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Strong Bunzl results down to swine flu

Steve Dinneen
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Distribution firm Bunzl reported better-than-expected full year profits as panic over swine flu sent sales of sanitary equipment soaring.

Its profit of £258m was well ahead of analyst consensus of around £237m.

It was boosted by a rise in sales of hospital gowns and cleaning equipment as the anti-swine flu message hit home. This was partly responsible for record operating margins for its continental Europe division of nine per cent. It also slashed costs to deliver an impressive performance in the second half of last year.

However, chief operating officer Mike Roney was cautious about sales in the coming months. Bunzl’s UK and Ireland operations lagged behind the rest of the business, with operating profit falling by 26 per cent, as demand for catering, vending and safety equipment declined.

The company said underlying sales grew by 2.6 per cent in the US, its largest business area, as existing customers outsourced more business to Bunzl. It also announced the purchase of Danish catering supplier Hamo, which has revenues of £5.1m.

Group revenue was £4.65bn for the year, an increase of 11 per cent compared to 2008 due to the positive impact of foreign exchange movements. However, at constant exchange rates, revenue growth was flat and excluding acquisitions, and underlying revenue fell by 1.1 per cent.

Bunzl increased its final dividend by five per cent to 14.9p, making a total of 21.55p for the year
Roney told City A.M.: “We’re pleased with the results, especially the record operating margin seen in continental Europe. Our UK business has been more affected than other parts of the company by the adverse economic conditions but we feel it is well positioned to do well going forward.”