Bunzl cuts full-year outlook, warns of tariff uncertainty

(Sharecast News) - Bunzl has lowered its guidance for 2025 after a worse-than-expected start to the year, with profits down "significantly" in the first quarter due to a challenging economic backdrop. The international distribution and services group said it now expects only a "moderate" increase in revenues at constant exchange rates this year, down from an earlier projection for "robust growth", while the operating margin is now expected to reduce to 8.0% compared with the initial targets for no change from 8.3% in 2024.

Group revenues were 2.6% higher than last year in the first quarter at constant exchange rates, but fell 0.9% on an underlying basis.

Profitability has suffered in its largest geography, North America, due to revenue "softness" and higher operating costs, particularly among foodservice and grocery customers, with trading impacted by continued deflation.

Operating margins also declined across Continental Europe, though margin management and cost initiatives are expected to deliver improvements towards the end of the second half.

Elsewhere, margins in the UK fell as underlying revenue growth was lower than expected, while the Rest of World category reported strong underlying growth.

Looking ahead, Bunzl said that "significant uncertainties" remain relating to tariffs and their impact on inflation and economic growth. "Although inflation is typically a benefit to Bunzl, this situation remains dynamic, and any potential benefit from tariffs together with a potential adverse impact on economic growth, is excluded from our guidance," it said.