Why did Bunzl stock sink 25% as outlook dims and buyback paused: analysts revise expectations

Shares of British business supplies group Bunzl fell sharply on Wednesday after the company cut its 2025 forecast and paused its share buyback programme, citing deteriorating performance in its North American division.

The stock dropped 25.7%—its steepest one-day fall in years—reaching its lowest level since mid-2020.

The London-listed firm, which supplies everyday products such as packaging, cleaning materials and personal protective equipment to businesses across the UK, Europe, and North America, said its revised forecast excludes any impact from potential US tariffs.

These tariffs have rattled global markets and heightened fears of a protracted trade war, making the company’s forward guidance even more uncertain.

Bunzl now expects only moderate revenue growth in 2025 at constant exchange rates, and anticipates that group operating margin will decline slightly below 8%, down from 8.3% in 2024.

The company also announced it was pausing its previously stated £200 million share buyback programme for 2025 for the rest of the year.

As of now, approximately £115 million worth of shares have already been repurchased. Management said the pause reflects a need to prioritise financial flexibility amid mounting cost pressures.

North American headwinds weigh heavily

Chief executive Frank van Zanten acknowledged that the company’s performance in the first quarter had fallen short of expectations.

“I am disappointed with our performance in the first quarter in this challenging trading environment,” he said.

Van Zanten added that the group is implementing leadership changes and cost-saving measures aimed at improving results in its largest business segment, with progress expected to become visible by 2026.

Bunzl reported revenue softness in its North American operations, which primarily serve grocery and food service customers.

While the company has raised prices for some daily-use items in response to inflationary pressures, these efforts have not fully offset weaker volumes, leading to tighter operating margins.

Analysts revise expectations, question growth assumptions

Following the announcement, Peel Hunt placed its estimates under review, with initial assessments pointing to a possible 10% downgrade in profit before tax for 2025.

The analysts also noted that the suspension of the buyback could slightly worsen earnings per share forecasts.

Ryan Flight of Jefferies, who had previously cautioned investors about limited upside potential, said the consensus assumption of a strong organic recovery appears overly optimistic.

“The recovery in organic growth assumed by the consensus is still too ambitious and will remain uninspiring,” he wrote.

In a March note following Bunzl’s full-year 2024 results, analysts at Hargreaves Lansdown said the company had shown resilience despite significant headwinds.

They praised its margin management and cash-generative model but acknowledged that recent growth had largely come from acquisitions.

With inflation easing and prices falling in many of Bunzl’s key markets, organic growth remains elusive—putting pressure on deals to drive performance in the short term.

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