Bunzl plc

Good morning, and thank you for attending Bunzl's 2025 Full Year Results presentation. I appreciate you joining us today.

I will start by summarizing our 2025 results and will provide an update on the actions we have taken to improve performance. Following this, Richard Howes, our CFO, will take you through our financial results, capital allocation and outlook for 2026.

After that, I will return to discuss how we are positioning the group for an improved performance and continued long-term growth. 2025 was a challenging year.

We were impacted by issues related to a significant organizational change in our largest business, which has been amplified by increasing end market weakness. This led to a meaningful drop in the group's adjusted operating profit over the year.

We took decisive actions to improve performance and in the second half, delivered a moderated margin decline and a return to underlying revenue growth. While end markets remain uncertain, we are reiterating the 2026 guidance we set out in December and continue to focus on delivering the things we can control.

In 2026, we anticipate further underlying revenue growth and expect a more stable adjusted operating profit. We expect this to be a foundation for future organic profit growth.

There also continues to be a significant consolidation opportunity within our markets. We are disciplined and with an active pipeline, expect growth from acquisitions to provide strong upside to future profits as it has done historically.

I also want to reiterate my confidence in the Bunzl model and its strong fundamentals, such as high cash generation. We operate in attractive end markets, and I remain very confident in the group's medium-term growth opportunity.

Revenue grew by 3% at constant exchange rates, driven by acquisitions and slightly positive underlying growth. However, our operating margin was 7.6%, excluding a share-based payment credit that Richard will explain later, down from 8.3% in 2024.

Importantly, actions taken during the year supported a moderation of the margin decline in the second half compared with the first half. Adjusted operating profit overall declined by 4% at constant exchange rates.

This is in line with the expectations we set out in April 2025 despite some of our key markets becoming more difficult through the year. The group remains highly cash generative, and we delivered GBP 579 million of free cash flow.

We also completed a GBP 200 million share buyback in October and ended the year with adjusted net debt-to-EBITDA of around 2x at the lower end of our target leverage range. We remain committed to a progressive dividend policy and have grown the dividend modestly over the year.

With the dividend and buyback, we returned almost GBP 450 million to shareholders in the year. After a record 2024 for acquisition spend, we announced 8 acquisitions in 2025.

Total acquisition spend was lower this year at GBP 132 million, reflecting the macro environment, although our pipeline has remained active. Return on invested capital over the year was 13%, impacted by our profit decline.

Before Richard takes you through the numbers in more detail, I would like to give an update on the areas that have impacted us most this year and a bit of context on the macroeconomic backdrop as well as the actions that we have taken to improve operational performance. Over the year, we have experienced issues related to our largest business, North America distribution, which represents around 30% of group revenue.

The business was impacted by its move to a sales and operations model, which separates logistics and supply chain from sales activities. This change, which was largely implemented by the start of 2024, has supported our growth with national accounts, enabled more coordinated process across the business and has allowed us to develop a better own brand offering.

However, initially, new processes reduced the agility of our local teams, which impacted business with their customers. We kept the customers but lost some wallet share.

In the first half of 2025, markets weakened, which led to volume pressure and increased customer price sensitivity. This amplified our execution issues.

Our businesses worldwide have felt the impact of significant global macroeconomic uncertainty and the pressure it has put on business and consumer confidence. Furthermore, we saw supply chain disruption related to tariffs.

In the U.S., consumer confidence, which is now at a 14-year low as well as inflationary pressures in certain food products has contributed to reduced footfall in restaurants and convenience stores. Furthermore, the food processor sector continued to experience industry-specific challenges related to supply and demand of cattle.

Together, the foodservice redistribution, convenience store and food processing sectors are around for more than 1/3 of our revenue in North America. In Brazil, we've also experienced challenges to fully passing on currency-driven product cost increases alongside weakening industrial demand.

We took a series of decisive actions to improve performance, including leadership changes and increased cost management, which took effect from the second quarter. These actions have driven operational improvement.

We have reengaged and motivated the team supported by this leadership change and a recent employee survey has confirmed an increase in the engagement of our local sales force compared to 2024. We have improved execution of the new sales and operations model.

Pricing and inventory decisions for our local business have moved back to our local teams, which has improved their agility and response times. This is particularly important in the dynamic redistribution market.

Furthermore, as a result of separation of our sales function in our new organizational model, we now have a more robust sales pipeline management process, which improves our visibility and accountability of opportunities. Core business basics have been restored with service levels significantly improved and back to our very high standards with better product availability and inventory stabilized.

