Bunzl FY profits drop as margin contraction offsets revenue growth

(Sharecast News) - Distribution firm Bunzl reported a drop in full-year adjusted operating profits on Monday despite posting higher revenues, as margins came under pressure over the year. Bunzl said adjusted operating profits fell 4.3% at constant exchange rates to £910.3m, despite seeing revenues grow 3% at constant currency to £11.84bn, principally driven by the firm's eight acquisitions completed in the year, across seven countries and four market sectors.

Underlying revenues rose 0.4%, including 0.9% growth in the second half, while adjusted earnings per share declined 5.2% at constant exchange rates to 179.3p. Excluding a £7.8m credit linked to prior years' share‑based awards, Bunzl noted that adjusted operating profits were £902.5m and its operating margin was 7.6%.

The FTSE 100-listed firm said operating margins slipped 0.6% from 8.3% to 7.7%, but noted the year‑on‑year margin decline had moderated to 0.3% in H2, helped by an improved performance in North America, stabilisation in Continental Europe and margin expansion in the UK & Ireland.

Cash conversion remained "strong" at 95%, with free cash flow of £579m, down 8.7% decrease, while its adjusted net debt to EBITDA ratio stood at 2x at year‑end.

Bunzl announced eight acquisitions during the year with committed spend of £132m, a significantly lower level of activity following a strong 2024, though the group said its pipeline remained "active" with an improving outlook for 2026.

Looking ahead, Bunzl reiterated its FY26 outlook, expecting moderate revenue growth at constant exchange rates and a "slightly" lower operating margin year‑on‑year.

Reporting by Iain Gilbert at Sharecast.com