Q2 2026 Bunzl PLC Earnings Call

September 1, 2026

Speaker #1: Hello everyone, and thank you for joining us for the Bunzl results for the half-year ending 30 June 2026. My name is Chat, and I'll be coordinating your call today.

Operator: Hello everyone, and thank you for joining us for the Bunzl results for H1 ending 30 June 2026. My name is Chach, and I will be coordinating your call today. After the presentation, there will be a Q&A session. To register to ask a question, please press star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. I would now like to hand over to Frank to begin. Please go ahead.

Operator: Hello everyone, and thank you for joining us for the Bunzl results for H1 ending 30 June 2026. My name is Chach, and I will be coordinating your call today. After the presentation, there will be a Q&A session. To register to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I would now like to hand over to Frank to begin. Please go ahead.

Speaker #1: After the presentation, there will be a Q&A session. To register to ask a question, please press star followed by 1 on your telephone keypad.

Speaker #1: And if you change your mind, please press star followed by 2. I'd now like to hand over to Frank to begin. Please go ahead.

Speaker #2: Good morning, and welcome to Bunzl's 2026 first half results presentation. I appreciate you joining us today. I will start by summarizing our performance over the period.

Frank van Zanten: Good morning and welcome to Bunzl's 2026 H1 results presentation. I appreciate you joining us today. I will start by summarizing our performance over the period. Following this, Richard Howes, our Chief Financial Officer, will take you to our financial results, capital allocation, and outlook for 2026. After that, I will return to provide an update on North America Distribution and Continental Europe, as well as discuss why Bunzl is well-positioned for continued long-term growth. I am pleased to be presenting a good set of results today, with the actions we have taken over the last 18 months, delivering a much improved performance and supported by the business ability to respond effectively in an inflationary environment. Over the H1, volume growth was particularly encouraging, with growth delivered in all business areas, but led by growth in our North America Distribution business.

Frank van Zanten: Good morning and welcome to Bunzl's 2026 H1 Results presentation. I appreciate you joining us today. I will start by summarizing our performance over the period. Following this, Richard Howes, our Chief Financial Officer, will take you to our financial results, capital allocation, and outlook for 2026. After that, I will return to provide an update on North America Distribution and Continental Europe, as well as discuss why Bunzl is well-positioned for continued long-term growth.

Speaker #2: Following this, Richard House, our Chief Financial Officer, will take you through our financial results, capital allocation, and outlook for 2026. After that, I will return to provide an update on North America Distribution and Continental Europe, as well as discuss why Bunzl is well positioned for continued long-term growth.

Speaker #2: I'm pleased to be presenting a good set of results today, with the actions we've taken over the last 18 months delivering a much-improved performance, supported by the business's ability to respond effectively in an inflationary environment.

Frank van Zanten: I am pleased to be presenting a good set of results today, with the actions we have taken over the last 18 months, delivering a much improved performance and supported by the business ability to respond effectively in an inflationary environment. Over the H1, volume growth was particularly encouraging, with growth delivered in all business areas, but led by growth in our North America Distribution business.

Speaker #2: Over the first half, volume growth was particularly encouraging, with growth delivered in all business areas but led by growth in our North America distribution business.

Speaker #2: The stabilization and recovery of the distribution business follows from actions taken to restore responsiveness, agility, and high service levels. While there's still work to do, these are having a positive effect.

Frank van Zanten: The stabilization and recovery of the distribution business follows from actions taken to restore responsiveness, agility, and high service levels. While there is still work to do, these are having a positive effect. I am also pleased with how our businesses globally have successfully navigated product and operating cost increases resulting from the geopolitical environment. This agility is core to Bunzl's fundamental resilience. Furthermore, Bunzl's strong and annual cash generation continues to support attractive capital allocation opportunities. While we have an active pipeline of bolt-on acquisitions and deal momentum is building, our improved performance, alongside the level of excess cash we see, allows us to announce a GBP 500 million share buyback today while maintaining headroom for acquisitions.

Speaker #2: I'm also pleased with how our businesses globally have successfully navigated product and operating cost increases resulting from the geopolitical environment. This agility is core to Bunzl's fundamental resilience.

Speaker #2: Furthermore, Bunzl’s strong and consistent annual cash generation continues to support attractive capital allocation opportunities. While we have an active pipeline of bolt-on acquisitions and deal momentum is building, our improved performance, alongside the level of excess cash we see, allows us to announce a $500 million share buyback today, while maintaining headroom for acquisitions.

Frank van Zanten: While we have an active pipeline of bolt-on acquisitions and deal momentum is building, our improved performance, alongside the level of excess cash we see, allows us to announce a GBP 500 million share buyback today while maintaining headroom for acquisitions. Overall, Bunzl's performance over the H1 is a testament to both the strength of the business model and the dedication of our people who have been able to deliver good growth in what remains a challenging external backdrop. I believe Bunzl can now deliver on the attributes it has long been known for, attractive compounding growth and resilience.

