Bunzl PLC (LSE:BNZL) got a mixed reception from the City as it accompanied an increase in margin guidance with a warning that sales are slowing.
Group revenue in the six months to end March 2023 is expected to increase year-on-year by 4% to 5% at actual exchange rates and by up to 1% at constant exchange rates, driven by acquisitions.
Underlying revenue growth was broadly flat, said the FTSE 100 sundries supplier, while adjusted operating margin for the first half is expected to be around the level achieved in the first half of 2022.
Sales in North America are expected to decline moderately, though inflation is predicted to drive good underlying revenue growth in Continental Europe and strong growth in UK & Ireland, said the statement.
“Given performance year-to-date, the group is increasing its 2023 operating margin guidance to be slightly lower than that achieved over 2022.”
Bunzl added it has also agreed to buy EHM, a distributor of a wide range of PPE products in the UK.
Frank van Zanten, chief executive, said: “Bunzl continues to demonstrate resilience, with our operating margin over the first six months of the year expected to remain well ahead of historical levels and driving an upgrade to our full-year expectations.”
Analysts at Jefferies added that it was a mixed statement though the margin upgrade should result in low-single-digits upgrades to consensus in current year earnings.
On the flip side, said Jefferies, if Bunzl’s organic momentum is stalling and macro headwinds build over the next 12 months, the share price looks full.