Bunzl Shares Rally Following Annual Results Announcement

Bunzl (LON: BNZL) saw its shares rally by 2% today after releasing its annual results for the year ended December 31, 2025.

The specialist international distribution and services group reported adjusted operating profit in line with revised expectations, signaling progress in its performance improvement initiatives.

Revenue reached £11,845.4 million, a 3.0% increase at constant exchange rates, primarily driven by acquisitions. However, underlying revenue growth was a more modest 0.4%, with a slight improvement to 0.9% in the second half of the year.

Adjusted operating profit decreased by 4.3% at constant exchange rates to £910.3 million, resulting in an operating margin decline from 8.3% to 7.7%.

Adjusted earnings per share decreased by 5.2% at constant exchange rates. The company demonstrated strong cash conversion of 95%, generating £579 million in free cash flow, although this represents an 8.7% decline year-on-year.

Adjusted net debt to EBITDA stood at 2.0 times at year-end. The board is recommending a final dividend of 53.9p per share, bringing the total dividend for the year to 74.1p, a 0.3% increase.

Bunzl completed a £200 million share buyback during 2025 and announced eight acquisitions with a committed spend of £132 million. The company anticipates an improving outlook for acquisitions in 2026, given the active pipeline.

The second half saw a moderation in the year-on-year operating margin decline to 0.3 percentage points, improving from 8.6% to 8.3%. This was attributed to improved operational performance in North America, operating margin stabilization in Continental Europe, and margin expansion in the UK & Ireland.

Driver Breakdown:

• North America Improvement: Actions taken to improve performance in North America, including leadership changes and cost-saving measures, drove operational improvements in the second half.
• Continental Europe Stabilization: Enhanced focus on cost reduction and new business pipeline management supported operating margin stabilization in Continental Europe.
• Acquisition Impact: Revenue growth was largely driven by acquisitions, particularly in the UK & Ireland with the Nisbets acquisition.

CEO Frank van Zanten stated, “I am pleased with how the Group has responded to what has proven to be a challenging year for Bunzl; our people have shown great agility to be able to deliver on the revised expectations we set out in April 2025. Our 2026 guidance for a more stable profit outlook remains unchanged and provides a foundation from which to deliver long-term profitable growth.”

Looking ahead to 2026, Bunzl anticipates moderate revenue growth at constant exchange rates, driven by underlying revenue growth and contributions from announced acquisitions. The Group operating margin is expected to be slightly down year-on-year compared to the adjusted 7.6% in 2025. Net finance expenses are projected to be around £125 million, with a full-year effective tax rate of approximately 26.0%.