And lastly, we have strengthened our relationship with our preferred branded suppliers and have increased our joint initiatives with them to target specific market opportunities together. Alongside this, we have seen an increase in our own brand penetration over the year with new category launches well received.

Overall, these actions have supported us establishing more than $100 million of new business in the fourth quarter, representing both national grocery and foodservice customers. These wins include both new customers and wallet share gains with existing customers.

We believe that our business model change has been a strong support to this success. I am encouraged by this performance.

While we have seen increased pressure in other North America businesses in the second half, distribution's underlying revenue growth improved, and we saw a moderation in its year-on-year operating margin decline. Looking ahead, our strategy is to build a strong platform to drive long-term profitable growth.

We are focused on continued market share gains through both new business wins and increased wallet share of existing customers, ensuring a well-functioning operating model, which allows us to enhance our focus on sales and deliver an optimal service for both larger and local customers, continued complementary own brand growth alongside preferred branded supplier growth and importantly, motivated teams. Turning now to Europe.

Across Continental Europe, we have been operating in a challenging environment since the second half of 2024, particularly in France, where deflation, a weak economy and operating cost inflation have put pressure on margins. In response, we took a series of actions focused on both driving business wins and improving operational efficiency.

To more effectively manage new business opportunities, we have enhanced our monitoring of major tenders and strengthened cross-country collaboration. We are also now more proactively showcasing our wide range of value-added services with our leading sustainability offering being a great example.

As a result, when considering larger relationships that are worth over EUR 100,000 per annum, we won EUR 50 million of new business in the second half of 2025. Own brand continues to be a key tool for us.

And in Europe, we saw a further 1% increase in own brand penetration, supported by both acquisitions and organic improvement. We are creating new growth opportunities by launching existing own brand products into new geographies.

We are also seeing procurement benefits by consolidating purchases across multiple operating companies. For example, in towel tissue, which is a large own brand category for Bunzl.

We also continue to identify operating cost efficiencies with 10 warehouse consolidations and relocations completed in 2025 in Europe. The majority of these have been in France, where we have had a significant project underway in cleaning and hygiene to reduce the number of warehouses from 15 to just 6 to improve efficiency and to enhance product availability and delivery speed for our customers.

This program has now largely been implemented, and we expect net benefits in 2026. In addition, a number of labor optimization projects have been launched, which also includes limits on discretionary spending and the implementation of AI tools to improve efficiency.

In 2025, we also saw additional businesses onboarded to our preferred demand planning software, which supports improved inventory levels and availability and reduces cost. Overall, these actions have resulted in operating cost inflation being well managed in 2025 and combined with easier comparatives, supported a stabilization of operating margin year-on-year in the second half.

Let me also spend a few moments on wider strategic progress across the group. As I've mentioned, it is encouraging that we have returned to underlying revenue growth in the second half, supported by new business wins.

We completed 8 acquisitions, including our first entry into the health care sector in Chile and established a physical presence in Slovakia. We continue to deliver operational efficiencies, including better-than-expected synergies from Nisbets' acquisition and multiple warehouse initiatives resulting in 36 consolidations and relocations across the group compared with 19 last year.

We further enhanced tools that support customer stickiness and saw own brand penetration increased to 30% and digital order penetration increased to 76%. It is our strategic initiatives alongside our actions in North America and Europe, which provide the foundation for future profit growth.

This is enabled by our people who are our greatest asset. During 2025, we maintained our 71% Trust Index score, a measurement achieved as part of the Great Place to Work surveys across all our employees.

I would like to thank colleagues across the group for their hard work, resilience and commitment during what has been a difficult year in several of our markets. I will now hand over to Richard to take you through the financial results and outlook in more detail.

Thank you, Frank, and good morning, everyone. As usual, my comments are at constant exchange rates unless otherwise stated.

Group revenue increased by 3.0% in 2025. We delivered underlying revenue growth of 0.4%, with broadly stable volumes and selling prices.

Underlying revenue growth improved during the year, growing at 0.9% in the second half compared to 0.2% in the first half. This was supported by new business wins in Q4 in North America and underlying growth across all business areas.

Acquisitions contributed 3.3% to revenue growth over the year partially offset by a 0.4% impact from the disposal of our R3 safety business in the U.S. Now turning to the income statement.

Adjusted operating profit for the year was GBP 910 million, a decline of 4.3% compared to 2024. This included an GBP 8 million share-based payment credit following reversal of prior year charges related to awards made in 2023 and 2024, which have been impacted by the group's performance in 2025.

Excluding this credit, adjusted operating profit was around GBP 902 million, and operating margin was 7.6% compared to 8.3% in 2024. Overall, group operating margin was impacted significantly by the margin decline seen in our distribution business in North America due to execution issues in challenging end markets and the resulting customer price pressure.

