ii view: the US spearheads recovery at distributor Bunzl

First-half results to 30 June

• Revenue up 3% to £5.93 billion
• Adjusted operating profit up 8.9% to £440.6 million
• Operating profit margin up 0.3% to 7.3%
• Operating margin edged higher from 7% to 7.3%,
• Interim dividend up 3% to 20.8p per share
• New £500 million share buyback programme
• Net debt down 14% from late December to £1.43 billion

Guidance:

• Continues to expect full-year currency adjusted revenue growth to be driven by modest underlying revenue growth, supported by some inflation and some benefit from acquisitions
• Now expects the full-year 2026 operating profit margin to be flat compared to slightly down previously
• Expects modest adjusted operating profit growth year-on-year, at constant exchange rates

Chief executive Frank van Zanten said:

"Bunzl has delivered a strong financial performance in the first half of 2026, with underlying growth in all regions and margin expansion. It is pleasing to see growth being led by North America, including in our Distribution business, which is testament to the operational progress that has been made with service levels restored and our teams fully engaged and motivated."

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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 close to 27,000 people, the FTSE 100 company operates across 32 countries.  

For a round-up of these latest results announced on 1 September, 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 adjusted operating profit during this latest period at 44%. That was followed by Continental Europe at 23%, the UK and Ireland 14%, and the Rest of the World 19%.  

For investors, recently raised US interest rates may now hinder consumer appetite to eat out at restaurant chains supplied by Bunzl. The relationship between oil and plastic prices warrants consideration, with many Bunzl products such as disposal gloves containing plastics. Bolt-on acquisitions, usually bolstering growth, have been more difficult to find with sellers reluctant to transact amid macro and geopolitical uncertainty, while increased staff taxes for the UK business have raised costs.

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To the upside, management initiatives to improve performance are ongoing, with better customer service levels achieved. Activist investor Elliott Management now holds a share stake and will be pushing for continued 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 19 years of consecutive dividend increases leave the shares on a prospective dividend yield of around 3%.

In all, and while risks remain, 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:

Hold