Bunzl (LON:BNZL) reported first-half revenue growth and higher adjusted operating profit, supported by broad-based volume gains, price increases and a recovery in its North American distribution business. The company also raised its outlook for 2026 and announced a £500 million share buyback while maintaining its focus on bolt-on acquisitions.
Chief Executive Officer Frank van Zanten said actions taken over the past 18 months had produced a “much-improved performance,” particularly in North American distribution. He said volume growth was recorded across all business areas, led by that division, while the group also navigated product-cost and operating-cost increases linked to the geopolitical environment.
First-half financial performance
Revenue momentum strengthened during the period, with underlying growth accelerating to 4.3% in the second quarter from 2% in the first quarter. Acquisitions, net of disposals, and hyperinflation contributed a further 0.9 percentage points to revenue growth.
Adjusted operating profit rose 8% year over year to £441 million, while operating margin increased to 7.3% from 7.0%. Adjusted earnings per share grew 11%.
Chief Financial Officer Richard Howes said the margin improvement was largely driven by the effect of inflation on inventory, as Bunzl sold products purchased at lower costs before subsequent price increases. The group also benefited from the annualization of Nisbets synergies and improved performance in North American distribution.
Gross margin rose to 29.4% from 28.8%, although the company said much of the inventory-related benefit should be temporary. Bunzl reported that gross margins peaked in June and had already declined in July as selling prices began to normalize in some categories.
- Free cash flow rose 6% to £328 million, including a £71 million inflow from U.S. tariff refunds.
- Cash conversion was 90%, reflecting investment in working capital but remaining in line with Bunzl’s target.
- Adjusted net debt to EBITDA stood at 1.8 times, below the company’s medium-term target range of 2.0 to 2.5 times.
- The interim dividend was increased 3% from the prior-year period.
North American distribution recovery
North America delivered underlying revenue growth of 4.6%, supported by both volumes and inflation. The distribution business, which accounts for roughly 60% of North American revenue, recorded 8% underlying revenue growth in the first half, largely driven by volume gains, customer wins secured in the fourth quarter of 2025 and growth among established grocery customers.
Van Zanten said Bunzl had restored agility and service levels in the local distribution business by returning certain pricing, inventory and sourcing decisions to local teams. On-time, in-full service performance has returned to 2019 levels, he said, while staff turnover has declined meaningfully over the past 12 months.
“The machine is working,” Van Zanten told analysts, adding that the business is now focused on growth, new customer wins and increased share of wallet. Near-term initiatives include hiring a new chief executive for distribution and opening East Coast and West Coast mixing centers to improve availability of imported products and warehouse productivity.
North American operating profit was flat, as the benefits of inflation were offset by a shift toward lower-margin grocery activity and higher variable costs tied to improved performance. Bunzl also cited continuing end-market challenges in its retail, Mexico and convenience-store businesses.
Regional developments and inflation
Continental Europe reported underlying revenue growth of just over 2%, with stronger volumes in most countries and higher selling prices. Spain posted very strong revenue growth, supported partly by acquisitions, while the performance of Bunzl’s online businesses improved. France generated volume growth that was partly offset by moderating selling-price deflation.
Bunzl completed a warehouse consolidation in its largest French cleaning and hygiene business, reducing the network to six warehouses from 15. The company said the project has already improved service levels, inventory and warehouse capacity, with further productivity gains expected from new digital tools.
In the U.K. and Ireland, underlying revenue grew slightly, mainly through volumes. Adjusted operating profit increased 9%, aided by Nisbets synergies and a one-off property-related gain. Rest of the world revenue rose 5% at constant currency, primarily due to acquisitions, while operating profit increased more than 15% as margins improved, particularly in Brazil.
Howes said plastic costs, which represent about 30% of Bunzl purchases, rose meaningfully and were a key source of inflation during the period. However, the company has started to reduce selling prices from peak levels in certain categories and expects further reductions during the third quarter.
Bunzl has established an “overwatch group” involving 150 senior buyers globally who hold weekly calls to monitor major product groups, Van Zanten said. The group aims to manage margins while retaining and growing volumes.
Capital allocation and updated outlook
Bunzl completed two acquisitions year to date and spent £26 million on net acquisitions during the first half. Management said acquisition momentum is building and expects committed acquisition spending in 2026 to exceed 2025 levels.
The company said it has identified more than 1,300 potential acquisition targets across its markets. Howes said Bunzl has spent less than £150 million on acquisitions over the past 20 months, compared with a typical spend of around £600 million over two years, leaving capacity for both acquisitions and the new £500 million buyback.
For the full year, Bunzl now expects modest revenue growth at constant exchange rates, excluding U.S. tariff refunds, supported by modest underlying growth, some inflation and a small contribution from acquisitions. It expects group operating margin to be broadly flat compared with the 7.6% reported for 2025, excluding an £8 million share-based payment credit, and forecasts modest growth in adjusted operating profit.
Management cautioned that second-half margins are expected to be lower year over year because inflation-related inventory gains are unwinding, Nisbets synergies will no longer provide an annualization benefit, recent customer wins will face tougher comparisons, and variable operating costs remain elevated.
About Bunzl (LON:BNZL)
Bunzl plc operates as a distribution and services company in the North America, Continental Europe, the United Kingdom, Ireland, and internationally. The company offers food packaging, films, labels, cleaning and hygiene supplies, and personal protection equipment to grocery stores, supermarkets, and convenience stores. It also provides food packaging, disposable tableware, guest amenities, catering equipment, agricultural supplies, cleaning and hygiene products, and safety items to hotels, restaurants, contract caterers, food processors, commercial growers, and the leisure sector; and gloves, boots, hard hats, ear and eye protection, and other workwear, as well as cleaning and hygiene supplies, and asset protection products to industrial and construction, and ecommerce sectors.
