Bunzl Shares (BNZL) in Multi Day Decline Seeking Support

Bunzl shares (LON: BNZL) have seen a two day decline of 6.52% following the distribution giant's cautionary statement regarding potential profit impacts from persistent deflation. This development has caught the attention of investors as Bunzl, a major player listed on the FTSE 100, foresees challenges mainly in its continental Europe operations.

Taking a look at the 1 year chart below, Bunzl's stock has now been rejected multiple times above the 3,600 level, with the previous 3,250 resistance now likely to provide some support if BNZL continues to descend from here.

Bunzl is well-known for its distribution of items such as food packaging, labels, and cleaning products to businesses globally. Over half of its revenue is derived from its operations in North America. Despite the current concerns over deflationary pressures, the company projects that its profits will still comfortably surpass last year's results, pointing to a relatively optimistic outlook amidst challenges.

The company, employing around 24,500 people, continues to focus on strategic growth. In 2024, Bunzl has made significant strides by acquiring 13 smaller companies with an investment of £850 million. This acquisition strategy underscores Bunzl's commitment to expanding its reach and enhancing its service delivery. Notable acquisitions include Dublin-based drinks distributor C&C Group and Comodis, a distributor of cleaning and hygiene products in south-east France. These strategic moves are set to bolster Bunzl's offerings in the UK and France, as highlighted by CEO Frank van Zanten.

Van Zanten also emphasized that Bunzl's acquisition pipeline remains robust, indicating that more deals are anticipated to advance the company's growth agenda. Despite the profit warning, Bunzl remains optimistic about 2024, forecasting another year of significant progress. This outlook is cheered by the successful integration of recent acquisitions, which are expected to strengthen Bunzl's market position and product range.

While Bunzl is navigating through warnings of deflation affecting its European business, its strategic acquisitions and a strong revenue base in North America provide a bullish outlook for 2024. The company's continued investment in growth, despite external economic pressures, highlights its resilience and ambition to maintain its market leadership in the distribution sector.