TIDMBNZL
RNS Number : 5033I
Bunzl PLC
02 April 2020
2 April 2020
BUNZL Q1 TRADING STATEMENT
Bunzl plc, the specialist international distribution and
services Group, today announces an update on the impact which the
COVID-19 outbreak has had on the business and its trading statement
for the period since 31 December 2019.
COVID-19
During these difficult times, the safety and welfare of the
Group's employees and continuing to support Bunzl's customers are
the main priorities.
The Company has implemented responsible working practices for
the current environment across the Group including where possible,
colleagues working from home and the adoption of flexible and
separate working arrangements in warehouses. Bunzl provides a
critical function in the supply chains in which it operates with
the supply of essential products and services to its customers. The
Group has increasingly been designated a critical supplier by
governments around the world, allowing Bunzl to play an important
part in responding to the COVID-19 crisis.
Current trading and prospects
The Group's resilient business model has delivered a strong
performance in the first quarter ended 28 March 2020. Revenue has
increased approximately 4.5% at actual exchange rates. At constant
exchange rates, revenue, adjusted for the impact of the number of
trading days in the quarter relative to the prior year, rose by
approximately 6%. Of this growth, acquisitions contributed 3% with
underlying revenue growth adding approximately 3%.
Underlying revenue growth in Continental Europe was strong and
North America saw some growth despite the impact of the previously
announced price and product specification changes with a large
grocery customer. Revenue growth in Rest of the World was
particularly strong due to growth in our safety businesses in Latin
America and UK & Ireland experienced a slight decline,
principally due to further weakness in the hospitality sector
during the quarter.
Trading has been strong in safety across the quarter and has
strengthened more recently in grocery, healthcare and cleaning
& hygiene. The foodservice and retail sectors, which together
account for around 35% of Group revenue, have been increasingly
negatively impacted by the COVID-19 crisis in the latter part of
March.
Looking forward, parts of Bunzl supplying to the foodservice and
retail sectors are expected to be significantly affected by the
closures being witnessed across the world. The cleaning &
hygiene and safety sectors are expected to see a mixed trading
picture as a result of the end-markets served. Sectors such as
grocery and healthcare are expected to deliver a robust
performance.
Given the unprecedented uncertainly around the impact of
COVID-19, it is not possible to assess with certainty the impact
this will have on the Group's financial performance for the year.
As such, the Company is withdrawing its previous guidance for the
year ending December 2020.
Robust financial position
The Group has a proven cash generative business model, strong
balance sheet with net debt to EBITDA of 1.9x as at 31 December
2019 and significant headroom in its committed facilities of over
GBP0.6bn. The Company has an investment grade credit rating, strong
relationships with a broad group of banks, is a long-standing
issuer in the US private placement market and has access to the
public bond markets. The Group has no debt maturities in the
remainder of 2020. The principal covenant limits are net debt to
EBITDA of no more than 3.5 times and interest cover of no less than
3.0 times.
In light of the evolving COVID-19 situation, the Company has
moved quickly to protect profitability, liquidity and cashflow
while seeking to ensure it is well placed to benefit when the
recovery takes place. The Group is acting responsibly with regard
to its employees and is accessing employee-related government
support packages where appropriate. In certain countries and where
safe to do so, employees are transferring between sites to balance
capacity. The Board, executive committee and business area managing
directors are taking a 20% reduction in fees / base salary during
the second quarter 2020 to help support the business. All
discretionary spend has been stopped and the Group continues to
manage actively its cost base.
The Company has also paused all acquisition activity, including
deferring the completion of the purchase of ICM, a distributor of
personal protection equipment in Denmark, the proposed acquisition
of which was announced in February 2020, until later in the year
and ceased any non-essential capital expenditure. The Group
maintains a high level of focus on working capital and, will, where
possible, defer tax payments in line with recent government
policies.
Dividend
Notwithstanding the generally robust trading position and the
Company's strong balance sheet, the macro economic environment is
one of heightened uncertainty. After due consideration, the Board
has decided it will no longer propose a final dividend for the year
ended 31 December 2019 at the Annual General Meeting to be held on
15 April 2020. The Board recognises the importance of dividends to
shareholders and, as such, it intends to consider the
appropriateness, quantum and timing of an additional interim
dividend payment relating to the financial year ended 31 December
2019 when it has a clearer view of the effects of COVID-19 on the
Company's business.
Commenting on today's announcement Frank van Zanten, Chief
Executive Officer of Bunzl, said:
"Bunzl is a strong, resilient and well diversified business
offering many critical and essential services to customers. While
we had a strong first quarter, the ongoing uncertainty and
headwinds presented by the COVID-19 outbreak mean we have a
significantly more challenging near-term trading outlook. However,
we are taking appropriate actions on cost and cashflow and Bunzl
remains a financially strong business with both a robust liquidity
position and a capital structure that are well-placed to absorb an
extended period of uncertainty.
"I am immensely thankful for the dedication and courage of our
colleagues around the world during these challenging times and
proud that large parts of Bunzl are playing an important part in
responding to the COVID-19 crisis and continuing to serve critical
industries."
This announcement contains inside information.
Enquiries:
Bunzl plc Tulchan
Frank van Zanten, Chief Executive David Allchurch
Officer Martin Robinson
Richard Howes, Chief Financial Tel: +44 (0)20 7353 4200
Officer
Tel: +44 (0)20 7725 5000
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END
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