Bunzl (BNZL) Q1 2025 TU earnings summary

Executive summary

• Q1 performance and profit fell short of expectations, mainly due to operational challenges and revenue softness in North America, especially in the largest business serving grocery and food service customers.

• Significant decline in adjusted operating profit in North America, compounded by deflation, slower volume and own brand growth, and the loss of a higher-margin grocery customer.

• Decisive actions taken include leadership changes, empowering local management, and accelerating cost-saving initiatives to restore commercial agility and operational excellence.

• Continental Europe and UK/Ireland saw expected margin declines, while Rest of World, particularly Latin America, maintained strong growth and margins.

• Group revenue grew 2.6% at constant exchange rates, but underlying revenue declined 0.9% year-over-year.

Financial highlights

• Group operating margin for 2025 expected to be moderately below 8%, compared to 8.3% in 2024; H1 margin expected around 7%, with improvement anticipated in H2.

• Revenue growth in 2025 expected to be moderate at constant exchange rates, driven by acquisitions and flat underlying revenue.

• Acquisitions, net of disposals, contributed 5.7% growth; fewer trading days reduced revenue by 2.2%.

• Adjusted operating profit and margin declined year-over-year, with Q1 margin notably lower.

• Net finance expenses for 2025 expected to be around £120 million; effective tax rate to remain at 26.0%.

Outlook and guidance

• Revised 2025 guidance reflects a challenging start, with margin contraction in North America and some decline in UK/Ireland.

• H2 margins expected to improve, supported by cost savings, price increases, and annualization of prior declines in Continental Europe.

• Guidance excludes potential impacts from tariffs and related economic effects.