UK-based Bunzl PLC’s (GB:BNZL) share price gained after the company raised its earnings outlook for the full year while simultaneously announcing an increase in profits for the first half of the year. The company stated that it anticipates the annual earnings to be “moderately higher” as compared to the previous year due to the alleviation of cost pressures and internal measures taken to enhance profitability.
Following the announcement, Bunzl’s share price gained around 2.8% at the time of writing. Over the last three months, the shares have experienced a loss of around 11%, offsetting the previous gains.
Bunzl operates as a distribution group that provides a variety of non-food products and solutions to businesses in the healthcare, grocery, and hygiene sectors, to name a few. The company has operations in the U.S., Europe, the UK, and Asia Pacific.
Higher Revenues and a Better Outlook
In its half-year earnings report for 2023, the company showcased a revenue increase of 4.5%, amounting to £5.9 billion. Additionally, the adjusted operating profit witnessed a growth of 6.5%, reaching £438.3 million. Bunzl highlighted that it was able to transfer higher raw material costs to customers through price adjustments as inflationary pressures across Europe and the UK persisted. The company also commended its efforts to enhance margins through a series of strategies, including the push for increased sales of more lucrative proprietary products.
In terms of shareholder returns, the company announced an interim dividend of 18.2p per share, surpassing the 17.3p per share paid during the first half of 2022. Shareholders registered as of November 17, 2023, will receive the dividend, scheduled for payment on January 3, 2024.
For the full year, the company foresees a moderate increase in its earnings compared to 2022, accompanied by an enhancement in operating margins. The projected group revenue for 2023 is anticipated to exhibit a marginal improvement over the previous year, propelled by acquisitions, albeit somewhat offset by a minor organic decrease. Up until August 2023, the company had announced a total of 12 acquisitions.
Is Bunzl a Buy or Sell?
In terms of share price growth, analysts have a bearish perspective on BNZL stock. According to TipRanks’ consensus, the stock has garnered a Moderate Sell rating based on two Sell and two Hold recommendations. Bunzl’s share price target of 2,866.25 is approximately aligned with the present trading level, with a marginal growth of only 2.26%.
It is important to note here that these ratings were last updated two months ago and could potentially change in response to the company’s recent earnings announcement.