In addition, margin was impacted by market headwinds in other businesses in North America and in Brazil, particularly in the second half of the year. Finally, our cleaning & hygiene business in France, which saw ongoing deflation in the first half of the year, where selling price pressure has followed significant product cost inflation during the pandemic.

The operating margin reduction was driven by a decline in underlying gross margin, although gross margin overall was supported by acquisitions and unchanged at 28.8%. An increase in the operating cost to sales ratio from 20.5% to 21.1% is largely driven by acquisitions and reflective of their business models.

Excluding acquisitions, the operating cost to sales ratio was broadly stable, supported by cost initiatives as well as the share-based payment credit. Moving down to P&L.

Adjusted net finance expense increased by GBP 20 million to GBP 123 million, mainly due to higher average debt. The effective tax rate was 26% compared to 25.5% last year, reflecting the absence of one-off benefits from U.K.

group relief and tax provision changes included in 2024. Adjusted earnings per share fell by 5.2% to 179.3p.

The higher tax rate and increased interest charge more than offset the benefit of a reduced average share count reflective of the share buybacks in '24 and '25. We saw a moderation of the group's adjusted operating margin decline in the second half, in line with our expectations set out in April 2025.

As the chart in the top left shows, our margin was down 0.9 percentage points year-on-year in the first half and was down only 0.4 percentage points in the second half. As outlined in the table, the key drivers of the year-on-year improvement in the second half were the U.K.

and Ireland, where margin increased 0.6 percentage points in the second half driven by the good performance of our foodservice businesses supported by strong Nisbets synergies. Continental Europe, where easier comparatives and benefits from actions taken have helped stabilize margins year-on-year in the second half, and a good moderation of the margin decline in North America distribution driven by actions taken despite an increasingly difficult market backdrop.

Within North America, progress in H2 was offset by increased weakness in our Mexico processor and convenience store businesses. Our safety, retail and Canadian businesses, however, were less negatively affected.

Market softness in Brazil has also impacted margin progress in rest of the world. Turning to inflation dynamics.

We continue to see pockets of selling price deflation over the year, particularly in our clean & hygiene businesses in France and the U.K., although there was some moderation during the year. However, towards the end of the year, the group saw slight net price inflation driven by tariff-related price increases in North America.

Overall, selling prices were broadly stable for 2025, and we expect this to continue in 2026. The group saw more normal levels of operating cost inflation over 2025.

People costs, which account for around 50% of our operating costs and wage inflation was at more typical levels. Fuel and freight accounts were around 15% of our operating costs and were well managed over the year supported by the annualization of contract retendering in North America.

Property leases are around 10% of our operating costs with inflation linked to renewals starting to moderate after recent high levels. We have a continued focus on operating cost efficiencies across the group going into 2026 and expect operating cost inflation to remain in line with typical levels.

Turning to business area performance. In North America, underlying revenue was broadly stable with the decline at constant exchange rates largely driven by the disposal of R3 Safety.

Adjusted operating profit decreased by 11.5% to GBP 441 million, with operating margin at 7.0%, down from 7.9% in the prior year. This was driven by underlying margin decline in our distribution business, and the wider market dynamics, as indicated previously.

The decline also strongly impacted the return on average operating capital. The tariff-related selling price inflation seen in our safety businesses in the second half was offset by volume decline resulting from uncertain economic backdrop.

Revenue in Continental Europe, however, grew by 2.5%, driven by the benefit of acquisitions with stable underlying revenue growth. Adjusted operating profit decreased by 3.6% to GBP 205 million, with a decline in operating margin from 8.9% to 8.4%.

Despite resilient performance in the Netherlands and Spain and the benefit of acquisitions, operating margin was largely impacted by our performance in France. Encouragingly, France delivered a more stable performance in the second half as did Continental Europe overall.

Very strong revenue growth in U.K. and Ireland has been driven by our acquisition of Nisbets, which completed in May 2024 and was supported by moderate underlying volume growth.

Our cleaning & hygiene and care businesses were impacted by continued deflation, although this was more than offset by a good performance in our existing foodservice businesses which delivered strong results, especially in the second half of the year. The reduction in operating margin was mostly due to the consolidation of Nisbets, which has a seasonally lower margin in the first half of the year.

In the second half of the year, operating margin expanded with Nisbets generating strong operating profit growth with greater-than-expected synergies, in addition, benefits from improved stock management were achieved, improving cash generation. Within Rest of the world, Asia Pacific delivered very strong revenue and profit growth supported by both acquisitions and performance of existing businesses, especially in the health care sector.

