Bunzl PLC (LSE:BNZL) forecast “another strong performance” for 2021 as it benefitted from £900mln in acquisitions over the last two years.
In a trading statement, the international distribution and services company forecast underlying revenue growth for the year to 31 December 2021 in the high-single digits against 2019, before the coronavirus (COVID-19) pandemic struck.
The company said it expects revenue to grow by 2% year-on-year at actual exchange rates and by 7% on a constant currency basis, with the impact of acquisitions being similar to underlying revenue growth, and a small negative impact from fewer trading days.
Underlying revenue growth, at constant currencies, reflects a strong recovery in the base business, partially offset by the anticipated decline in COVID-19 related orders.
Bunzl said its adjusted operating margin is expected to be only slightly ahead of historical levels.
For 2022, the group predicted revenue at constant exchange rates will be slightly higher than in 2021, driven by acquisitions. However, it sounded a cautionary note about continued uncertainties relating to the extent of inflation and the effect of new COVID-19 variants.
Meanwhile, the continued recovery of the base business next year is expected to be offset by the further normalisation of sales of COVID-19 related products, although these are predicted to be above 2019 levels.
Operating margins are forecast to continue to normalise in 2022 to more historical levels, as the mix of sector and product sales returns to more typical levels.
"The group has once again demonstrated the strength and resilience of the Bunzl business model, and the power of our global supply chains and entrepreneurial people who continue to reliably support customers despite supply chain disruptions,” commented Bunzl chief executive Frank van Zanten.
“Not only has the group delivered strong underlying growth over the pandemic to date, we have also invested approximately £900m into acquisitions over the last two years, funded by the group's strong cash flow. Our acquisition pipeline remains active, supported by the strength of our balance sheet.
“Whilst we expect some continued normalisation of revenue mix in 2022, the performance since the start of the pandemic has only reinforced my confidence in our strategic focus and compounding growth model.”