Speaker #2: Overall, Bunzl's performance over the first half is a testament to both the strength of the business model and the dedication of our people, who have been able to deliver good growth in what remains a challenging external backdrop.

Frank van Zanten: Overall, Bunzl's performance over the H1 is a testament to both the strength of the business model and the dedication of our people who have been able to deliver good growth in what remains a challenging external backdrop. I believe Bunzl can now deliver on the attributes it has long been known for, attractive compounding growth and resilience. I expect 2026 to be the foundation for future profit growth. Turning to the financial highlights over the period. Revenue growth at constant currency was 4.1% in the H1, driven by underlying revenue growth of 3.2%. Pleasingly, we have now delivered 5 consecutive quarters of underlying revenue growth. Operating margin increased by 30 basis points to 7.3%.

Speaker #2: I believe Bunzl can now deliver on the attributes it has long been known for: attractive, compounding growth and resilience. I expect 2026 to be the foundation for future profit growth.

Frank van Zanten: I expect 2026 to be the foundation for future profit growth. Turning to the financial highlights over the period. Revenue growth at constant currency was 4.1% in the H1, driven by underlying revenue growth of 3.2%. Pleasingly, we have now delivered 5 consecutive quarters of underlying revenue growth. Operating margin increased by 30 basis points to 7.3%.

Speaker #2: Turning to the financial highlights over the period: revenue growth at constant currency was 4.1% in the first half, driven by underlying revenue growth of 3.2%.

Speaker #2: Pleasingly, we have now delivered five consecutive quarters of underlying revenue growth. Operating margin increased by 30 basis points to 7.3%. Whilst this is largely driven by the net impact of inflation in the second quarter, much of which is temporary in nature, we have also benefited from the annualization of initial NISBE synergies, the stabilization of our distribution business, and have delivered results despite some increased variable operating costs.

Frank van Zanten: Whilst this is largely driven by the net impact of inflation in Q2, much of which is temporary in nature, we have also benefited from the annualization of initial Nisbets synergies, the stabilization of our distribution business, and have delivered the results despite some increased variable operating costs. Adjusted operating profit growth was 8% year-on-year. Bunzl's performance since H1 has led to an upgrade of our 2026 outlook. We now expect broadly flat operating margins year-on-year and modest growth in adjusted operating profit. Free cash flow rose by 6% with cash conversion of 90% and leverage was 1.8x, which is below our target range. We have announced an interim dividend, which is 3% higher than the prior period, and completed two acquisitions year to date.

Speaker #2: Adjusted operating profit growth was 8% year-on-year. Bunzl's performance in the first half has led to an upgrade of our 2026 outlook. We now expect broadly flat operating margins year-on-year, and modest growth in adjusted operating profit.

Speaker #2: Free cash flow rose by 6%, with cash conversion of 90%, and leverage was 1.8 times, which is below our target range. We have announced an interim dividend, which is 3% higher than the prior period, and completed two acquisitions year-to-date.

Frank van Zanten: Free cash flow rose by 6% with cash conversion of 90% and leverage was 1.8x, which is below our target range. We have announced an interim dividend, which is 3% higher than the prior period, and completed two acquisitions year to date.

Speaker #2: With deal momentum building, we continue to expect higher annual acquisition spend in 2026 compared to 2025. And lastly, as I've already mentioned, we have announced a new share buyback in line with our capital allocation policy.

Frank van Zanten: With deal momentum building, we continue to expect higher annual acquisition spend in 2026 compared to 2025. Lastly, as I have already mentioned, we have announced a new share buyback in line with our capital allocation policy. Importantly, this maintains significant headroom for continued bolt-on acquisitions which remain our priority given the strong returns they achieve. With that, I will hand over to Richard.

Speaker #2: Importantly, this maintains significant headroom for continued bolt-on acquisitions, which remain our priority given the strong returns they achieve. With that, I will hand over to Richard.

Speaker #3: Thank you, Frank. And good morning, everyone. As usual, my comments are at constant exchange rates unless otherwise stated. In addition, within our results, you will see adjustments for refunds we received related to US IEPA tariffs paid in 2025.

Richard Howes: Thank you, Frank, and good morning, everyone. As usual, my comments are at constant exchange rates unless otherwise stated. In addition, within our results, you will see adjustments for refunds we received related to US IEEPA tariffs paid in 2025. While the position will become clearer in H2, our view is that this cash will be paid back to customers. In accordance with accounting standards, this reduced our statutory reported revenue by 1.2%, effectively offsetting an implied revenue benefit in prior periods. A corresponding reduction in cost of sales means there is no impact to adjusted operating profit, and throughout, we state operating margin and gross margins excluding this impact. Starting with revenue, Group revenue increased by 4.1% in H1 2026, excluding the tariff refund.