Trading in Brazil has been difficult since the second quarter as we face challenges in passing through currency-related cost increases to customers in a weaker market. Whilst Brazil achieved underlying revenue growth and benefit from acquisitions, these dynamics strongly impacted its operating margin.

Moving to cash flow. Cash conversion over the period remained strong at 95%.

We generated GBP 579 million of free cash flow, a 9% decline year-on-year, reflective of lower adjusted operating profit although free cash flow grew in the second half of the year as working capital management improved. During the period, we paid out GBP 242 million in dividends and made a net payment of GBP 40 million to buy shares for our employee benefit trust, leaving total cash generation prior to acquisitions, disposals and share buybacks of GBP 296 million.

A net GBP 17 million inflow from the disposal of R3 safety. Cash outflow related to acquisitions was GBP 145 million.

In addition, we had outflow of GBP 205 million related to our share buyback program. Turning to the balance sheet.

Working capital increased by GBP 78 million, mainly due to reduction in payables related to the payment of share buyback commitments. Deferred consideration related to acquisitions decreased by GBP 33 million to GBP 226 million.

Inclusive of off-balance sheet components, deferred and contingent consideration was GBP 279 million compared to GBP 375 million at the end of 2024. The reduction is driven by a reduced expectation for future payments for some acquisitions, including Nisbets and payments made in the period.

We took an impairment of GBP 11 million in the year related to a business, which has seen more negative trading since it was acquired during the pandemic, at a point where performance benefited from demand for COVID products, which has since normalized. Our adjusted net debt to EBITDA was 2.0x compared to 1.8x at the end of 2024.

This headline ratio continues to exclude the impact of leases and the increase largely reflects the reduction in EBITDA in 2025. Returns have been impacted by our profit performance over the period with a return on invested capital of 13% and a return on average operating capital of 37%.

Our leverage is now within our target range of 2 to 2.5x adjusted net debt to EBITDA albeit at the lower end. Our strong cash generation supports capital allocation opportunities and our priorities remain unchanged: one, to invest in businesses to support organic growth and operational efficiencies; two, to pay a progressive dividend; three, to self-fund value-accretive acquisitions, supported by our strong track record and the attractive valuations and returns we can achieve; and four, to distribute any excess cash.

While currently, we see the greatest value in delivering bolt-on M&A, we will actively review our priorities throughout the year. In the 21 years up to and including 2025, Bunzl has committed GBP 6.2 billion in acquisitions to support the growth strategy that has delivered an adjusted earnings per share CAGR of circa 9% and has returned GBP 3.1 billion to shareholders through dividends and share buybacks.

As part of our capital allocation framework, we commit to a progressive dividend policy and have delivered a dividend per share CAGR of circa 9% since 1992. Today, we have announced an increase of 0.3% in our total dividend, a continuation of annual growth.

Our dividend cover was 2.4x in 2025 compared to 2.6x in 2024. Looking ahead to 2026, our outlook is unchanged.

And we expect profit to be more stable. We note that our outlook is set at a time of significant uncertainties relating to economic and geopolitical landscape.

We expect moderate revenue growth in 2026 driven by some underlying revenue growth and a small benefit from announced acquisitions. We are anticipating slight volume growth from improved performance and expected business wins despite challenging markets and a broadly neutral selling price environment.

Alongside this, we expect typical levels of operating cost inflation of around 2% to 3%, which we expect to be partially offset by operating cost and sourcing initiatives, including the annualization of Nisbets synergies. As a result, we expect operating margin to be slightly down year-on-year versus the 7.6% in 2025, excluding the share-based payment credit.

While recognizing the significant uncertainties mentioned previously, we expect a more normalized weighting of adjusted operating profit between the first and second half. We also expect a net finance charge of GBP 125 million and a tax rate of 26%.

And I will now hand you back over to Frank to take you through our strategy update.

Thank you, Richard. I will give a brief update on our key strategic priorities, which will support 2026 being the year in which we expect to deliver organic profit growth and support long-term compounding growth.

Our long-term strategy remains unchanged. We are focusing on driving profitable organic growth, complemented by disciplined value-accretive acquisitions.

We also continued to drive operating efficiencies and strong cash generation, which supports a progressive dividend and where appropriate, additional returns of capital. Organic revenue growth opportunities are supported by our differentiated customer proposition.

A good example of this is our long-standing relationship with Wegmans, a fast-growing grocery chain in the U.S. We have recently moved from being 1 of 2 distributors to becoming their sole supplier of goods not for resale.

This materially increases our share of business with the grocer. There are several factors behind this successful expansion, including our recent organizational model change in distribution.

