UK Stocks: Bunzl (BNZL) Shares Slip After 2024 Margin Alert
Global Markets

UK Stocks: Bunzl (BNZL) Shares Slip After 2024 Margin Alert

Story Highlights

The British distribution giant Bunzl released its 2023 annual results along with a margin warning for 2024, causing its shares to drop around 4%.

In key news on UK stocks, Bunzl PLC (GB:BNZL) shares slipped by over 4% following an alert for a margin drop in 2024 in its 2023 annual results announcement. The company reported a 10% rise in its pre-tax profit to £698.8 million, even though revenue was impacted due to weakness in the North American operations. The 2023 pre-tax profit gained from operating margin expansion.

Bunzl is a distribution company providing products and solutions across various sectors, including healthcare, grocery, hygiene, and more.

Cautious Outlook

Bunzl revealed two new acquisitions: an 80% stake in Bristol-based catering company Nisbets for £338 million, and Pamark in Finland.

Driven by its acquisitions in 2023, the company anticipates that revenue will grow slightly in 2024, at constant exchange rates. However, underlying revenue, adjusted for trading days, is expected to experience a modest decline. The company also expects its operating margin to be slightly lower than the 8% reported in 2023. This is primarily attributed to a decline in inflation-related benefits, resulting in a slower-than-anticipated start to the year in North America.

Bunzl further stated that it maintains an active pipeline of acquisition opportunities in its current markets, along with potential acquisitions in new regions and related sectors. Analyst Matt Britzman from Hargreaves Lansdown believes that the new business acquisitions could help the company in easing the margin pressures, particularly as the company struggles with reduced prices.

The company proposed a final dividend of 50.1p per share for 2023, leading to a total dividend per share of 68.3p. The total dividend for 2023 reflects an 8.9% year-over-year increase.

Is Bunzl a Good Share to Buy?

According to TipRanks’ consensus, BNZL stock has garnered a Hold rating based on two Buy, three Sell, and two Hold recommendations. The Bunzl share price target of 2,795p is 12% lower than the current trading level.

It is important to note here that these ratings were updated before the results and could potentially change.



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