's largest acquisition to date.

Family Business

It will own about 80% of the company, which is currently family-owned and operates in the UK and Ireland, Northern Europe and Australia.

CEO Frank van Zanten said 2024 could be Bunzl's "biggest year ever for acquisitions".