Bunzl PLC (LON:BNZL) has said its current overall performance is consistent with expectations at the time of its half-year results announcement in August as it unveiled an acquisition in Brazil.
In a trading update, the FTSE 100-listed International distribution and services group said its third-quarter revenue increased by 7% at constant exchange rates, driven by organic growth of around 4% and an impact from acquisitions, net of disposals, of 3%.
READ: Bunzl announces first acquisition in Norway as it reports growth in first-half profits
It added that it is buying Volk do Brasil, a distributor of personal protection equipment based in Parana, Brazil, for an undisclosed sum.
The business being acquired is forecast to achieve revenue in 2018 of around £41mln.
Completion of the deal is subject to clearance of the transaction by the Brazilian competition authority, the company added.
Bunzl’s chief executive, Frank van Zanten commented: "The proposed purchase of Volk do Brasil will expand our already well-established safety business in Brazil and will complement and strengthen our product offering in the safety sector."
"Good performance", says ShoreCap
In a note to clients, analysts at ShoreCapital pointed out: “Bunzl makes no comment on margin performance at this juncture, but we expect a firm performance for the full year reflecting the granular nature of the business globally, the EBITA margin just nudging down 10bps or so reflecting vertical mix.
“We note higher oil input prices for FY2019F at present, but do expect a noticeable impact on profitability given a positive trend in product substitution and price leverage.”
They added: “We expect to hear news on further acquisitions from Brazil before the close of the year, noting that FY2017A was exceptionally strong for acquisition activity with FY2018F likely to see a lower level of transactions.”
ShoreCap reiterated a ‘buy’ rating on Bunzl shares. In afternoon trading, the FTSE 100-listed stock was 0.6% higher at 2,199p.
-- Adds analyst comment, share price --