Firstly, our long-term track record of reliability and service quality. In 2025, we delivered a full range of 99% for Wegmans.

Secondly, our own brand development and our ability to innovate across new product lines, helping our customers manage costs while maintaining quality. The new categories we have won will be supported to our own brand offering, and we expect to see a strong increase in own brand penetration with this customer.

Thirdly, our single IT system, which uniquely positions Bunzl to provide consolidated data and supports better customer decision-making. Fourthly, our sustainability expertise which continues to be an increasingly important differentiator and delivers commercial benefits to our customers.

And finally, our ability and commitment to onboard large programs with no disruption. This is critical when ensuring the timely delivery of essential items to customers.

Acquisitions represent a significant opportunity for Bunzl as we operate in large but fragmented markets. Since 2004, we have completed over 230 acquisitions and spent over GBP 6 billion.

Our pipeline remains active and extensive with over 1,300 potential targets identified across countries and customer end markets and bolt-on acquisitions continue to be our focus. We're a good home for these businesses, providing them with opportunities to enhance their offering to customers and leverage Bunzl scale whilst maintaining their entrepreneurial spirit.

Since 2020, we have announced 74 acquisitions with enterprise values below GBP 200 million. We spent an average of GBP 300 million annually on these deals, with an average committed spend of around GBP 25 million.

Our balance sheet and cash flow are supportive of an ongoing similar level of annual spend in the coming years. The average multiple that we are paying for these deals has been around 8x operating profit and has remained consistent for the last 10 years.

We continue to target paying a range of 6 to 8x depending on the specifics of the individual businesses. Bolt-on deals typically deliver a return on invested capital well ahead of their project WACCs quickly, and recent deals have demonstrated a year 2 return on invested capital of 13.3%.

Alongside acquisitions, we continue to maintain strong portfolio discipline. Since 2022, we have completed 4 disposals, including the sale of R3 safety in the U.S.

in 2025. These businesses had relatively low margins and their disposal improves the overall quality and focus of the group.

As I mentioned earlier, we completed 8 acquisitions in 2025, although on average, these were on the smaller side. Despite an active pipeline and ongoing conversations with attractive targets, our spend was at the lower end compared to our recent history, driven by the macroeconomic environment.

Historically, acquisition activity has picked up quickly, and we expect an improved year for acquisitions in 2026. I also want to give an update on Nisbets after its first full year of trading as part of Bunzl.

Nisbets is a leading and scaled distributor of catering equipment and consumables and is a strong addition to the Bunzl portfolio. Whilst it had a more challenging start, given a weaker market and ongoing optimization of an automation investment made prior to the acquisition, I am pleased to see the business deliver an improvement in performance in the second half of 2025.

This has been supported by strongly enhanced inventory management processes resulting in improved availability, reduced working capital and reduced storage costs. Furthermore, we have delivered significant and better-than-expected synergies related to predominantly to third-party logistics as well as procurement savings.

Overall, the business is expected to see its return on invested capital, meet the required project WACC around year 4, which is consistent with our expectations at the time of acquisition. Whilst this reflects slightly lower than previously anticipated earnings in year 4, it also reflects the reduced deferred consideration to be paid.

Our disciplined approach to valuation and integration remains unchanged. Operational efficiency remains a core pillar of our strategy, and we continue to make incremental improvements across the group.

Over the year, we completed 36 warehouse consolidations and relocations. This is a material increase compared to an average of 19 over the previous 3 years.

Automation projects are a further example of potential opportunities. In one of our largest warehouses in the Nordics, we are implementing an automated picking system supported by robots, which is expected to double productivity compared to manual picking.

In one of our German warehouses, we are automating 60% of order lines, which is expected to increase productivity by around 30%. These examples continue to demonstrate how Bunzl reviews opportunities on a case-by-case basis as there is no one solution that suits all.

Stepping back, Bunzl has a resilient Bunzl business model with a value-added customer offering supported by our global scale, which will continue to underpin our performance in the longer term. We have a very strong proposition for our customers.

Our product expertise and value-added services, including our sustainability capabilities, deliver commercial benefits to our customers that set us apart from competitors. This is supported by our global reach and scale where we leverage investments across the group.

Furthermore, our robust supply chain with more than 15,000 supplier relationship strongly supports our reliability. These areas of strength are complemented by a decentralized model, which allows for local market responsiveness and an entrepreneurial approach.

Ultimately, our focus on low-cost essential products and services is the foundation of our resilience and supports very sticky customer relationships. Alongside strong cash generation and high returns, this model and our positioning will continue to provide a robust foundation for long-term growth.

