Half Year 2025 Bunzl plc Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rory McKenzie - UBS AG - Analyst : Two questions, please. First, wanted to ask for more detail on the cost-based plans for North America and Europe. If we assume that gross margins were pretty stable in each region, and I think SG&A rose by about 10 to 20 million year over year in local currencies for H1. I guess does that sound right firstly? And then in terms of modeling that from here, were there any one-off costs you charged in H1 that will recur in H2? And could you also quantify the savings you expect to make from your actions, please? And then secondly, can you talk about the pricing environment? It sounds like H1 overall was still marginally deflationary, but can you quantify the price increases that you've recently put through and the potential impact on H2, and then just give a bit more background on how you're managing the US in particular, given the tariff volatility there.

Question: Rory McKenzie - UBS AG - Analyst : Thank you. I just came back on the cost base. It doesn't sound like what you're saying that there's any kind of large absolute cost reductions you expect to make over the next, 6, 12 months. It's more about repositioning the business to drive growth. Is that fair then in the context of what you just said?

Question: Rory McKenzie - UBS AG - Analyst : That's great. Thank you.

Question: Ryan Flight - Jefferies LLC - Analyst : All three from me, if I may, please. First one, you've noted reduced engagement from suppliers largely on the back of your focus on own brand. I wondered if you could kind of update us on this engagement and your relationship with suppliers and how you strike the balance on own brand. It seems that you're still kind of pushing the own brand penetration and then just how you strike that balance. Second one, you've got your kind of shorter-term leverage target at the lower end of the previous range, so it's 2 times. I wondered if you could kind of build out on what you really need to see to move back to the 2 to 2.5 times range. And then the third one, just on M&A really, I know you've kind of noted the tougher macro environment, but is there anything else for us to be aware of? Are you being a little bit more prudent? Is there anything on valuation, competition? That'd be really useful.

Question: Ryan Flight - Jefferies LLC - Analyst : Thank you.

Question: Suhasini Varanasi - Goldman Sachs Group Inc - Analyst : Thank you for taking my questions. Just a couple for me, please. You've mentioned in your remarks that organic growth trends in July have been in line with your expectations. Could you please clarify whether that growth in July was similar to Q2, which seems to have improved a little bit versus Q1 on an underlying basis. And maybe just one on clarification please. I think your defer and contingent consideration on M&A, could you just remind us how much is the expected payout for '26 and '27 on from the from the free cash flow?

Question: Suhasini Varanasi - Goldman Sachs Group Inc - Analyst : That's very clear, thank you. But just to go back on the first question, is it possible to provide some color on how the underlying organic trends have evolved in July? I just want to understand if there have been any implications from tariffs pre-buy, post-buy, whatever, how that has affected, or inflation, for example, how that has affected the underlying organic trends.

Question: Suhasini Varanasi - Goldman Sachs Group Inc - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 26, 2025 / 8:30AM, BNZL.L - Half Year 2025 Bunzl plc Earnings Call

Question: Karl Green - RBC Capital Markets Inc - Analyst : I've got two questions just in terms of trying to assess and track the improvement program. You've indicated that service levels and inventory levels are normalizing. Just how far off the optimal level are both service levels and inventories, please, and any quantification around that would be helpful. So any kind of comments around where business wins need to get to be kind of back on track. And then the second question is really around the M&A slowdown. I think, Frank, you did indicate that part of that is Bunzl deciding to pause certain processes. So the question would be, what are you seeing in the books of targets that is giving you that sort of second (inaudible) of thoughts, giving you -- making you think twice about pushing forwards. I mean, on the basis that Bunzl typically targets fairly resilient businesses. W What kind of businesses are seeing the slowdown at the moment, that would be helpful.

Question: Karl Green - RBC Capital Markets Inc - Analyst : Okay, thanks very much. And so just following up on my first question, when would you say the earliest point in time would be when you can declare mission accomplished on the turnaround program?

Question: Karl Green - RBC Capital Markets Inc - Analyst : Very clear. Thank you.