Bunzl jumps 4% as earnings meet forecasts, outlook steady and buyback returns

Investing.com -- Bunzl (LON:BNZL) plc shares rose more than 4% on Tuesday after the British company reported first-half results broadly in line with expectations, reaffirmed its 2025 outlook and resumed its share buyback program.

Revenue for the six months ended June was £5.76 billion, almost unchanged from consensus estimates of £5.76 billion. 

Organic growth declined 0.2%, compared with an expected 0.8% drop. Adjusted EBITA was £404.5 million against forecasts of £405.3 million, with a margin of 7.02%. 

Adjusted profit before tax reached £345.6 million, slightly above the £345.3 million consensus. 

Adjusted basic earnings per share were 77.8p, near expectations of 78p. The interim dividend per share was 20.2p, short of consensus expectations of 21.8p and marginally lower than last year’s 20.5p.

Cash flow conversion was 97%, ahead of the company’s 90% target, supported by inventory performance.

Net debt ended the period at 1.9 times adjusted EBITDA, with the year-end ratio expected at the lower end of the 2 to 2.5 range. 

Analysts at RBC Capital Markets said the benefit of North America recovery measures will not be felt until well into 2026 and a flat interim dividend limits the signal from the £86 million buyback, but noted leverage is set to finish at the lower end of the 2.0 to 2.5 times range and expected shares to move higher in the short term given no new negatives.

Bunzl announced five acquisitions so far this year with about £120 million committed, compared with more than £650 million at the same point in 2024. 

The company said it plans to complete the remaining £86 million of its current buyback program, equal to about 1.1% of its market capitalization.

For the full year, Bunzl said it expects moderate revenue growth at constant exchange rates, supported by acquisitions, while underlying revenue is expected to be broadly flat. 

Group operating margin for 2025 is projected to be moderately below 8%, compared with 8.3% in 2024. 

The distribution and outsourcing company said second-half margins, typically higher due to seasonality, are expected to reflect the impact of performance measures in North America and Continental Europe, easier comparisons in Europe, and synergies from the Nisbets acquisition.

“The end customer mix remains relatively defensive which is likely to appeal to some investors at certain points in the economic cycle, but we currently see better value defensive growth names elsewhere in the wider Business Services sector,” RBC said.