Bunzl plc

First-half 2026 constant-currency revenue increased 4.1%, driven by 3.2% underlying revenue growth; 2/3 of the underlying growth came from volume and 1/3 from price. Adjusted operating profit was GBP 441 million, up 8% year over year, and operating margin improved to 7.3% from 7.0%. Gross margin was 29.4% versus 28.8% last year, and adjusted EPS increased 11%. Free cash flow was GBP 328 million, cash conversion was 90%, and adjusted net debt to EBITDA was 1.8x. For 2026, Bunzl now expects revenue growth at constant exchange rates excluding U.S. tariff refunds to be driven by modest underlying growth plus some inflation and a small acquisition benefit, operating margin to be broadly flat year on year versus the 7.6% reported in 2025 excluding the GBP 8 million share-based payment credit, and adjusted operating profit to grow modestly. Tax guidance remains 26%, net interest is expected to be GBP 125 million to GBP 130 million, and management expects higher annual acquisition spend in 2026 than in 2025.

Frank Van Zanten said the first half reflected the benefit of actions taken over the prior 18 months, especially in North America Distribution, where responsiveness, agility and service levels improved. He framed 2026 as the foundation for future profit growth and said Bunzl is well positioned to return to its long-term compounding model through organic growth, acquisitions and efficiency actions. His tone was confident and constructive, but he kept emphasizing discipline and the need to continue working on the business.

Richard Howes emphasized that the tariff refund reduced reported revenue by 1.2% but had no impact on adjusted operating profit because cost of sales was adjusted as well. He highlighted gross margin at 29.4%, operating margin at 7.3%, adjusted operating profit of GBP 441 million, adjusted net finance expense of GBP 60 million, and free cash flow of GBP 328 million with 90% cash conversion excluding the tariff inflow. He also said H2 margins should be lower year on year because the inventory gain will unwind, Nisbets synergies annualize, selling prices are already normalizing, and higher variable costs will continue.

Analysts focused on the second-half margin bridge, tariff refunds, inflation pass-through, and whether North America Distribution’s recovery is sustainable. Management said H2 margins should be lower year on year because the first-half inventory gain will reverse, selling prices are already declining, and variable costs tied to better profit performance will remain elevated. On tariffs, Richard said the group expects most of the GBP 71 million inflow to be repaid to customers in the second half, with no further meaningful refunds expected, and that discussions are underway on how the money flows through the supply chain. On M&A, Frank said the pipeline is active but timing is lumpy, discipline matters more than speed, and lower spend in the last 18 months reflected market uncertainty rather than a lack of opportunity.