Before we move to Q&A, let me summarize the key takeaways. Decisive actions across the group have improved performance and supported the moderation of margin decline in the second half.

We expect some underlying revenue growth in 2026 and a more stable adjusted operating profit to provide a foundation for future organic profit growth. We continue to see significant opportunity for further consolidation, and our business fundamentals remain attractive.

And I remain confident in realizing the group's medium-term growth opportunity. Thank you for your attention.

We are happy to take your questions.

Rory?

It's Rory McKenzie from UBS. Firstly, on the new business wins you called out in the slides, I think they added up to about 1% of sales in itself, which actually is quite a lot for Bunzl.

So have your sales teams been more proactively targeting larger accounts or tenders? What does the pipeline look like there?

And also, can you talk about what headwinds you're facing that offset some of that growth in some markets? Just trying to get a sense of how growth kind of could phase through this year.

And then secondly, thanks for giving the gross margin figure today, stable on last year at 28.8%. Within that, can you comment on the M&A contribution?

Did Nisbets add about 50 basis points or more or less? And then can you just talk through the pressures versus tailwinds driving that reduction in the underlying gross margin, please?

Okay. Let me take the first question, you take the second.

In terms of new business wins, so yes, so we saw some good wins in -- during the second half in North America in the distribution business, which was encouraging because this really goes back to why did we make that organization model change. Initially, during 2024, '25, we saw some issues around agility in the local business.

Now it feels like we're seeing more of the benefits from the new model in terms of having more focused sales team. So the pipeline is being very actively managed, not only in distribution but also in areas like Continental Europe, for instance.

So that's fair that there's more focus on that. In terms of the headwinds, I would say I think all the things that we can control, we made good progress in.

The one thing that we can't control is the market and the levels of wars that are starting around this. So that's the thing we don't control, and we'll have to see how that pans out.

So on gross margin, as you say, flat at 28.8% overall, but down slightly when you look at underlying. The best way to think of this is that essentially gross margin decline has driven our operating profit -- operating margin decline.

The 2 numbers are not that different. So that's, I think, the first part of your question.

As to pressures versus tailwinds, look, I think what we've seen throughout the year, as we've gone through 2025 is that the market has been more -- become more and more difficult. And that could be in foodservice in North America, it could be in our processor business, it could be in our convenience store business or it could be the effect of the U.S.

challenges to the rest of the world. We've seen that, I think, more generally.

So what that tends to mean is you see, even though we don't see a change in the overall competitive environment, you've got the same competitors fighting for lower volumes. So inevitably, there's a degree of price pressure which flows from that.

I think we've seen that in -- certainly in North America and also across the world. As the tailwinds, look, it's good to see own brands up at 30%.

We are taking a slightly more measured approach in the U.S., as Frank talked about. We still think there's opportunity.

But also, we will be taking every opportunity to continue to buy better. I mean the cost of sales is our biggest single product.

The best way we can grow to grow profits and offset any margin pressures is to buy better and then -- and ideally hold on to those prices where we can. So the 2 combined, I would see as the pluses and minuses.

Suhasini?

Suhasini from Goldman Sachs. Just a couple for me, please.

Is it possible to give some color on how early trading year-to-date has been? Given the new business wins that you won at the end of last year, it felt like momentum was maybe a little more positive heading into the beginning of the year.

And when I think about the SG&A, I think on the cost side, you have taken some one-off costs above the line. You've also done warehouse consolidations that have been completed in Europe.

Can you help us quantify the net benefit to SG&A potentially? We can obviously work out margins after the revenues are done for 2026.

Yes. So if I think of -- look, in terms of early trading, I would say January is the -- is all we've seen in terms of profit trading.

It's the lowest month of the year. So you need to keep that in mind.

But against that context, we are seeing trends that are consistent with what we're guiding to. So -- but it is against the context of a very -- a typically low starting point.

We did see momentum in Q4 in the revenue growth. I would caution though, because I think that is largely seasonally driven.

So we do tend to see this where you have businesses which are very much servicing at Christmas peak, like our distribution business in North America, our retail businesses globally, it doesn't necessarily translate and you see that landing in January. It just doesn't tend to happen that way.

As to SG&A, so yes, Bunzl always takes the cost of any change within our numbers. There's no separate lines pulled out at all.

It is also fair to say we don't tend to see big restructuring activity, which could create big numbers. The change in France that we've been talking about by consolidating warehouses, we took some of that cost in 2024, and there were some property profits at the time, which broadly offset it.

If I look to 2025, there are some one-off costs that hit us in the year, particularly around the activity levels we took in place in North America. You should think of those as low single-digit numbers.

