Bunzl To Continue Buying Spree As Profits Rise

U.K.-based distribution and outsourcing group Bunzl PLC (BNZL.LN) Tuesday said it will continue buying businesses as part of its growth strategy, despite continuing difficult economic conditions, as it posted an 8% rise in first-half pretax profit.

Chief Executive Michael Roney said "in spite of the continuing difficult economic conditions, I am pleased to report good growth in profitability and continued strong operating cash flow for the first half of 2010. This, combined with the resumption of acquisition activity, which has resulted in us acquiring businesses with annual revenues of GBP140 million so far this year, gives us a platform and momentum for further growth."

First-half pretax profit, before intangible amortization and acquisition related costs, to end-June rose 8% to GBP125.1 million while revenue rose 2% to GBP2.34 billion.

Bunzl also reported underlying revenue growth of 5% in its largest business area, North America, and said that group operating margin improved due to significant increases in the U.K. & Ireland and the Rest of the World.

It has made eight acquisitions, with annual revenues of GBP140 million, so far this year and announced two further ones Tuesday.

Bunzl, based in London, provides outsourcing and distribution for the grocery, food service, cleaning and safety, nonfood retail and health care sectors. It supplies a broad range of nonfood consumable products like catering equipment and vending machines, as well as running distribution centers and delivery networks.

The company lifted its interim dividend by 8% to 7.15 pence per share.

Bunzl shares closed Friday at 702 pence, giving it a market value of GBP2.3 billion.

By Anita Likus, Dow Jones Newswires; [phone]; [e-mail]