Company Reports

Bunzl is the largest worldwide distributor of nonfood consumables, inexpensive products essential to clients' businesses, and is the clear leader in a fragmented market. Bunzl’s scale provides a cost advantage, as its sourcing, consolidation, and delivery allow customers to reduce costs and access expertise for products and regulations. Customers also save time and money by outsourcing warehouse storage and distribution to Bunzl. In North America, this advantage is under threat, as private equity firms have been acquiring companies rapidly. However, offsetting this weakness are positive moat trends in the UK/Ireland and continental Europe segments.

Bunzl reported positive momentum, with underlying revenue expanding by 3.2%, driven by strong volumes in North America. Margins also improved, driven by inflation, prompting an upward revision to the outlook, with Bunzl now anticipating flat margins in 2026.

Bunzl is the largest worldwide distributor of nonfood consumables, inexpensive products essential to clients' businesses, and is the clear leader in a fragmented market. Bunzl’s scale provides a cost advantage, as its sourcing, consolidation, and delivery allow customers to reduce costs and access expertise for products and regulations. Customers also save time and money by outsourcing warehouse storage and distribution to Bunzl. In North America, this advantage is under threat, as private equity firms have been acquiring companies rapidly. However, offsetting this weakness are positive moat trends in the UK/Ireland and continental Europe segments.

We see a clear path to near-term recovery for Bunzl, anticipating that raw material prices will stabilize and strategy tweaks will be successful. In the long term, we see no erosion of its moat, keeping its merger-and-acquisition strategy effective, suggesting market concerns are overblown.

Underlying revenue increased by 2% in the first quarter, driven by volume growth. Adjusted operating profit was consistent, in line with expectations. Management reiterated full-year guidance.

Bunzl is the largest worldwide distributor of nonfood consumables, inexpensive products essential to clients' businesses, and is the clear leader in a fragmented market. For reference, its largest competitor, Essendant, which competes with Bunzl in office and janitorial products in the United States, generates around $1.5 billion in revenue across its overlapping sectors, only 20%-25% of Bunzl’s US revenue and only 10%-15% of its global revenue. Bunzl’s scale provides a cost advantage, as its sourcing, consolidation, and delivery allow customers to reduce costs and access expertise for products and regulations. Customers also save time and money by outsourcing warehouse storage and distribution to Bunzl.

Underlying revenue and margin fell in 2025 due to weakness in North America and macro headwinds, in line with guidance. Management expects moderate revenue growth in 2026, driven by small underlying growth and acquisitions. Group margins are anticipated to be slightly down.

Bunzl's trading update confirmed full-year 2025 guidance, with the group anticipating constant revenue growth between 2% and 3%, driven by acquisitions, and an adjusted operating margin of 7.6%. In 2026, operating margins are expected to be slightly down year on year.

Bunzl's revenue expanded by 0.6% at constant exchange rates, with flat underlying revenue. Although not much information is provided on trading updates, management reiterated guidance of moderate revenue growth, flat underlying growth, and margin stabilization in 2025.

Bunzl is the largest worldwide distributor of nonfood consumables, inexpensive products essential to clients' businesses, and is the clear leader in a fragmented market. For reference, its largest competitor, Essendant, which competes with Bunzl in office and janitorial products in the United States, generates around $1.5 billion in revenue across its overlapping sectors, only 20%-25% of Bunzl’s US revenue and only 10%-15% of its global revenue. Bunzl’s scale provides a cost advantage, as its sourcing, consolidation, and delivery allow customers to reduce costs and access expertise for products and regulations. Customers also save time and money by outsourcing warehouse storage and distribution to Bunzl.

Bunzl increased revenue 4% at constant exchange rates, with flat underlying revenue in the first half. It reiterated its full-year outlook for moderate revenue growth and margin stabilization in 2025, driven by a stronger second-half 2025. Management also resumed its GBP 200 million share buyback.

