Shares in Bunzl have dropped by over 26.5% to a four-year low price of £22.28 after the firm cut its profit guidance for the full financial year.

The international distribution group said the guidance cut comes as it operates in a "more uncertain macro environment".

In the first quarter of 2025, the firm's underlying revenue fell by 0.9%, while its operating profit dropped year-on-year, as a result of an "operating margin decline driven by performance" in North America and continental Europe.

Bunzl said that in recent years, its North America business, which is the largest across the group, had made good progress in evolving its strategy.

However, it added that it needed substantial investment and change in the sales and operating model, which it said has been "more challenging to execute than expected".

As a result, its first quarter trading has been impacted, leading to the firm looking at ways to improve performance.

In the UK and Ireland, Bunzl said its underlying revenue growth was lower than expected, having been driven by deflation.

The firm has therefore reduced its guidance for 2025 to "reflect the operational challenges faced" in North America, and the group now expects moderate revenue growth in 2025.

Chief executive officer at Bunzl, Frank van Zanten, said: "I am disappointed with our performance in the first quarter in this challenging trading environment. We are taking decisive action to improve performance in the group, particularly with regards to execution in our largest business in North America.

"Overall, my confidence in the group's compounding growth strategy and resilient business model remains unchanged, supported by our continuous focus on improving our offering to customers. Bunzl has a long-term track record of delivery and the group continues to be very well placed to navigate periods of macroeconomic uncertainty given our focus on essential products, the depth of our customer and supplier relationships and our sector and geographic diversification, which have been the foundations of Bunzl's resilience over time."

Alongside the cut to its guidance, Bunzl has also paused its share buyback scheme for the remainder of the year, having purchased around £115m of shares in the year to date.

Investment director at AJ Bell, Russ Mould, added: "A profit warning and termination of a share buyback programme, the first such halt by any FTSE 100 firm since the dark days of COVID-19 and lockdowns, are both taking a heavy toll on shares in Bunzl and driving them to a four-year low.

"Before the trading alert and Wednesday’s collapse, Bunzl’s shares were trading on around 18.5 times forecast earnings for 2025, compared to 12.5 times for the wider FTSE 100. Such a premium is much harder to justify if underlying sales growth is weak, margins are under pressure and acquisitions are providing the top-line growth on offer – organic growth is harder to achieve and therefore more highly prized by investors."

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