Bunzl PLC (LSE:BNZL) heads into its half-year results next week with a cloud still hanging over its biggest markets.
Analysts at Panmure Liberum have reiterated their 'sell' recommendation on the FTSE 100 support services group, keeping their target price at 2,000p, compared with a recent share price of 2,280p.
The broker expects management’s full-year guidance to remain intact, which may be taken as a relief by investors.
But it warns that trading conditions remain “deeply unhelpful”, particularly in North America and the UK, where Bunzl’s foodservice and cleaning supplies businesses face sluggish demand.
North America looks fragile
Roughly a third of Bunzl’s turnover comes from supplying the North American foodservice industry, and Panmure highlights clear signs of consumer weakness.
Restaurant chains, including McDonald’s, have reported double-digit declines in visits from lower-income customers. Suppliers such as Essity, which provides hygiene products, have also flagged falling demand in hotels and restaurants.
Although Bunzl can benefit when shoppers cook more at home, as it supplies supermarkets too, Panmure notes that price increases at large customers such as Walmart could temper volumes, making the shift less favourable than it first appears.
UK headwinds
The UK is not offering much respite. Bunzl’s acquisition of catering equipment distributor Nisbets has increased its exposure to hospitality.
Yet industry data shows sales in pubs and restaurants have been flat or negative for much of 2025. Even with expected cost synergies from the deal, Panmure argues that inflation in operating costs could outweigh the benefits.
Margins under the microscope
For the full year, Bunzl has guided to broadly flat sales and an operating margin “moderately below” 8%, compared with 8.3% in 2024. Panmure is forecasting group sales of £11.7 billion and operating profit of £899 million, down almost 8% year on year.
The broker’s longer-term concern is that Bunzl’s profit margins will gravitate back towards 7% as pricing pressures persist. At that point, the valuation, currently about 13 times 2026 earnings, would look stretched against the group’s 10-year average of 18 times.
The shares fell 12p to 2,268p.