As a distributor of paper cups, clingfilm, soap, safety equipment and other basic products for the grocery, hospitality, retail and healthcare industries, Bunzl PLC (LSE:BNZL) is far from a very exciting company, but with a share price graph that is a lot higher on the right than it is on the left, it has gained a lot of followers over the years.
While there have been concerns raised about the impact on the disposable and plastic-based products it supplies being hit by single-use plastic bans, as have come into force in the UK, shares in the acquisitive FTSE 100 group hit an all-time high above £32 in spring.
Not long after, however, as the company revised the 2023 revenue outlook to "slightly lower" than 2022's £12 billion from an initial forecast of “slightly higher”, August saw a 10-month low of just under £27.
Ahead of a year-end update on Thursday 14 December, the shares have been steadily on the recovery, with Bunzl's business model having demonstrated its strength and adaptability, helped by around 80 bolt-on acquisitions in its time.
In its last update in October, the company revealed it had added its 13th and 14th acquisitions of the year, but that the strengthening pound and lower Covid-relates sales meant revenue fell 8.8% in the third quarter (4.8% if currency swings were ignored), following a rise of 12.4% in the first half.
However, full-year operating profit guidance was maintained, helped by “very strong” profit margins.
At the core of Bunzl's success is its unique offering, say analysts at AJ Bell, with their simple necessity helping "shelter the firm from the vagaries of the economic cycle, at least to some degree, and also provide Bunzl with pricing power – a key ingredient during inflationary times".