March 2 (Reuters) - UK business supplies distributor Bunzl reported a 9.8% drop in annual adjusted pretax profit on Monday, as weaker trading conditions in its key North American division was
UK Bunzl's annual profit beats forecasts as turnaround bears fruit
Bunzl's Financial Performance and Strategic Initiatives
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By Nithyashree R B
Annual Profit and Market Challenges
March 2 (Reuters) - Supplies distributor Bunzl said on Monday annual profit dropped by less than expected, helped by cost control and turnaround efforts in the U.S. even as it grappled with margin pressures and supply chain disruptions due to tariffs.
Cost Control and Product Mix Adjustments
Bunzl, which supplies packaging, cleaning, and safety products to business customers, has cut costs and reshaped its product mix in North America, its largest market, after a decline in demand and execution challenges dented margins.
North American Food Processor Division
The company said its North American food processor division saw a modest rise in revenue from higher volumes and prices, but operating margins fell sharply as the company could not pass on the full impact of cost increases driven by U.S. tariffs to price-sensitive customers.
Bunzl had initially expected that a tariff-driven rise in prices could help its business.
"But overall, because it has been so volatile and because it's been taking so much time, there hasn't been any positive impact from tariffs in the results," CEO Frank van Zanten told Reuters.
Mexico Safety Business Performance
The company's Mexico safety business also had a challenging year with flat sales and lower margins due to tariffs impacting business confidence, it said.
Business Wins and Share Performance
In the second half of last year, Bunzl benefited from new business wins, which helped offset some of the weakness it faced in the first half, it said.
Shares in the company rose 2% to 2,238 pence at 1326 GMT. The company maintained its 2026 forecast.
Analyst Commentary and Profit Figures
"From a top-line perspective, Bunzl had a slightly stronger end to FY25 than we expected, despite a tough fourth quarter comparison and challenging markets, aided by new business wins," JP Morgan analysts said in a note.
The company reported annual adjusted operating profit of 910.3 million pounds ($1.22 billion), ahead of analysts' expectations of 878.1 million pounds, according to data compiled by LSEG. The company reported operating profit of 976.1 million pounds last year.
($1 = 0.7455 pounds)
Reporting and Editorial Credits
(Reporting by Neeshita Beura and Nithyashree R B in Bengaluru; Writing by Yadarisa Shabong; Editing by Sumana Nandy and Alison Williams)
