Britain's Bunzl said on Monday it had acquired catering distributor Nisbets in the UK and Finland-based Pamark but warned its operating margin would dip slightly from 2023 as inflation falls and after a slower start to the year in North America.
The company has benefited from higher prices for items such as plastic spoons, food packaging and latex gloves but the COVID-led surge in demand for personal protective equipment (PPE) has disappeared while price pressures are easing across the globe.
Bunzl's shares, which have risen almost 10% over the past year, were 4.6 % lower at 0930 GMT.
'Potential Headwind'
"Looking forward, volumes should come back but the pricing weakness is a potential headwind for the new year," Matt Britzman, equity analyst at Hargreaves Lansdown, said in a note.
"If Bunzl can contain the ongoing pricing weakness, then the pipeline of accretive acquisitions can do its job to prop up margins over the coming year."
Destocking And Inflation
For the year ended December 31, the company reported an operating margin of 8% and a 3.4% rise in adjusted profit before tax at constant exchange rates, while revenue slipped 2%.
In North American, Bunzl's largest market by revenue, underlying revenue growth declined 5.6%, hit by lower volumes as destocking and inflation hampered demand in the food service sector. Still, profit in the region rose 3% as input cost pressures eased.
Bunzl, which added 19 businesses to its portfolio in 2023, said it had paid £339 million ( €396.6 million) for Nisbets, it's largest acquisition to date.
Family Business
It will own about 80% of the company, which is currently family-owned and operates in the UK and Ireland, Northern Europe and Australia.
CEO Frank van Zanten said 2024 could be Bunzl's "biggest year ever for acquisitions".
