Bunzl stockpiles against no-deal Brexit as FY profits rise

Distribution group Bunzl said it was stockpiling goods to mitigate against border delays if the UK crashed out of the European Union without a deal as it reported a rise in full year pre-tax profits.

The company said profits at constant exchange rates rose 6% to £559m on the back of a 9% increase in revenue to £9bn which was boosted by acquisitions, although partly offset by the impact of disposals, with "good contributions from all business areas".

"Operating profit was £614m, an increase of 7% at constant rates. Operating margin of 6.8% was down 10 basis points at both constant and actual exchange rates, principally due to decreases in North America and UK & Ireland, partly offset by increases in Continental Europe and Rest of the World.

A final dividend of 35.0p was declared, for a total 50.2p, up 9% compared to 2017.

Although more than 85% of the group's revenue, profit and cash flow generated outside the UK, Bunzl said it was "highly decentralised" meaning its ability to service its customers inside or outside the EU was is unlikely to be affected materially by Brexit.

However, it did identify supply chain disruption at UK ports due to extra border checks in the event of a no-deal Brexit which could lead to inventory shortages.

"Selected UK warehouses are applying for simplified customs freight procedures authorisation to attempt to minimise port delays. Additional stocks of certain items will be held to minimise the risk of inventory shortages," the company said.

Chief executive Frank van Zanten said that despite mixed macroeconomic conditions the company had an active pipeline of acquisition opportunities.

He added that future prospects were "positive due to its strong market position and well established and successful strategy to grow the business both organically and by acquisition".

In a separate announcement, Bunzl said it was buying Liberty Glove & Safety, a supplier of safety products to distributors based in the US. The business supplies a full range of personal protection equipment with a focus on gloves. Revenue in 2018 was £70m.