ii view: Bunzl offers disappointing 2026 outlook
Although sat on an enviable dividend track record, shares for this FTSE 100 company have fallen by more than a third so far in 2025. Buy, sell, or hold?
17th December 2025 11:16
by Keith Bowman from interactive investor
Full year trading update to 31 December
- Expects full year revenues to be broadly flat
- Expects a full year operating profit margin of 7.6%
Guidance:
- Expect the full year 2026 operating profit margin to be slightly down
Chief executive Frank van Zanten said:
"Despite what has remained a challenging market, we expect to meet our outlook for 2025, which was set out in April this year. We continue to remain strongly focused on performance across the Group and are encouraged by operational improvements being made and new business wins in North America.
“We remain confident in the Group's underlying resilience and strength, and ability to deliver consistent compounding growth in the medium-term."
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ii round-up:
Bunzl (LSE:BNZL) today flagged sales and profits for 2025 matching City forecasts although with the global distributer of items such as paper towelling and cleaning products highlighting an expected fall in the profit margin for 2026.
Broadly flat revenues for 2025 and an operating profit margin of 7.6% continue to underpin analyst expectations for full year profit of around £900 million. Ongoing cost inflation and no product price inflation are now expected to leave the 2026 profit margin potentially 0.1% lower. Analysts had forecast a 0.1% increase to 7.7%.
Shares for the FTSE 100 company fell 4% in UK trading having come into this news down around a third so far in 2025. The FTSE 100 index is up by close to a fifth year-to-date.
Operating across more than 30 countries, Bunzl supplies non-food consumables products to businesses and organisations such as Walmart Inc (NASDAQ:WMT), Domino's Pizza Group (LSE:DOM) and the NHS.
In October, Bunzl completed the acquisition of Damito s.r.o, a distributor of cleaning and hygiene, personal protective equipment and packaging in Slovakia.
Management expects moderate revenue growth in 2026 on an adjusted currency basis, pushed by some underlying revenue growth and a small benefit from previous acquisitions.
A £200 million share buyback programme for 2025 is now complete. A year-end leverage ratio of just over 2 times remains towards the bottom end of management’s 2.0-to-2.5 times target range.
Full year results to 31 December 2025 are scheduled for 2 March.
ii view:
Listed on the UK stock exchange since 1957, Bunzl today supplies more than 15,000 global businesses and organisations. The FTSE 100 company’s six core markets range from grocery, foodservice and safety, to retail, cleaning and hygiene, and health. Geographically, North America accounted for most sales during 2024 at 56%, followed by Europe at 20%, the UK and Ireland 14%, and the Rest of the World 10%.
For investors, a combination of trade tariff uncertainties and cuts to US government jobs may now be dampening US consumer appetite to spend and including eating out at restaurants potentially supplied by Bunzl. Increased staff taxes for the UK business now raise costs. Bolt-on acquisitions going forward and boosting sales growth are not guaranteed, while an expected year-end debt leverage ratio of around 2.0 times is up from 1.6 times in late 2023 and underpinned management’s previous caution in temporarily halting the £200 million 2025 share buyback programme.
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To the upside, group initiatives to improve performance are ongoing. Bolt-on acquisitions continue to be made including a cleaning and hygiene distributor Bunzl’s position as a global leader in its market with no competitors of a similar size is not to be overlooked, while more than 16 years of consecutive dividend increases leave the shares sat on an estimated future dividend yield of around 3.4%.
On balance, and despite ongoing risks, this unrivalled distributor continues to justify its place in many already diversified investor portfolios.
Positives:
- Diversified customer type and geographical location
- Continues to seek growth enhancing acquisitions
Negatives:
- Uncertain economic outlook
- Subject to currency volatility
The average rating of stock market analysts:
Strong hold
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