Bunzl bounces back to restore dividend

Distribution giant restores 27-year record of dividend growth as coronavirus fails to halt relentless growth

Economic bellwether Bunzl has reinstated its dividend, restoring its 27-year record of growth for investor payouts after coronavirus had less impact than initially feared.

The distribution and services business, which supplies items such as safety and cleaning gear, napkins and cutlery for restaurants and carrier bags to supermarkets, pleased shareholders in its interim results.

For the six months to June 30, Bunzl said revenues rose 7pc to £4.8bn while pre-tax profit was 22pc higher at £245m.

A 20pc rise in sales for continental Europe, which represents a quarter of revenue, helped with the dividend decision. Sales in North America, which accounts for more than half the total, were 1.5pc higher at £2.7bn. 

Frank van Zanten, chief executive, said: “These results have once again demonstrated the strength of our customer proposition and supply chain and the resilience of our business model and consistent and proven strategy.”

Although he warned of “considerable uncertainty”, he said Bunzl remained “fundamentally attractive … allowing us to maintain Bunzl's long track record of dividend growth”.

In April, coronavirus concerns meant Bunzl cancelled its 35.8 a share final dividend, which would have taken the full-year payout to 51.3p. 

However, after the strong performance the board decided to reinstate the final dividend at the same level as originally proposed. It will be paid as an additional interim dividend because it could not be approved at the annual meeting in time.

The 2020 interim was also raised by 1.9pc to 15.8p ,taking the total payout to 51.6p.

Bunzl also used the results to reveal the latest targets of its relentless acquisition programme, agreeing to buy MCR Safety, a US safety business, and Abco Kovex, a packaging distributor in Ireland. 

Shares rose 3pc to £24.71 and are almost £4 higher than their January value - a rare achievement given the economic backdrop.