Bunzl (BNZL) Q1 2025 TU earnings summary

Executive summary

• Q1 performance and profit fell short of expectations, mainly due to operational challenges, revenue softness, and customer loss in North America, especially in the grocery and food service segments.

• Execution issues in North America stemmed from a shift to a centralized model, reducing local agility and slowing response times.

• Adjusted operating profit declined significantly, driven by higher costs, slower volume and own brand growth, and margin pressure in North America and Continental Europe.

• Leadership changes and decisive actions, including empowering local teams and accelerating cost-saving initiatives, are underway, with some benefits expected soon and more in 2026.

• 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 is expected to be moderately below 8%, compared to 8.3% in 2024.

• First half operating margin is expected to be around 7%, with improvement anticipated in the second half.

• Revenue growth for 2025 is expected to be moderate at constant exchange rates, driven by acquisitions and broadly 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.

Outlook and guidance

• Revised 2025 guidance reflects operational challenges in North America and a weak start to the year.

• Moderate revenue growth expected for 2025 at constant exchange rates, driven by acquisitions; underlying revenue broadly flat.

• Group operating margin for 2025 expected moderately below 8.0%, with H1 margin around 7.0%.

• Second half margins are expected to improve due to cost actions and easing deflationary trends, but ongoing volume weakness is anticipated.

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