Bunzl: Inflation spike lifts FTSE 100 outsourcing firm’s revenue

Distributor Bunzl saw a boost in its bottom line after the firm was able to pass on inflationary pressures to customers.

The FTSE 100 outsourcing group recorded a three per cent rise in revenue to £5.93bn in the first half of the year, bolstered by commodity-driven price adjustments and growth across North American markets.

Bunzl’s gross margin – the proportion of revenue retained after deducting the direct cost of goods sold – expanded to 29.4 per cent, up from 28.8 per cent in the prior period. The firm pinned the expansion on the group’s was ability to “effectively manage an inflationary environment”.

It listed plastic-related products as being hit the hardest by the geopolitical tensions and commodity price movements that drove up the group’s input costs.

Operating profit rose eight per cent to £440.6m. Bunzl’s operating margin – the percentage of revenue left over after paying day-to-day operating costs, but before paying interest or taxes – swelled 30 basis points to 7.3 per cent.

Chris Beauchamp, chief market analyst at IG, said: “Bunzl’s shares endured an awful 2025, which culminated in them falling by almost 50 per cent by December from the 2024 high. hitting a 15-year low in valuation terms.

“But they have clawed their way higher this year, and the news this morning shows this was no idle short-covering rally, but has been built on a strong recovery for the business. Brave bargain hunters have been rewarded, but on the strength of today’s news there is more to come.”   

Bunzl flags inflation bump as ‘temporary in nature’

The business upgraded its full-year margin expectations to be flat year-on-year on the back of the expansion. Bunzl also kicked off a £500m share buyback and hiked its interim dividend three per cent.

But the group warned the performance was “driven by the net impact of inflation, much of which is expected to be temporary in nature”.

The British Retail Consortium, which represents major supermarkets and high street shops across the UK, have raised concern over surging shop price inflation on the back of rising energy and commodity costs.

In the UK, headline inflation was recorded at 2.9 per cent in the 12 months to July, up from a previous reading of 2.6 per cent, following the reset of the energy price cap.

Elsewhere, Bunzl was bolstered by a turnaround in North America, where revenue grew 4.6 per cent after strong growth in grocery and foodservice. The market makes up a 52 per cent of the company’s revenue pool.

For the UK, revenue inched up 1.3 per cent but its operating margin rose to 7.1 per cent from 6.6 per cent following the completion of its takeover of catering company Nisbets.