(Reuters) -British business supplies distributor Bunzl on Tuesday said that low prices, especially in continental Europe, would have a “slight impact” on its annual profit, sending its shares down more than 5%.
Bunzl has been balancing sales declines in the U.S., a key market, by raising prices for daily-use items such as stationery and food packaging, but prices in Europe have remained soft.
The company did not go into detail on the impact on profit but said in a statement that lower prices in the fourth quarter looked “more persistent than previously anticipated.”
Bunzl said it expected group revenue for the year to be between 0% and 1% lower compared with last year at actual exchange rates, and 3% higher at constant exchange rates.
“It (Bunzl) makes a small margin on supplying products, but a deflationary environment can act as a headwind if it has already bought a lot of stock at higher prices and has to sell them for less than originally expected,” said investment firm AJ Bell.
Bunzl, a supplier of everything from stationery to food packaging, was the top percentage loser on London’s benchmark index, with its shares down 5% at 3,380 pence at 0842 GMT.
Analysts at JP Morgan estimated that Bunzl’s fourth quarter organic growth was around 1%, below JPM’s expectations of 3%.
Bunzl has been expanding its business through acquisitions and forecast “robust” revenue growth for 2025, supported by its recently acquired businesses.
The company also announced share buybacks of 200 million pounds for next year.
(Reporting by Yamini Kalia in Bengaluru; Editing by Abinaya Vijayaraghavan, Mrigank Dhaniwala and Kate Mayberry)