And therefore, I don't really see there being much of a benefit when it comes to 2026.

Annelies?

Annelies Vermeulen from Morgan Stanley. Just going back to your own brand strategy, you touched on this in some of the earlier comments, Richard.

But how are you implementing that this year? And how is that -- what kind of progress do you expect to make with your own brand, particularly in North America over the course of '26?

And then secondly, just on -- you mentioned a write-down of an impairment on a business that you bought during COVID. Is that a one-off in nature?

Or is there -- are there other parts of the business where that could also be the case? And as part of that, could you also perhaps talk about disposals and if there's anything else we should expect in the next year or so?

Yes, let me take the own brand. So yes, we're very pleased with the own brand progress we have made.

Still a good opportunity there because we have overall -- we moved from 28% to 30%. So the way to think about this is, of the overall level of cost of sales, 30% is in own brand, then we have a level of preferred branded supply spend that we want to grow, and we want to continue to push forward.

But then there's quite a big piece in the middle that is still up for grabs, basically. And to give a very simple example, when we sell products to our customers, you have people who ask for Kleenex tissues because it's a brand and it's from Kimberly-Clark, obviously, and we're gladly delivering that with a margin.

But a lot of the products also have the nature of, let's say, a plastic or a paper straw. And if I would ask you, what is the supplier of a straw, you wouldn't know that's like the equipment of a Kimberly because these things are being provided by importer or suppliers that have -- people have no brand recognition, no salespeople in the field.

So these kind of products are still, for us, a potential area to further own brand without any possible conflict. So certainly, in our distribution business, we are much more mindful of what we're doing on own brands.

Really sort of reengage and reenergize the supplier relationships. They are very keen.

In January, we had a big promotion called [ Jan Sanity ], which is around January and [ Jensen ] products, cleaning hygiene products. So it's a lot more engagement sort of on a local level, but also centrally.

So in summary, we expect own brand to develop in a gradual way. It still depends a little bit on the mix of acquisitions going forward.

As I said before, if we would only buy safety businesses that have almost 100% on brand that obviously will drive the own brand up quicker, but that really depends on what is going to happen. So I still feel good about the potential to further develop, but the 30% is a nice level already.

And on the impairments, I mean, this doesn't happen very often, thankfully. And I think this is a particular case in point where we acquired this business during the height of COVID when we knew there were some COVID products in there, but it was not as clear that the level of COVID products that they were benefiting from would ultimately continue.

It hasn't continued. And as a result, we've had to reflect that in our carrying value.

That said, this is still a decent business, and I think there is opportunity here for us to -- whilst technically, we have to do this, this business still has opportunity to grow. And our teams are very, very focused on making sure it does exactly that.

But look, it is -- I do think of it as a one-off. I look around the rest of the estate, I don't see anything in a similar position.

As to disposals, well, look, we've seen us do, I think, 4 disposals in the last few years, GBP 250 million of revenue. It is part of how we think about the portfolio.

If there are businesses which for whatever reason the market has changed or whatever has happened, but ultimately we see as having a more valuable home elsewhere, we may consider it. We obviously always want to make sure we try and fix and improve these businesses first.

But in certain cases, as you've seen with the 4 that we've done, that can happen. I think you should assume this is housekeeping, and we carry on doing exactly the same.

David?

It's David Brockton from Deutsche Bank. Can I ask 2, please?

One, specifically in relation to the U.S. local business, and secondly, in respect of CapEx.

When you rebased guidance in April, I think you indicated that you felt it would take 2 years to get that U.S. local foodservice business back to where it should be.

Do you still stand by that? And can you confidently assert that some of the issues you've had there are now behind that business just purely for the local side?

And then secondly, in relation to the CapEx, that number has trended up quite materially over the year against relatively flat revenue, which I presume is property consolidation related. But can you just touch through what's happening there and how we should think about that going forward?

Yes. So let me take the first question.

So yes, on the local business, in the U.S. distribution business, 3 things happened.

And that was my objective when I went in. You remember me saying, listen, I know what needs to happen, I'll fix it.

And we focused on 3 things. Service levels, and I always say to our management also, there's really 3 things that are important in distribution.

That's on time in full service deliveries, so which is delivering on time what people ask. Number one is service levels, number two is service levels and number three is service levels.

So our service levels are back to their historical levels. So we are in a good position.

The local agility has returned. So the salespeople have the cost that they need.

If they want to bring in products, they can bring in products. If they want to change suppliers with the local management, they can do that.

So that's been restored. And then obviously, the last thing is the people motivation, that people need to be excited.

They need to score. They need to go out and sell.

