Bunzl cuts costs amid profits fall

Grocery packaging firm Bunzl today said profits were 37% lower in the UK and Ireland after the weak pound increased the cost of imported products.

Bunzl, which specialises in packaging and “not for resale” items in sectors such as retail, catering and healthcare, said the economic climate meant it was not always able to pass on the “significant and rapid” increases to customers.

Costs were reduced as a result, including through an unspecified number of job losses, but Bunzl said profits for the division still slid to £37.8m (€43.6m) in the six months to June 30. Revenues fell 4% to £523m (€603m).

The company said its UK cleaning and safety supplies business was affected by declining demand in the construction and industrial sectors. In retail, it said new customer wins helped it offset the ongoing decline in demand for plastic carrier bags as supermarkets sought to cut down on customer usage.

Stronger margins in continental Europe and North America – which generate almost three-quarters of group revenues – helped Bunzl to report pre-tax profits of £115.5m (€133m), up 4% on a year earlier.

Bunzl, which employs more than 10,000 people in 23 countries, has also thrust into faster-growing markets such as Brazil during the last year.

While the UK arm suffered from dearer import costs, currency conversions from overseas operations worked in the company’s favour and inflated profits from the underlying rise of 11%.

Chief executive Michael Roney described the half-year results as “largely robust” and said the company had been successful in winning new customers as well as additional business with existing clients.

It said headcount reductions will result in estimated savings of £18m (€20.8m) this year, some £8m (€9.2m) of which was realised in the first half. Bunzl did not provide further details on where the jobs have been lost.

The company, which has more than 200 distribution centres, traces its origins back to 1854 when Moritz Bunzl opened a small haberdashery business in Bratislava, now the capital of Slovakia.