Bunzl shares face worst day on record as it cuts guidance and pauses buybacks

Bunzl shares plummeted on Wednesday after the business supplies distributor cut its full-year guidance and reported lower earnings.

The group, which dispenses products such as paper packaging and medical gloves, revealed its adjusted operating profit shrank 'significantly' in the first quarter following weaker performances in North America and Continental Europe.

In the former territory, Bunzl noted 'some revenue softness' had impacted operating margins, particularly at its largest business, which predominantly serves food service and grocery customers.

It also said 'continued deflation' led to a weaker-than-expected rebound in volumes, increased operating costs, and an 'isolated customer category loss.'

Due to these challenges, Bunzl predicts its annual operating margin to be 'moderately below' 8 per cent, against 8.3 per cent last year.

Shares in the firm dived 23.9 per cent to £23.42 by the late morning, making them the FTSE 100 Index's biggest faller and marking their worst day on record.

The London-based group's outlook does not include the potential impact of recent tariffs and their effects on inflation and economic growth.

A fortnight ago, President Donald Trump announced a 10 per cent baseline tariff on US goods imports and put a 25 per cent levy on steel, cars and aluminium products.

He has since implemented a colossal 145 per cent duty on Chinese goods and briefly applied 'reciprocal' tariffs on dozens of other nations before suspending them for 90 days.

China has retaliated with 125 per cent import taxes on US goods, while Canada has subjected numerous goods such as orange juice, footwear and cooking appliances.

These measures have led to considerable unrest in global markets and heightened concerns among economists about a worldwide recession occurring this year.

Bunzl has decided to pause its £200million share buyback programme owing to this uncertainty, having already bought about £115million in stock.

Frank van Zanten, chief executive of Bunzl, said he was 'disappointed' with his company's performance even amidst a 'challenging trading environment'.

He added: 'We are taking decisive action to improve performance in the group, particularly with regards to execution in our largest business in North America.'

Founded in 1854, Bunzl delivers a wide array of items, including masks and bandages to hospitals, hard hats and eye protection to construction firms, and cleaning and hygiene products to hotels and restaurants.

Acquisitions have driven a large part of its strategy; Bunzl spent £636million acquiring businesses last year, of which more than half went towards obtaining an 80 per cent stake in catering equipment supplier Nisbets.

In the first quarter, the company's turnover rose by 2.6 per cent at constant exchange rates, with takeovers contributing 5.7 per cent growth and offsetting lower underlying revenue.