Bunzl is the largest worldwide distributor of nonfood consumables, inexpensive products essential to clients' businesses, and is the clear leader in a fragmented market. For reference, its largest competitor, Essendant, which competes with Bunzl in office and janitorial products in the United States, generates around $1.5 billion in revenue across its overlapping sectors, only 20%-25% of Bunzl’s US revenue and only 10%-15% of its global revenue. Bunzl’s scale provides a cost advantage, as its sourcing, consolidation, and delivery allow customers to reduce costs and access expertise for products and regulations. Customers also save time and money by outsourcing warehouse storage and distribution to Bunzl.

In its pre-close statement, Bunzl guided for 4% revenue growth at constant rates, clarifying its previous announcement of moderate revenue growth, driven by acquisitions with flat underlying growth. Bunzl signed an agreement to acquire Solupack, a Brazilian distributor of brand packaging solutions.

We are launching coverage of Bunzl, the largest worldwide distributor of nonfood consumables, including disposable cutlery, cleaning products, and personal protective equipment.

Bunzl is the largest worldwide distributor of nonfood consumables, inexpensive products essential to clients' businesses, and is the clear leader in a fragmented market. For reference, its largest competitor, Essendant, which competes with Bunzl in office and janitorial products in the United States, generates around $1.5 billion in revenue across its overlapping sectors, only 20%-25% of Bunzl’s US revenue and only 10%-15% of its global revenue. Bunzl’s scale provides a cost advantage, as its sourcing, consolidation, and delivery allow customers to reduce costs and access expertise for products and regulations. Customers also save time and money by outsourcing warehouse storage and distribution to Bunzl.

We are dropping coverage of Bunzl. We provide broad coverage of more than 1,500 companies globally and periodically adjust our coverage according to investor interest and staffing.

Bunzl is the only global player in the nonfood consumables space, operating in more than 30 countries. The company sources, stores, and distributes thousands of products to its diverse customer base, essentially offering a one-stop shop for operating supplies. While Bunzl holds significant share, which we estimate to be close to 50% of the outsourced U.S. market, outside of Bunzl the market is extremely fragmented, with thousands of mom-and-pop or regional outfits meeting the needs of much of the industry.

Narrow-moat Bunzl’s first-half results were strong, with organic revenue growth of more than 9%, as the wave of recovery takes hold in core areas of the business, offsetting the decline from elevated sales of coronavirus-related products during the pandemic. This decline in COVID-19-related products has also hit operating margins, with these products generally garnering higher margins, but over the full year we expect this to come out in the wash. With few surprises since the end-June update, we do not expect to make any material changes to our forecasts, nor to our GBX 2,600 fair value estimate. Currently, we view the shares as slightly overvalued.

Narrow-moat Bunzl’s brief preclose statement perfectly illustrated the resilience of the company’s business model. Headline revenue growth reached 16% in the first half, driven partly by positive currency translation, continued acquisitions, and inflationary price increases. It is the last part of this equation that we are most excited about as Bunzl proves itself one of a short list of firms with true pricing power and the ability to effectively and consistently pass through inflationary price increases, thus protecting its operating margin in times of inflationary pressure. Management upgraded its full-year guidance, albeit qualitatively. While we may adjust our near-term numbers slightly, we do not expect this to have a material effect on our GBX 2,600 fair value estimate. Despite the recent market-related pullback, we view the shares as being fairly valued.

Narrow-moat Bunzl’s brief trading statement perfectly illustrated the resilience of the company’s business model, with organic growth coming in at 11% for the first quarter of the year, with most of this growth coming in the form of pass-through inflation. Bunzl’s two largest single markets, North America and the U.K., which together account for more than 70% of revenue, are currently experiencing the highest inflation rates in the developed world, putting Bunzl’s operations in the eye of the storm. The company has managed to effectively pass through these increased costs and this should be music to investors’ ears. We do not expect to make any immediate changes to our forecasts on the back of this update, nor to our GBX 2,600 fair value estimate. With the share price having run heavily over the last two months we now view shares as moderately overvalued.