Bunzl backs FY outlook after in-line third quarter

(Sharecast News) - Distribution and services group Bunzl backed its full-year guidance on Tuesday as it said third-quarter trading had been in line with expectations. In an update for the period since 30 June, the company said group revenue in the quarter rose 0.6% at constant exchange rates.

Underlying revenue - which is organic revenue adjusted for trading days - edged up 0.4%, in line with Bunzl's expectations, "against what remain challenging end markets in our key business areas," it said.

Net acquisitions contributed growth of 1.4% at constant exchange rates, while fewer trading days in the period impacted revenue by 1.1%.

Overall, at actual exchange rates, group revenue fell 0.8%. In line with expectations, the year-on-year operating margin decline over the quarter moderated compared to the first half of the year, it said.

Bunzl said it continues to expect moderate revenue growth in 2025, at constant exchange rates, driven by announced acquisitions and broadly flat underlying revenue.

Group operating margin for the year is expected to be moderately below 8%, compared to 8.3% in 2024, with a continued expectation for a moderation of year-on-year operating margin decline in the second half, compared to the first.

Chief executive Frank van Zanten said: "In what remains a challenging market, we remain strongly focused on improving performance across the business. As we enter the important final quarter, I am pleased to see the actions that we have taken driving operational improvements, as expected. We reiterate our group outlook for 2025.

"As highlighted in our recent investor seminar, we remain confident in the significant opportunities we see for continued acquisition growth. We have completed seven acquisitions year-to-date and our pipeline is active. I remain confident in the group's underlying resilience and strength, and ability to deliver consistent compounding growth in the medium-term."

At 1115 BST, the shares were down 2.1% at 2,398p.

Russ Mould, investment director at AJ Bell, said: "Bunzl is not a company that you expect to make waves and that's how its shareholders typically like it. Its steady and reliable performance, augmented by acquisitions, has been rewarded by the market over the years.

"However, the last 12 months have been an exception, and there will be a measure of relief to see the company now post a suitably solid update.

"Bunzl provides businesses with items like coffee cups or cleaning products which are not sold to customers but are essential to their day-to-day operations.

"Building on a reassuring first-half update, the company has stabilised its margins and eked out some sales growth in the third quarter. Crucially, Bunzl has stuck to its full-year guidance which should help rebuild some of the credibility with the market damaged by its recent bad spell."