Davy Morning Equity Briefing

Jun 30, 2022

Market Comment

European business confidence still resilient

Yesterday’s European Commission (EC) business sentiment surveys showed that confidence in both industry and services remains resilient on the back of improving demand and with firms raising employment at a robust pace. However, the flash HICP inflation releases for Germany (8.2%) and Spain (10%) show that price pressures remain acute, with the EC survey indicating that firms expect to pass them on through elevated cost inflation.

Bunzl plc

Strong H1 growth, but inflation remains the key driver

Bunzl has released its H1 pre-close statement, which is strong and has benefited significantly from an inflation driver. Overall, forecasts for 2022E are set to increase and we expect they will move up c.4-5% at the EBITA level as that inflation point remains; however, the stock has pre-empted this and has been strong since October 2021.