One of the UK’s largest public listed companies has seen its share price sink by 25 per cent on Wednesday, after reporting a lower annual forecast for 2025 and warning over the “uncertainty” caused by Donald Trump’s tariffs.
Bunzl is a distributor business which supplies other companies around the world with essential everyday goods such as food packaging and labels for supermarkets, catering equipment for restaurants, and masks, gloves and gowns for hospitals.
Having held a market capitalisation in excess of £10bn, the share price crash of the FTSE 100 company has seen more than £2bn wiped off that total in hours after CEO Frank van Zanten cited a “challenging trading environment”.
No other company on the London Stock Exchange’s biggest index saw a fall of more than four per cent on Wednesday, leaving Bunzl as a huge outlier as it battles with its biggest market operating cautiously amid potential import costs and a weak dollar.
“A profit warning and termination of a share buyback programme, the first such halt by any FTSE 100 firm since the dark days of Covid-19 and lockdowns, are both taking a heavy toll on shares in Bunzl and driving them to a four-year low,” said AJ Bell investment director Russ Mould, explaining why the tariffs had particularly weighed on the company.
“The specialist distributor had already flagged the combination of higher input costs and price pressure in the US business in particular, where sales and profit fell in 2024. These challenges have become even more acute, especially for the food service and grocery segment. Volumes have stayed soft, prices have weakened, a customer has been lost and Bunzl has invested in its sales proposition to reaffirm its competitive position in the market.
“That is all putting a lid on profit margins after a period of strong expansion and also eroding one of the key parts of the investment case for Bunzl’s shares, namely the essential nature of the services it provides for its customers, and the pricing power this brings.”
Bunzl have halted a £200m buyback programme for this year, which sees companies buy their own shares from the market to return value to investors.
No FTSE 100 company had taken this course of action since 2020.
“It's still all connected with the concerns about global tariffs and slowdowns...there's nervousness in the market. Any bad news or any hint of bad news is being punished severely,” added Nick Saunders, CEO of Webull UK.
Bunzl has about 27,000 employees, with more than half of its revenue coming from North America.
The company reported higher earnings for the past year, generating an operating profit of £799.3m, about 1 per cent higher than 2023. However, its profit before income tax declined nearly 4 per cent year-on-year, and total revenues came in fractionally lower at £11.78bn. Bunzl said the decline was mainly driven by deflation across the US and Europe, which led to fiercer competition to decrease prices among suppliers.
The volume of sales was also impacted by the firm switching its focus towards own-brand products in its food services division in the US.
In the UK, Bunzl flagged a more challenging sales environment leading to weaker volumes, particularly in its safety division, which includes supplying equipment for building sites, and retail arm, with packaging for luxury fashion and jewellery firms impacted by slower consumer demand.
The company said it had a record year of acquisitions, buying 13 companies in 2024 and pledging to spend £883m.
Matt Britzman, senior equity analyst for Hargreaves Lansdown, said: “It’s been a tough year; prices have been falling in many of Bunzl’s markets after a period of rampant inflation and that’s been bad news for top line growth – but it might finally be at an inflection point.
“Key markets are showing brighter volume trends, and pricing looks set to flip positive soon, setting the stage for a stronger core business, with own-brand gains and cost efficiencies promising sustainably higher margins despite last year’s cost pressures.”
Bunzl said it expects revenues to grow in 2025 “despite significant uncertainties relating to the wider economic and geopolitical landscape”.
