Having almost hit an all-time high share price pre-results, the company took quite a large drop in early trading.
Bump in the road for Bunzl (BNZL)
- Shares fall by 12% in early trading following a reported decline in revenue growth.
- News of Dutch group Coolpack acquisition highlighting Bunzl’s continued policy on growth via acquisition.
- We recommend the shares as a long-term buy due to longer term attractions.
The normally reliable and defensive Bunzl hit the buffers this morning over its first quarter trading update. The shares which have risen steadily over the last year were marked down by around 12% at the opening.
The company, which provides a variety of every day products ranging from safety equipment to food packaging and operates in over thirty countries with the majority of revenue coming from outside the UK, reported that revenue growth had slowed over the quarter as a result of mixed macroeconomic and market conditions. With around 58% of revenue deriving from the US, investors will be particularly concerned regarding the slowdown of sales within this area.
As usual, there was news of an acquisition of specialist packaging Dutch group Coolpack, demonstrating the companies continued policy of growth via acquisitions.
Our View on Bunzl - Buy
With the shares pre-update close to an all-time high any sign of turbulence was likely to hit the shares hard. Investors may have to put on the companies safety hats for a period of time, but longer-term attractions remain – We continue with a long-term ‘buy’ recommendation.
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