BUNZL (BNZL) SHARES: 2025 PERFORMANCE IN UK, KEY DRIVERS, MILESTONES AND RISKS —'26 OUTLOOK

How did Bunzl (BNZL) shares perform in 2025?

In 2025, Bunzl plc (LSE: BNZL), the international distribution and outsourcing company headquartered in London, demonstrated resilient performance amid macroeconomic uncertainties. The company's shares maintained relative stability throughout the year, closing with moderate gains compared to their 2024 starting levels. The overall performance was driven by cost control, strategic acquisitions, and solid demand in select end markets.

Bunzl operates across more than 30 countries and supplies a wide range of non-food consumables, including cleaning & hygiene products, catering supplies, and personal protective equipment. Its broad client base across various industries - from healthcare to retail - continued to support its defensive investment profile.

Over the course of 2025, BNZL shares exhibited low volatility, trading within a tight range of 2,700 GBX to 2,950 GBX. As of December 2025, shares stood at approximately 2,875 GBX, reflecting a 4.6% year-to-date gain. In comparison, the FTSE 100 index returned around 6.2%, placing Bunzl slightly below the broader market but outperforming some defensive peers.

The company’s H1 2025 results showed a 2% year-on-year revenue increase, driven by favourable foreign exchange movements and incremental contributions from bolt-on acquisitions. Organic growth remained relatively flat due to easing pandemic-driven demand for PPE and a slowdown in retail sector volumes. Nevertheless, Bunzl’s operating margin held steady at 7.1%, indicating effective cost management and pricing discipline.

During Q3 and Q4 of 2025, Bunzl focused on expanding its portfolio through targeted acquisitions, further strengthening its market position in North America and Europe. Notably, the acquisition of a healthcare-focused distribution firm in Spain and a catering supplies business in the eastern U.S. added diversity and scale. Analysts applauded the deals for being accretive to earnings and aligned with Bunzl’s long-term growth strategy.

Dividends remained a strong feature for BNZL investors. The company announced a full-year dividend increase of 5%, continuing its multi-decade history of dividend progression. With a payout ratio of approximately 45%, the dividend remains well-covered by earnings, offering income stability for shareholders.

In terms of sustainability, Bunzl advanced its ESG commitments by increasing its focus on reusable packaging solutions and reducing Scope 1 and 2 emissions. Investors welcomed these initiatives as part of their growing interest in environmental responsibility.

Despite minor weakness in organic growth and some FX headwinds in Q2, 2025 proved to be a solid year for Bunzl. The company's diversified end-market exposure, consistent M&A strategy, and emphasis on operational efficiency allowed it to navigate inflationary and supply chain pressures effectively.

As we head into 2026, investors are closely watching how Bunzl adapts to shifting market dynamics, especially in consumer-facing segments, and whether its acquisition pipeline continues to deliver earnings accretion.

What drove Bunzl's share performance in 2025?

The share performance of Bunzl in 2025 was influenced by several interconnected factors. As a defensive stock with a wide operational footprint, Bunzl exhibited solid fundamentals and steady cash flow generation during a period marked by global economic softness, supply chain recalibration, and evolving customer demand.

1. Acquisition-led growth strategy

One of the central pillars supporting BNZL’s share price in 2025 was its disciplined and focused merger and acquisition (M&A) activity. Bunzl completed over five bolt-on acquisitions during the year, expanding its reach in healthcare, foodservice, and safety sectors. These acquisitions typically involved niche distributors with strong local networks, aligning with Bunzl’s approach of integrating complementary businesses to enhance margins and cross-selling opportunities.

Investors responded positively to this strategy, particularly after the Q3 announcement of a double-digit earnings boost from recent deals. Maintaining a robust pipeline of deals supported analyst confidence, with several brokerages upgrading their outlook by Q4 2025.

2. Resilience in essential services

Bunzl’s exposure to essential markets—including healthcare, cleaning, and food distribution—cushioned its performance during periods of declining discretionary spending. The company benefitted from long-term contracts and non-cyclical demand, which helped preserve predictable revenue streams.

In particular, Bunzl’s healthcare and hygiene product lines registered decent activity as institutional buyers maintained inventory levels amid ongoing health concerns post-COVID-19. Although PPE demand declined from pandemic peaks, sustainable product ranges saw modest volume increases, helping to offset the drop.

3. Cost management and operational leverage

Bunzl demonstrated solid progress in containing input cost inflation and enhancing operating efficiencies. Executives pointed to improved procurement practices, investment in digital procurement technologies, and centralised sourcing strategies as key cost-saving levers.

As a result, gross margins improved slightly year-on-year, while operating margin remained steady despite currency volatility. These trends reassured investors that the company remains well-positioned to weather macroeconomic headwinds through internal levers and structural advantages.

