Shares in Bunzl plummeted by 23% during early trading on Wednesday, following the FTSE 100 heavyweight's announcement that it was revising its 2025 financial guidance downward after a challenging first quarter.
The update highlighted weaker-than-anticipated revenue growth in the 海角视频 and Ireland, coupled with margin pressures within its largest North American operations contributing to the subdued results, as reported by .
The distribution behemoth reported a modest increase of 2.6% in constant currency revenue; however, adjusted operating profit took a significant hit year-over-year due primarily to narrowed margins across North America and Continental Europe.
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Additionally, performance in its 海角视频 business sectors disappointingly lagged, with underlying revenue growth being impacted by deflationary pressures, as well as a subpar showing from catering supply firm Nisbets, which further eroded margins.
Bunzl now forecasts that its operating margin for the first half of the year will be approximately seven per cent, a decline from the previous year's figure of 8.3%, and anticipates the full-year margin will be "moderately below" the eight per cent mark.
The company revealed that its North American division has experienced slower volume growth than expected, complications associated with expanding its own brand offerings and the loss of a significant customer group.
As part of its strategy to rectify these issues, the group has embarked on an action plan which involves changes in leadership and reducing costs to regain stable performance.
Chief Executive Frank van Zanten expressed his disappointment with the company's performance in a difficult trading climate, remarking: "I am disappointed with our performance in the first quarter in this challenging trading environment. We are taking decisive action to improve performance, particularly with regards to execution in our largest business in North America."
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Bunzl has put its share buyback programme on hold and raised concerns about the uncertain impact of Trump's latest tariffs on growth, despite potential inflationary benefits.
Bunzl's growth slowdown
The group has experienced sluggishness in its start to the year, following on from a previous drop in revenue for 2024.
For 2024, Bunzl reported a slight 0.2 per cent dip in revenue. However, operating profit saw an encouraging increase of 7.2 per cent at constant exchange rates, totalling £976.1 million, and statutory operating profit went up by 1.3 per cent to reach £799.3 million.
The firm also announced its intention to set aside roughly £700 million per year for acquisitions and prospective capital returns for the upcoming three years.