Bunzl has lifted its revenue guidance for 2026, pointing to firmer trading and a helping hand from inflation, as the specialist distribution group updated the market ahead of its closed period for the half-year to 30 June.
The group expects first-half revenue to grow by around 4% at constant exchange rates, with underlying growth of roughly 3%.
Much of that is being supported by inflation in categories where product costs have been pushed up by geopolitical events, but Bunzl was keen to stress that volumes are moving in the right direction too.
Volume growth is being led by North America, where the Distribution business is making operational headway following a series of self-help actions and a clutch of new business wins secured towards the end of last year.
Acquisitions, net of disposals, are expected to add around 1% to first-half revenue, while currency should have a broadly neutral effect.
On profitability, the group anticipates good year-on-year growth in adjusted operating profit at constant exchange rates over the first half.
Operating margin is expected to edge up modestly, helped by second-quarter inflation. Margin guidance is unchanged, with the group still expecting it to be slightly lower year-on-year.
Frank van Zanten, Chief Executive Officer of Bunzl, said: “Bunzl is expecting to deliver an improved performance in the first half, with continued underlying growth and robust profitability, demonstrating the resilience and agility of our business model. Furthermore, I am pleased that our North America Distribution business has achieved the good operational progress we had expected, with the business’ responsiveness, agility and high service levels largely restored. We continue to expect 2026 to be a foundation for future profit growth.
Touching on acquisitions, Bunzl completed the purchase of Scientifix Group in April, an Australian distributor of critical products to the life sciences and biotechnology sectors. The bolt-on broadens the category offering of Bunzl’s existing operations and is expected to generate revenue of around £9m in the 12 months to June 2026.
“After a year of pain caused by issues in its North American operations, distributor Bunzl has regained its footing and delivered good news. The timing is fortunate given speculation that activist investor Elliott has taken a position ahead of a potential campaign to drive change,” said AJ Bell investment director Russ Mould.
“Bunzl has long been seen as a ‘steady as she goes’ business, delivering goods that companies need to run their day-to-day operations. Last year’s profit warning and share buyback pause took the shine off the stock. Bunzl fell to its lowest price to earnings ratio since the Covid global market sell-off in 2020 and left it vulnerable to either activist shake-up or a bid. One has subsequently emerged, and investors might now wonder if the other does too.”