Bunzl says trading in line with expectations, buys Brazil based Solupack

Investing.com -- Bunzl (LON:BNZL) on Tuesday said that trading for the first half of 2025 is in line with expectations, as the distribution group announced an acquisition in Brazil and reaffirmed its full-year outlook.

Group revenue for the six months ending June 30 is expected to be approximately 4% higher than the prior year at constant exchange rates, and up to 1% higher at actual exchange rates. 

The company said revenue growth at constant exchange rates was driven by acquisitions, net of disposals, with underlying revenue broadly flat.

Bunzl expects an operating margin of about 7% for the period, consistent with previously issued guidance. 

The group also said the anticipated decline in adjusted operating profit is in line with expectations.

For the full year, Bunzl reiterated guidance first issued in April, stating it expects moderate revenue growth in 2025 at constant exchange rates. 

The increase is projected to be driven by announced acquisitions, while underlying revenue is expected to remain broadly flat. 

Operating margin for the year is forecast to be moderately below 8%, compared with 8.3% in 2024. 

The company said the second-half operating margin is typically higher and is expected to reflect the impact of ongoing performance initiatives.

“H1 trading is in line with expectations, which should be seen as something of a relief after the Q1 profit warning,” analysts at RBC said in a note. 

The brokerage added, “There is much to do in H2, and we see better value elsewhere in the sector at present.”

As part of a capital allocation update, Bunzl said it signed an agreement in May to acquire Solupack, a Brazilian distributor of own-brand packaging solutions for the food industry. Solupack generated revenue of BRL 106 million (approximately £15 million) in 2024. 

Bunzl said the acquisition, which remains subject to clearance by competition authorities, will strengthen its offering alongside existing operations in Brazil.

Leverage at the end of June is expected to be around 2 times adjusted net debt to EBITDA. 

Bunzl said this aligns with its target to be toward the lower end of its 2.0 to 2.5 times range by the end of the year, taking into account potential acquisition-related spending.

“Alongside a macroeconomic backdrop that remains uncertain, the Group is trading in-line with our expectations,” chief executive Frank van Zanten said in a statement. 

He said efforts to improve performance are underway, particularly in North America and Continental Europe.

Van Zanten said Solupack is Bunzl’s third acquisition of the year and that the company’s acquisition pipeline remains active.