Supplies distributor Bunzl flags product and labour shortages

By Aditi Sebastian

(Reuters) -Business supplies distributor Bunzl on Tuesday flagged labour crunches in its key markets including the United States and Britain and said it was also facing shortages in the products it delivers to the grocery and hospitality sectors.

Shares in the British-based FTSE 100 group, which provides everyday items such as disposable tableware, food packaging, latex gloves and stationery to business customers, were down 2.5% by 0746 GMT.

Several companies in Britain including McDonald's and Greggs have been hit by pandemic-related supply chain interruptions, including delivery delays and a shortage of staff and truck drivers that are crippling distribution and availability of produce.

Bunzl, which also supplies products ranging from counter-service packaging to cleaning chemicals to the retail and hospitality industries, said it was seeing material shortages in its food service and consumables sectors as suddenly surging demand after coronavirus lockdowns eased called for catch-up production.

"So far, (the labour shortage is) not extreme and because we also see product inflation in certain areas and we focus really on efficiencies (as well), we have been able to mitigate that in a good way but it may be a little bit more, back there in the second half," Chief Executive Frank van Zanten to Reuters.

He expects labour shortages to ease as temporary unemployment benefits introduced during the pandemic are set to end in the United States.

Bunzl reported a 17.5% rise in first-half adjusted pre-tax profit to 338.4 million pounds ($466.92 million) and increased its dividend by 2.5%, helped by a recovery in demand as businesses such as offices, hotels and restaurants reopen.

The company said wage inflation and delivery costs in the first half were offset by product inflation in COVID-19 related items such as disposable gloves. However, it said that COVID-19 related items were starting to see a price deflation in the second quarter.

The company, known for making several bolt-on deals, on Tuesday also announced two new acquisitions of safety equipment distributors in Spain.

($1 = 0.7247 pounds)

(Reporting by Aditi Sebastian and Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich and Susan Fenton)