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Bunzl notches up higher profits despite facing supply chain woes

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Distribution and outsourcing group Bunzl has become the latest firm to caution over supply chain and staff shortage issues across major markets, including the UK.

The FTSE 100 listed group said the global supply woes are having an impact on business in regions such as the US, UK, Mexico and Australia.

In the UK, it said: “Major infrastructure projects across the UK are several months behind schedule and both labour and materials shortages are limiting a return to normal activity levels in our target sectors.”

It said it was also seeing “labour-related manufacturer supply chain challenges” in the US, but was able to mitigate the impact thanks to its global sourcing programmes.

Despite the supply challenges, Bunzl posted a 12.3% rise in statutory pre-tax profits to £275.7 million for the six months to June 30.

Revenues lifted 0.4% to £4.9 billion, or a 6.3% rise with currency impacts stripped out.

It said it was seeing a reversal in some Covid-19 related sales, having initially received a boost from cleaning and hygiene, safety and personal protective equipment.

But the group said this has been more than offset by a recovery in its core businesses and markets.

It said: “While some regions have seen a strong recovery, others have experienced greater pandemic-related restrictions at various points over the last six months.

“One of the key strengths of our decentralised business is the ability to respond to local situations.”

It said acquisitions were also giving its results a fillip as it announced the completion of another two deals in Spain focused on personal protection equipment.

Frank van Zanten, chief executive of Bunzl, said: “Acquisitions will further contribute to growth, with £134 million committed spend year to date, and an active pipeline supported by substantial financial headroom.

“Looking ahead, we expect future growth to be supported by a recovery in the base business and economic activity.”

In the UK and Ireland, which together make up 12% of the group’s revenue, the impact of lockdowns at the start of the year saw underlying revenues fall 10.3%, with adjusted earnings tumbling 22%.

It said sales in its safety business was knocked as manufacturing and construction customers have been slow to return to normal activity, while cleaning and hygiene product supply has been hit due to offices, entertainment venues and travel hubs remaining closed for much of the first half.

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