4. FX fluctuations and global footprint

Given Bunzl’s significant international revenue (over 85% originating outside the UK), exchange rate fluctuations remain a critical factor. In 2025, a stronger dollar relative to the pound provided a translation benefit on U.S. sales, although this was partially offset by weakness in European currencies. Currency effects contributed to about 1.5% of revenue growth during the year.

Geographic diversification continues to serve as both a growth driver and a hedge against regional slowdowns, though it exposes the firm to regulatory and political risks across jurisdictions.

5. ESG alignment and investor sentiment

The increasing importance of ESG (Environmental, Social, and Governance) in investment decisions placed Bunzl in favourable standing. The company reported steady progress on its 2025 sustainability goals, including increased sales of reusable and biodegradable packaging solutions and reduced GHG emissions per unit revenue.

These factors enhanced the company’s appeal among institutional investors focused on sustainability criteria, possibly expanding its shareholder base and supporting the share price through increased demand.

6. Dividend reliability

Bunzl’s reputation as a dividend aristocrat once again came into play. With more than 30 consecutive years of dividend growth, the firm’s reliable income generation remained attractive in a low-growth, high-inflation environment. This attribute preserved valuation support, even as growth prospects normalised.

In summary, the combination of reliable earnings, strategic growth through acquisitions, and an increasingly sustainable business model were key contributors to BNZL’s 2025 share performance. Analysts noted its defensive qualities and ability to adjust to changing conditions as stand-out qualities.

What to expect for Bunzl shares in 2026?

As we move into 2026, market watchers and investors are eyeing several critical themes related to Bunzl’s operational performance, strategic direction, and external risk environment. Here's a breakdown of what to monitor in the next 12 months.

1. Earnings guidance and organic growth recovery

Investors will focus on Bunzl’s ability to return to stronger organic growth rates after a plateau in 2025. Expected recovery in retail, hospitality and industrial demand could support such a rebound, provided global inflationary pressures subside. Management's forward guidance will be key in assessing margin expectations, operating cost discipline, and sales momentum heading into FY2026.

Should Bunzl maintain growth in its high-margin product categories while continuing its successful M&A strategy, analysts expect mid-single-digit earnings per share (EPS) growth for the year. Market consensus is projecting low double-digit total returns including dividend yield.

2. Strategic acquisitions pipeline

Another important factor is the persistence of Bunzl’s M&A strategy. Investors will watch for further acquisition announcements in key European, Latin American or Asia-Pacific markets as Bunzl looks to enter or deepen its presence in fragmented sectors. The quality and valuation of these purchases—and their integration success—will be essential in justifying continued share appreciation.

Notably, if larger deals emerge beyond typical bolt-ons, analysts may revise earnings forecasts upward while reassessing the company’s balance sheet flexibility and leverage positions.

3. Inflation and currency dynamics

2026 could bring more clarity around central bank policies, helping to stabilise inflation trends. Bunzl's performance is partially reliant on foreign exchange, especially considering its dollar-heavy revenue base. A further weakening or strengthening of sterling could impact reported figures and investor sentiment.

Effective currency hedging programmes and geographic mix will be closely monitored by financial analysts seeking to understand earnings resilience.

4. ESG & regulatory clarity

Regulatory changes around sustainability, packaging waste, and product sourcing could either pose compliance risks or create market opportunities. Bunzl’s proactive ESG stance suggests it is well-placed to lead rather than react, which may appeal to green-focused investors. That said, implementation costs tied to compliance upgrades will warrant attention.

Clear communication on long-term environmental goals, carbon reduction timelines, and sustainable supply chain audits should bolster investor confidence.

5. Technological transformation outlook

In line with industry-wide digitisation, Bunzl is boosting its investment in procurement technologies, data analytics and e-commerce enablement. This tech adoption could improve process efficiency and customer retention. Any successful rollout of digital procurement platforms or supplier integration tools will likely enhance margin profiles and operational speed.

6. Potential risks and headwinds

While the outlook remains cautiously optimistic, downside risks must be acknowledged. These include:

• Global economic slowdown or recession limiting customer volumes
• Supply chain disruptions linked to geopolitical tensions or shipping bottlenecks
• Sharp currency swings affecting reported results
• Increased competition from local distributors underpricing Bunzl’s offerings
• Failing to successfully integrate newly acquired businesses
• Rising interest rates increasing debt servicing costs

Prudent investors will continue monitoring quarterly updates and macroeconomic indicators. Analysts stress the importance of execution consistency and transparent investor communication as differentiating factors in 2026.

Ultimately, Bunzl enters 2026 in solid shape—backed by a defensive business model, income reliability, and scalable acquisition strategy. However, external developments could test its ability to stay on a growth trajectory. Transparency, efficiency, and adaptability will likely prove decisive in how BNZL shares perform over the coming year.