Bunzl PLC (LSE:BNZL) shares rose close to 2% to 3,092p after upgrading its guidance for the year based on improved margin performance in the first half of the year and previous acquisitions.
A pre-close statement from the FTSE 100-listed distributor stated that revenue growth in 2024 is expected to be "robust" on constant exchange rates, with a "small decline" in underlying revenue, but with group operating profit margin now expected to be "slightly above" 2023 levels.
For the first half of the year, revenue is expected to be down 3-4%, with underlying revenue falling 5%.
A decline of around 4.6% in underlying revenue in the second quarter was an improvement from the 5.4% decline in the first quarter, but not as much as City analysts expected, with the Visible-Alpha consensus forecast for a 3.6% decline.
The decline in underlying revenue, which is organic revenue adjusted for trading days, was mainly driven by continued reductions in sales volumes in its US foodservice and retail businesses, together with price deflation.
Group operating profit margin for the period is expected to show a strong improvement compared to the first half of 2023, with margin growth "good" in North America and "very strong" in the UK & Ireland and Rest of the World regions.
CEO Frank van Zanten expressed delight with the ongoing "margin management", including increasing penetration of own brands across the group, allowing the full-year profit outlook upgrade.
He also revealed two more acquisitions, taking the total committed spend to around £600 million so far this year, with the pipeline for further purchases said to remain "active".
Analysts at UBS said the update implies an upgrade of around 20 basis points on previous profit margin guidance.
"Overall we see scope for low-single-digit upgrades to consensus forecasts," they said.