Packaged meals pay off for Bunzl

STRONG demand for the ready meals that Bunzl packages for supermarkets has enabled the company to continue its run of solid profits growth in the face of deteriorating markets for many of its services.

The recession-proof nature of its operations underpinned an 8% rise in pre-tax profits to £187.7m in 2001. Continuing operations were up 11%.

'The lifestyle trends that have driven our growth are continuing despite economic uncertainty,' chairman Tony Habgood said. The total dividend is up from 9.4p to 10.35p.

Bunzl shares have doubled since early 1999, valuing it at £2.2bn, as the company has expanded its portfolio of outsourcing services. Its products now range from salad bowls, plastic bags and boxes for cakes to cigarette filters and high-quality paper.

'There is a desire for customers like big US supermarkets to deal more and more on a one-stop-shop basis,' Habgood said. 'We can provide all the products with one delivery.'

Bunzl spent £95m on eight acquisitions in the past year. However, interest cover still remains at a robust 15 times, leaving scope for further purchases.

Habgood said prices being paid by Bunzl appeared to have stabilised at 'historically low levels'. But he said the paper distribution and plastics divisions had seen a significant deterioration in conditions in the second half.

Trading so far this year suggested there had been some recovery, though conditions were still uncertain.