Bunzl sparks buyback worries as first FTSE 100 firm to pull programme since Covid
Published: 12:55 16 Apr 2025 BST
Bunzl PLC (LSE:BNZL) shares fell down 25% but the distributor also may have spooked UK investors with the pulling of its share buyback in the wake of US tariff issues, raising concerns that others may follow.
The FTSE 100-listed specialist distributor brought forward a scheduled trading update by a week to warn of challenging conditions in North America hitting first-quarter growth, lowering its full-year outlook and "pausing" its share buyback programme.
The new guidance implies 7-10% consensus downgrades, analysts at UBS said, noting that a slowdown "has largely been driven by volume weakness in North America, which management believes are due to some execution issues in a market with increasing uncertainty".
Updated guidance "could imply" 10% cuts to consensus profit forecasts, the bank's analysts said, but highlighted that management said any tariff-related impact on inflation/growth is excluded from this guidance.
A profit warning and termination of a share buyback programme is the first such halt by any Footsie firm since the pandemic, pointed out AJ Bell investment director Russ Mould.
Terminating this year’s £200 million share buyback may cause some investors to worry that others companies may follow suit, he suggested.
"Whether this is a warning that the buyback boom is about to come to an end remains to be seen," says Mould, given the economic uncertainty that prevails in the face of President Trump’s trade and tariff policies.
"Buybacks have been part of the investment case for the FTSE 100, and a contributor to its move to fresh all-time highs as recently as February, so any retrenchment here would be a potential blow."
If Bunzl remains an outlier, the constituents of the UK’s benchmark index are in with a chance of setting a new all-time high for buybacks in 2025 after the announcement of £30.7 billion of such cash returns in the first four months of this year, Mould says, with an all-time high of £58.2 billion set in 2022.
