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London - British business supplies distributor Bunzl expects underlying sales growth for the rest of its financial year to beat broader economic growth, after a strong pound dented first half revenue by 8%.
Referring to like-for-like growth at constant exchange rates, CEO Michael Roney said this should be ahead of the GDP forecasts in the countries in which it operates, and that acquisitions would help boost revenues further.
"We expect our underlying growth to be ahead of GDP- for example, if (GDP growth) is 2%, we would expect to be somewhere around 2.5% 3.5% in that area," he told Reuters in a phone interview.
The company, which supplies supermarkets, hospitals and hotels with products ranging from carrier bags to toilet rolls and generates 83% of revenues abroad, said on Tuesday it had posted strong sales growth in North America, Britain and Latin America.
But Australia and some parts of Continental Europe remained sluggish.
Helped by the impact of recent acquisitions in Brazil, Germany and the Netherlands, the company posted a 7% rise in first-half revenue at constant exchange rates - just ahead of a forecast of 6% it gave in June.
But adjusted for currency fluctuations, sales fell 1%.
Pre-tax profits rose 5% to £176.6m.
Shares in Bunzl, which have risen 13% since the start of the year, were up 0.6% at 1 640 pence by 11:14, shedding some of their early gains.
Asia on acquisition agenda
The company has been on a steady acquisition drive, spending £1.7bn on 80 deals over the past ten years.
Roney said it would continue to look for new businesses in the second half of the year and that it was making progress in seeking out an anchor acquisition in Asia.
"The key point is that we have a individual on the ground now, based in Shanghai. That individual is making contact with individuals in China and further afield in Asia," he said.
"I wouldn't be expecting things very quickly in China; you have got out there, get to know the people, and get to know the opportunities and hopefully something will happen."
Analysts have estimated that Bunzl could afford to spend about £300m a year on acquisitions in the next four years.
"We continue to view Bunzl as a business services core holding with resilient growth, impressive cash conversion and excellent opportunities to consolidate its markets," said Citi analysts, who have a "buy" rating on the stock.
"Given the likelihood of a prolonged low interest rate environment, we feel Bunzl should continue to outperform."
Bunzl said it had acquired four new businesses in the past two months, with annualised revenue of £34.8m, bringing its total acquisition spending this year to £119m for 12 businesses.
Last year, Bunzl spent £295m on 11 acquisitions, the highest amount in a single year since 2004, in countries including Brazil, Australia and Canada.
