April 21 (Reuters) - Bunzl is planning to step up acquisitions of smaller businesses, its chief executive said on Wednesday, after revenues were driven higher during the COVID-19 pandemic by a surge in demand for masks, gloves and hand sanitizer.
The British firm, which supplies companies with personal protection equipment, cleaning chemicals, disposable tableware and other products, said on Wednesday that revenue for the quarter to March rose 10.4% at constant currency.
The lift from demand for COVID-19 related products and from acquisitions offset a 5% fall in sales from the company’s other offerings, however, and Bunzl maintained its annual guidance. Shares were down more than 3% at 2,419 pence at 0843 GMT.
Bunzl closed three acquisitions in the first quarter and expects that momentum to continue, Chief Executive Frank van Zanten told Reuters.
“We use our cash flow to pay dividends, so we have a lot of capacity for making acquisitions,” he said. “We turned, last year, more than a 100% of our profits to cash. So Bunzl is really a cash machine.”
Van Zanten, who joined the firm in 1994 when Bunzl acquired his family-owned business in the Netherlands, said that post the coronavirus crisis many businesses are likely to go up for sale because of the “shocking period” they have had to endure.
“When you have all your wealth in one area, your family business, that makes you think. I expect that in maybe one or two years’ time we will see a very strong acceleration of M&A activity,” the Dutch businessman said.
Bunzl expects enhanced hygiene trends to continue even as lockdowns peter out and as the pandemic is brought under control, with the company investing in these and sustainable products.
Shore Capital analysts said in a note that Bunzl “has remained in a position of strength throughout”. “Others may see a short-term recovery eclipsing Bunzl’s performance, but beyond this the group remains well placed,” they said.
(Reporting by Vishwadha Chander and Pushkala Aripaka in Bengaluru; Editing by Krishna Chandra Eluri and Jan Harvey)