Bunzl 2025 at a glance: revenue up, margin down
Bunzl has delivered a solid set of full-year numbers in a tough backdrop, hitting the expectations it reset in April 2025. Revenue nudged up 3.0% at constant exchange rates to £11,845.4 million, powered by bolt-on deals, while underlying revenue growth (organic growth adjusted for trading days) crept in at 0.4% and improved to 0.9% in the second half.
The trade-off was profitability. Adjusted operating profit came in at £910.3 million, down 4.3% at constant exchange rates, with operating margin slipping 0.6 percentage points to 7.7%. Excluding a £7.8 million share-based payment credit, the Group’s “clean” margin was 7.6%.
| Key metric (2025) | Result |
|---|---|
| Revenue | £11,845.4m (+3.0% at constant FX) |
| Adjusted operating profit | £910.3m (-4.3% at constant FX) |
| Operating margin | 7.7% (7.6% excluding credit) |
| Adjusted EPS | 179.3p (-5.2% at constant FX) |
| Free cash flow | £578.5m |
| Cash conversion | 95% |
| Adjusted net debt to EBITDA | 2.0x (year-end) |
| Total dividend | 74.1p (+0.3%) |
| Share buyback | £200m (completed) |
| Acquisition spend (committed) | £132m across 8 deals |
Headline: not spectacular, but resilient. The business leaned on M&A and cash discipline to offset operational missteps and a softer macro. Importantly, second-half trends moved the right way.
Momentum improved into the second half
Two encouraging signals stand out. First, underlying revenue growth swung from a 0.2% decline in H1 to +0.9% in H2. Second, the year-on-year operating margin decline moderated to 0.3 percentage points in H2 (8.6% to 8.3%), versus a 1.0 percentage point drop in H1 (8.0% to 7.0%).
The driver was operational course-correction, particularly in North America Distribution (the largest business), where Bunzl rebalanced decision-making back to local teams, cut costs, improved service levels and pushed own brand. Continental Europe’s margin stabilised in H2, and the UK & Ireland saw margin expansion, helped by stronger-than-anticipated Nisbets synergies.
Regional performance snapshot
North America: fixing the engine room
Revenue fell 1.2% to £6,276.7 million (underlying -0.3%) after the R3 Safety disposal and execution issues tied to a new operating model. Adjusted operating profit dropped 11.5% to £440.5 million, with margin down from 7.9% to 7.0%.
- Foodservice and grocery-focused Distribution faced lower volumes and pricing pressure, plus the loss of a higher-margin category at a grocery customer early in the year.
- Actions taken – leadership changes, local empowerment on pricing and inventory, supplier engagement, and more own brand launches – helped moderate the H2 margin decline and drove better-than-expected new business wins.
- Elsewhere in the region, food processor and convenience store exposure stayed under pressure; Canada held up better.
Continental Europe: stabilising after a tricky first half
Revenue grew 2.5% to £2,442.0 million (underlying +0.3%), but adjusted operating profit fell 3.6% to £204.7 million as margin dipped to 8.4% from 8.9%.
- France was the main drag in H1 due to ongoing price deflation in cleaning & hygiene and cost inflation; H2 was more stable as cost actions and easier comparatives helped.
- The Netherlands and Spain were resilient, with Spain boosted by acquisitions and business wins.
UK & Ireland: Nisbets synergies kick in
Revenue jumped 15.9% to £1,883.6 million (underlying +1.4%), reflecting the full-year impact of 2024 deals, primarily Nisbets. Adjusted operating profit rose 13.3% to £153.1 million; margin eased to 8.1% (from 8.3%) due to the seasonally lower H1 margin period at Nisbets, then improved in H2 as synergies exceeded expectations.
Rest of the World: growth strong, Brazil a headwind
Revenue increased 9.1% to £1,243.1 million (underlying +3.5%). Adjusted operating profit was £145.3 million (+5.4%) with margin down to 11.7% (from 12.1%). Asia Pacific delivered very strong growth; Brazil struggled to pass through currency-related cost increases in a softer industrial market.
Cash generation, balance sheet and shareholder returns
Cash remains a core strength. Cash conversion hit 95% and free cash flow was £578.5 million despite lower profit and higher interest paid. Leverage, at 2.0x adjusted net debt to EBITDA, sits at the bottom of Bunzl’s 2.0–2.5x target range, keeping M&A firepower intact.
Shareholder returns continued: the dividend inched up to 74.1p (33rd consecutive annual rise; dividend cover 2.4x) and the £200 million buyback was completed. Acquisition spend was deliberately lighter at £132 million across eight deals in seven countries; the pipeline is described as active with an improving outlook into 2026.
Operational levers: own brand, digital and efficiency
- Own brand penetration rose to 30% (2024: 28%), a positive margin and loyalty lever.
- Digital orders reached 76% of orders (2024: 75% excluding 2024 acquisitions), supportive of efficiency and retention.
- 36 warehouse consolidations and relocations in 2025, including a major French consolidation, signal ongoing cost discipline and service improvements.
2026 outlook: moderate growth, margin slightly lower
Guidance is unchanged. Management expects moderate revenue growth at constant exchange rates in 2026, driven by some underlying growth and a small benefit from announced acquisitions. Group operating margin is expected to be slightly down year-on-year compared to 7.6% in 2025 (the margin excluding the share-based credit). Other guideposts: net finance expenses of around £125 million and an effective tax rate of about 26.0%.
Translation: profit should be more stable, but a big margin rebound is not in the guidance. The focus remains on bedding in changes in North America, annualising Nisbets synergies and stepping up M&A when conditions allow.
My take: why this matters
- Resilience on show: Delivering to revised guidance, strong cash conversion and disciplined leverage underline Bunzl’s defensive qualities in a wobbly macro.
- Self-help is working, gradually: H2 stabilisation across key regions – especially North America Distribution – suggests the worst of the execution issues may be behind them.
- Margin reality check: Guidance for a slightly lower margin in 2026 keeps expectations sensible. A sustained recovery likely needs more own brand gains, fuller benefits from local empowerment, and better mix.
- M&A optionality intact: With leverage at 2.0x and a busy pipeline, 2026 could see activity step up from 2025’s quieter year – historically a key EPS driver for Bunzl.
- Steady but modest income: The 0.3% dividend lift is conservative, but the 33-year growth record and cover at 2.4x provide comfort.
What I’m watching next
- North America Distribution KPIs: own brand penetration, service levels and net new business wins translating into margin stabilisation or expansion.
- Nisbets synergy delivery: benefits already running ahead of plan – can that continue through 2026 and support UK & Ireland margins?
- Acquisition cadence: committed spend re-accelerating in 2026 and the returns profile of new deals.
- Brazil and tariffs: pricing power and demand in Latin America and tariff-related dynamics in North America.
- Cash discipline: maintaining 90%+ cash conversion while funding both M&A and shareholder returns.
Bottom line
Bunzl has navigated a challenging year with credible delivery and improving second-half trends. The 2026 outlook is sensible rather than punchy, but the combination of self-help, own brand momentum, and potential M&A re-acceleration sets a reasonable platform for medium-term compounding. For investors, this remains a cash-generative consolidator where execution in North America and the pace of deal-making will set the tone for the next leg of growth.
