Bunzl lifts 2026 sales outlook amid Elliott campaign

Activist calls for North America division split may be challenges by higher demand in the region.

British business supplies distributor Bunzl has upgraded its annual revenue growth outlook following strong demand in North America, despite activist calls to pursue strategic options for its business in the region.

Bunzl, which distributes products ranging from food packaging and safety equipment to cleaning supplies and healthcare consumables, now expects first-half revenue to grow by around 4% at constant exchange rates, with underlying growth of roughly 3%.

According to a Tuesday announcement, that growth is predominantly fueled by inflation in categories where product costs have been driven up by geopolitical events. However, volume growth, led by North America, also played a role, with “good operational progress” resulting in “high service levels largely restored”.

“North America’s underlying revenue growth was slightly ahead of the Group, supported by continued benefit of actions taken to improve performance, including new business won in the second half of 2025,” the company said.

The update comes just weeks after activist investor Elliott Investment Management disclosed a near-5% stake and called for increased share repurchases and a review of the company’s North American operations.

Elliott argued that considering strategic options for the division could attract interest from private equity buyers and potentially highlight the value of assets that investors may not fully appreciate within the broader group structure.

The activist’s demands were not unfounded, with Bunzl’s North America division weighing heavily on overall profitability in 2025.

Operational execution issues following a reorganization were compounded by softer demand across several end markets, including food processing, convenience stores, and parts of the Mexican business, leading to an 11% decline in North American adjusted operating profit, and an operating margin decrease from 7.9% to 7%.

Management spent much of 2025 implementing corrective measures and cost-control initiatives, and the pace of margin deterioration eased in the second half of the year.

However, the North American business remained the principal drag on group performance, contributing to a near 10% decline in Bunzl’s adjusted pretax profit for the year.

It remains unclear whether Bunzl management will embrace Elliott’s proposals or mount a defense of its existing strategy, however a defense may be easier now that demand seems to be returning to its North American operations.

Bunzl’s stock was trading at GBP26.48 at 11:36 on Wednesday in London, up 1.7% from Tuesday’s close. The stock is up 27.2% year-to-date.

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