Bunzl warns of hit from weak dollar

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The Independent Online

Bunzl, the specialist distributor of carrier bags, catering equipment, hard hats and harness equipment, said that second-half trading was in line with expectations but warned yesterday about the impact of the weak dollar on its results for the year.

The company, which celebrated its 50th year on the London Stock Exchange in June, said that strong growth across the UK, Ireland and continental European countries was expected to deliver a "significant" boost to its annual earnings.

A company statement said: "Further strong underlying growth in the UK & Ireland and a good level of acquisition activity in 2007 will increase revenue significantly. The 2006 acquisitions of Southern Syringe and Keenpac are performing ahead of expectations and the more recent acquisitions of Coffee Point and Irish Merchants are progressing as planned."

The company said that Kings Benelux, the Netherlands-based cleaning contractor and healthcare distributor which it bought from Ergon Capital partners in July, was "integrating well" and would add to growth in 2008.

Bunzl also revealed that its North American operations, which grew at 2 per cent in the first half of this year behind the UK, which grew by 4 per cent, and continental Europe, which grew by 6 per cent continued to be weaker than other business areas.

The news depressed the company's share price, which lost 11p to close at 677p after hitting a high of 728.5p last month.

Mike Murphy, an analyst at Panmure Gordon, said that although the company had been hit by the declining greenback, it was less likely to fall prey to an economic slowdown.

"The weak dollar has held them back throughout this period," he said. "But the fundamentals of their business remain strong. Most of their work, inc-luding cleaning services and supplying packaging materials to supermarkets, is hidden away, far from any direct impact from a slowdown in economic activity."

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