Bunzl shares plunge after FTSE 100 giant cuts forecast
Bunzl shares plunged 23 per cent in early deals on Wednesday after the FTSE 100 giant cut its 2025 guidance following a tough first quarter.
This was driven by softer-than-expected revenue growth in the UK and Ireland and margin pressure in its largest North American business, which weighed on performance.
The distribution titan said revenue grew just 2.6 per cent at constant currency, but adjusted operating profit dropped significantly year on year – driven by a squeeze on margins in both North America and Continental Europe.
UK business lines also under-performed, with underlying revenue growth coming in lower than expected due to deflation, while a weaker performance from catering supplier Nisbets dragged margins.
Operating margin in the first half of the year is now expected to come in around seven per cent, down from 8.3 per cent last year, with the full-year margin forecast to be “moderately below” eight per cent.
Bunzl said North America faced slower than expected volume growth, execution issues tied to its own brand push and the loss of a key customer category.
In response, the group has launched an action plan including leadership changes and cost cuts, as it looks to stabilise performance.
Chief executive Frank van Zanten said: “I am disappointed with our performance in the first quarter in this challenging trading environment. We are taking decisive action to improve performance, particularly with regards to execution in our largest business in North America.”
Bunzl also paused its shared buyback programme and warned that while Trump’s latest tariffs might offer some benefit through inflation, the overall impact on growth remains uncertain.
Bunzl’s growth slowdown
The group’s slow first quarter follows the decline in revenue reported for 2024.
Bunzl reported a 0.2 per cent decline in revenue for 2024, although operating profit increased by 7.2 per cent at constant exchange rates to £976.1m, while statutory operating profit rose 1.3 per cent to £799.3m.
The company said it would allocate approximately £700m annually for acquisitions and potential capital returns over the next three years.