ii view: recovering Bunzl drives forward with optimism

First-half trading update to 30 June

• Expects currency-adjusted revenue growth of 4% from a year ago
• Expects good growth in adjusted operating profit on a constant currency basis

Guidance:

• Now expects annual currency-adjusted revenue growth to be driven by modest underlying revenue growth, supported by some inflation and some benefit from acquisitions
• Continues to expect the full year 2026 operating profit margin to be slightly down

Chief executive Frank van Zanten said:

"Bunzl is expecting to deliver an improved performance in the first half, with continued underlying growth and robust profitability, demonstrating the resilience and agility of our business model.

“Furthermore, I am pleased that our North America Distribution business has achieved the good operational progress we had expected, with the business' responsiveness, agility and high service levels largely restored. We continue to expect 2026 to be a foundation for future profit growth."

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ii round-up:

Bunzl (LSE:BNZL) is a global distributor of non-food consumables products such as paper towelling, disposable cutlery, cleaning products, and personal protective equipment.

Employing round 27,000 people, the FTSE 100 company operates across 32 countries.  

For a round-up of this latest trading update announced on 23 June, please click here.

ii view:

Started in 1854 by Moritz Bunzl as a Slovakian haberdashery, 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 in 2025 at 53%, followed by Europe at 21%, the UK and Ireland 16%, and the Rest of the World 10%.  

For investors, heightened inflation following the war in the Middle East could leave interest rates higher for longer, potentially hindering consumer appetite to eat out at restaurant chains that might have been supplied by Bunzl. A year-end debt leverage ratio of 2.0 times in late December compared with 1.6 times in late 2023 and underpinned management’s previous caution in temporarily halting its share buyback programme. Continued bolt-on acquisitions, bolstering growth, are not guaranteed and carry some risk, while increased staff taxes for the UK business have increased costs.

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On the upside, an uptick in inflation is allowing increased product prices and allowing for a more optimistic annual revenue forecast. Management initiatives to improve performance are ongoing, with an improvement in customer service levels having been pursued. Activist investor Elliot Management now holds a share stake and will be pushing for performance improvements. 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 18 years of consecutive dividend increases leave the shares sat on a forecast dividend yield of close to 3%.

On balance, and despite ongoing risks, this unrivalled distributor continues to recover from last year's profit warning and looks to remain worthy of its place in 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