Distributor Bunzl saw its bottom line strengthen after the FTSE 100 outsourcing firm successfully passed inflationary pressures on to customers.

The group, which supplies a wide range of consumables – from packaging and cleaning products to foodservice and personal protective equipment – to customers in sectors including grocery, foodservice, retail and healthcare, posted a three per cent rise in revenue to £5.93bn for the first half of the year, supported by commodity-driven price adjustments and growth across its North American markets.

Bunzl's gross margin – the proportion of revenue retained after deducting the direct cost of goods sold – expanded to 29.4 per cent, up from 28.8 per cent in the prior period. The company attributed the improvement to its ability to "effectively manage an inflationary environment". Plastic-related products were identified as the hardest hit by the geopolitical tensions and commodity price movements that raised the group's input costs. As a distributor rather than a manufacturer, Bunzl's results are closely watched as a gauge of how input cost pressure moves through supply chains to end customers.

Operating profit rose eight per cent to £440.6m, while the operating margin – the percentage of revenue remaining after day-to-day operating costs, but before interest or taxes – widened by 30 basis points to 7.3 per cent.

Chris Beauchamp, chief market analyst at IG, said: "Bunzl's shares endured an awful 2025, which culminated in them falling by almost 50 per cent by December from the 2024 high. hitting a 15-year low in valuation terms.

"But they have clawed their way higher this year, and the news this morning shows this was no idle short-covering rally, but has been built on a strong recovery for the business. Brave bargain hunters have been rewarded, but on the strength of today's news there is more to come."

Bunzl flags inflation bump as 'temporary in nature'

On the back of the margin expansion, the business upgraded its full-year margin guidance to be flat year-on-year. Bunzl also launched a £500m share buyback and raised its interim dividend by three per cent.

However, the group cautioned that the performance was "driven by the net impact of inflation, much of which is expected to be temporary in nature" – a signal that investors will be watching whether underlying volume growth can sustain momentum once price effects fade.

The British Retail Consortium, which represents major supermarkets and high street retailers across the UK, has raised concerns over surging shop price inflation driven by rising energy and commodity costs. UK headline inflation was recorded at 2.9 per cent in the 12 months to July, up from a previous reading of 2.6 per cent, following the reset of the energy price cap.

Elsewhere, Bunzl was supported by a turnaround in North America, where revenue grew 4.6 per cent on strong growth in grocery and foodservice. The region accounts for 52 per cent of the company's revenue pool.

In the UK, revenue edged up 1.3 per cent, while the operating margin rose to 7.1 per cent from 6.6 per cent following completion of the takeover of catering company Nisbets. The Nisbets deal is part of Bunzl's long-running strategy of bolt-on acquisitions, a model the company has used to expand across its markets for decades.