Bunzl Shares Hit by Operating Margin Outlook

Bunzl's Operating Margin Outlook Affects Share Prices

(Corrects paragraph ‌7 to clarify that analysts had expected a slight improvement ‍in margins, ‌not that those were the company's previous expectations)

Dec 17 (Reuters) - Bunzl's warning ⁠of a drop in its operating ‌margin next year in the face of continuing cost pressures sent the business supplies distributor's shares down as much as 8% on Wednesday.

The company, which supplies ⁠packaging, cleaning and safety products to customers in the food service, retail and healthcare sectors, ​said its group operating margin is expected to fall ‌slightly in 2026.

Bunzl has sought ⁠to offset pricing pressures and challenges in North America, its biggest market, by cutting costs and changing its product mix as customers trim ​spending. 

It has also reined in M&A activity to preserve capital but plans to restore momentum in that area in the coming year. 

"After a lower level of acquisition spend in 2025, reflective of timing and ​driven by ‍macroeconomic uncertainty, and with ​our pipeline remaining active, we look forward to an improved year for acquisitions in 2026," CEO Frank van Zanten said.

Bunzl projected moderate revenue growth for 2026 at constant exchange rates, adding that it expects profit this year to be in line with analyst expectations.

Sentiment, however, remained focused on ⁠margins, RBC Capital Markets said, pointing to analyst expectations of a slight improvement. RBC highlighted concern that ​Bunzl may be in a "margin downcycle" as it contends with a tougher consumer backdrop after enjoying a "bonanza" during pandemic lockdowns.

The company's shares recovered a little to be 3.1% down at 0900 GMT ‌in a FTSE 100 index that was up 1.3%.

(Reporting by Nithyashree R B and Pushkala Aripaka in BengaluruEditing by Sumana Nandy and David Goodman)