So significant progress has been made in terms of these leading indicators, which is important. So the business locally operates much better.

I think we fixed that probably faster than I expected it given the size of the company, this is like almost a $5 billion business in total. What obviously takes time is, let's say, the winning back element.

And the good thing is, in most cases, we have retained the customer because this is food redistribution. So they buy a lot of categories.

And in some areas, we've lost some categories during that process. And that takes time to win back over time.

We won't win everything back, but we also win some other stuff like we talked about GBP 100 million that we won in food redistribution but also in grocery. So very pleased around the progress we are making.

I set the bar very high. So I won't let go before it operates much better than it used to be, but we are well positioned to go out and win.

And on CapEx, David, look, yes, it is high in 2025, and that's driven by 2 things really. Warehouse consolidations in France that we talked about, but we're taking -- and this is our biggest cleaning & hygiene business, taking warehouse account from 15 down to 6.

About -- that was about 15 down to 9 within 2025. And this requires us to -- there's a chunk of fit-out cost that goes into standing up the new site, particularly the one outside Paris.

And we're doing something similar -- slightly different, but similar in Memphis in our safety business, our biggest safety business, MCR, who's a big extension that we're doing that will allow us to consolidate some other warehouses into it in the year. Both are going very well.

We've also had some of the investments we talked about in Denmark as well. So you can think of this as being unusually high.

It will reduce down to more normal levels in 2026 and beyond.

Sanjay?

Sanjay Vidyarthi, Panmure Liberum. I had 2 from me as well, please.

First one, in terms of the phasing of EBIT margin in the U.K. in '26.

Obviously, there's a big uplift in the second half of '25. Should we see the synergies from Nisbets offsetting the kind of the seasonal weakness you have there and so more kind of balanced in '26, H1, H2?

And then second question, in terms of deferred consideration, you mentioned lower expectations for the year ahead. Could you give any guidance for '26 and '27 cash costs for deferred consideration, please?

Yes, guess this is mine. So phasing -- so if you think about 2026, we -- I think we've talked about in the statement that we expect a more normalized profit contribution from first half, second half.

And I think you should think of the -- when you search for what that means, I would look pre-COVID has been a more indicative period. COVID's been a highly disturbed time when a lot of the normal trends have changed.

So I think that's the starting point, Sanjay. Within that, actually, the regional shifts are not that different.

So they're broadly the same. We do expect margins to be, I'd say, flat, maybe slightly up for the first half and therefore, the offset in the second half, given that we're guiding down slightly.

Specifically to Nisbets, yes, there is an annualization to come on some of the Nisbets synergies. They've actually done an extremely good job in generating synergies, not only within Nisbets, but also flowing back into our other foodservice businesses in the U.K.

and Ireland. And so we're pleased with that.

I think that's within the wrapper of what I've just said. So it won't specifically change the overall group number.

From a U.K. perspective, though, I think you should still expect that phasing to be certainly more second half and first half weighted because January and February for Nisbets is a quiet time, I mean, for a lot of food service businesses.

As to deferred consideration, we give -- we do give a phasing of time scales on the cash outflow in the statement. But broadly, you can expect a lion's share of that total cash outflow will land in '27 and '28.

There'll be a bit in '26, sort of low to mid-10s, but the rest will come in '27, '28.

Jane?

Jane Sparrow, JPMorgan. Just one for me on the pricing outlook.

I know you're guiding broadly stable. But can you comment on within that, whether you're expecting continued deflation in the cleaning & hygiene business?

Just trying to understand where you are in the air coming out of that? And if that is coming down, if where else it's being offset by inflation?

Yes. Look, I think we -- so we enter the year seeing a benign outlook for input prices.

We're not really seeing any big shifts in paper or plastics or anything else. So then when thinking about '25, '26, then you're to think about the full year effect of '25.

There should be some benefit from tariffs given that we put tariffs through in Q2 last year, there will be at -- let's say, a quarter's benefit in 2026. We have seen -- we do see continued deflation in cleaning & hygiene businesses, but it did moderate through the year.

So I think there's probably a bit of that as well. Now obviously, the changes -- there's 2 things that aren't included in our guidance from what we've seen more recently, the Supreme Court ruling on tariffs.

It's still very early for us to understand what that really means as to how this plays out and indeed, how the refund process works, should there be one. And of course, all that we've seen over the weekend and any changes to oil prices or gas prices driving plastics prices, yet to be seen.

Obviously, there would be a lag in any event between the base, the substrate level and the finished goods. So I would imagine if it does -- if we do see something, it will be later in the year.

Okay, no more question. Well, thank you for attending the presentation.

Thanks.