Bunzl PLC (LSE:BNZL) shares fell 4.2% to 2,126p after the specialist distributor provided a year-end update where it expressed confidence in meeting profit guidance for the current year, but said it expects profit margins to fall next year.
The FTSE 100-listed group said revenue is forecast to grow between 2% and 3% at constant exchange rates this year, but be broadly flat at actual exchange rates as growth is driven by acquisitions.
Adjusted operating margins are projected to be around 7.6% this year as a decline seen in the first half moderated in the second, supported by performance improvements in North America and Continental Europe, easier comparatives, and synergy benefits from Nisbets.
Chief executive officer Frank van Zanten said it remained "a challenging market" but the group has been encouraged by operational improvements being made and new business wins in North America.
Looking ahead, while he expects a return to organic growth in 2026, ongoing cost actions are not expected to stop operating margin from being slightly down year-on-year.
Revenue growth is expected to be "moderate" at constant exchange rates, with a small benefit from acquisitions.
In October, the group completed the acquisition of Damito in Slovakia, a distributor of cleaning & hygiene, personal protective equipment and packaging, which generated €14 million (approximately £12 million) in revenue in 2024.
The company also completed a £200 million share buyback for 2025 and expects year-end leverage to be just over 2.0 times.
Analysts at Jefferies said a fall in margins "should prompt consensus downgrades".
** UPDATE: Adds share price and broker comment **