Speaker #3: While the position will become clearer in the second half, our view is that this cash will be paid back to customers. In accordance with accounting standards, this reduced our statutory reported revenue by 1.2%.

Speaker #3: Effectively offsetting an implied revenue benefit in prior periods. A corresponding reduction in cost of sales means there is no impact to adjusted operating profit, and throughout, we state operating margin and gross margin excluding this impact.

Richard Howes: A corresponding reduction in cost of sales means there is no impact to adjusted operating profit, and throughout, we state operating margin and gross margins excluding this impact. Starting with revenue, Group revenue increased by 4.1% in H1 2026, excluding the tariff refund. We delivered underlying revenue growth of 3.2%, with approximately two-thirds of this being driven by volume growth and one-third from selling price increases. We saw growth in all business areas led by North America.

Speaker #3: Starting with revenue, group revenue increased by 4.1% in the first half of 2026, excluding the tariff refund. We delivered underlying revenue growth of 3.2%, this being driven two-thirds by volume growth, and one-third from selling price increases.

Richard Howes: We delivered underlying revenue growth of 3.2%, with approximately two-thirds of this being driven by volume growth and one-third from selling price increases. We saw growth in all business areas led by North America. Both volume growth and inflation accelerated in Q2, driving total underlying revenue growth of 4.3% in Q2 compared to 2% in Q1. Acquisitions net of disposals and the hyperinflation impact contributed 0.9% to revenue growth. US tariff refunds impacted revenue by 1.2%. Turning to the income statement, gross margin was 29.4% compared to 28.8% in the prior period, driven by the profit impact from turning inventory in an inflationary environment as well as currency. Much of the inventory impact is expected to be temporary in nature. Gross margin expanded in all of our business areas except for North America, which saw a moderate decline driven by business mix.

Speaker #3: We saw growth in all business areas, led by North America. Both volume growth and inflation accelerated in the second quarter, driving total underlying revenue growth of 4.3% in Q2, compared to 2% in Q1.

Richard Howes: Both volume growth and inflation accelerated in Q2, driving total underlying revenue growth of 4.3% in Q2 compared to 2% in Q1. Acquisitions net of disposals and the hyperinflation impact contributed 0.9% to revenue growth. US tariff refunds impacted revenue by 1.2%. Turning to the income statement, gross margin was 29.4% compared to 28.8% in the prior period, driven by the profit impact from turning inventory in an inflationary environment as well as currency. Much of the inventory impact is expected to be temporary in nature.

Speaker #3: Acquisitions, net of disposals, and the PIPE for inflation impact contributed 0.9% to revenue growth. U.S. tariff refunds impacted revenue by 1.2%. Now, turning to the income statement.

Speaker #3: Gross margin was 29.4% compared to 28.8% in the prior period, driven by the profit impact from turning inventory in an inflationary environment, as well as currency.

Speaker #3: Much of the inventory impact is expected to be temporary in nature. Gross margin expanded in all of our business areas except for North America, which saw a moderate decline driven by business mix.

Richard Howes: Gross margin expanded in all of our business areas except for North America, which saw a moderate decline driven by business mix. Operating cost growth over the period included the impact of fuel and freight inflation and some meaningful variable costs linked to improved profit performance, particularly in North America. Overall, the operating cost to sales ratio increased from 21.8% to 22% at actual currency. Adjusted operating profit for the year was GBP 441 million, an increase of 8% from the prior year. Operating margin was 7.3% compared to 7% in the prior period.

Speaker #3: Operating cost growth over the period included the impact of fuel and freight inflation, as well as some meaningful variable costs linked to improved profit performance, particularly in North America.

Richard Howes: Operating cost growth over the period included the impact of fuel and freight inflation and some meaningful variable costs linked to improved profit performance, particularly in North America. Overall, the operating cost to sales ratio increased from 21.8% to 22% at actual currency. Adjusted operating profit for the year was GBP 441 million, an increase of 8% from the prior year. Operating margin was 7.3% compared to 7% in the prior period. This was largely driven by the net impact of inflation as well as the annualization of Nisbets synergies. Moving down the P&L, adjusted net finance expense of GBP 60 million and a tax rate of 26% are both consistent with our full-year guidance. Adjusted earnings per share increased by 11% over the period, further supported by the timing of share buybacks in 2025.

Speaker #3: Overall, the operating cost to sales ratio increased from 21.8% to 22% at actual currency. Adjusted operating profit for the year was £441 million, an increase of 8% on the prior year.

Speaker #3: Operating margin was 7.3%, compared to 7% in the prior period. This was largely driven by the net impact of inflation, as well as the annualization of NISBE synergies.

Richard Howes: This was largely driven by the net impact of inflation as well as the annualization of Nisbets synergies. Moving down the P&L, adjusted net finance expense of GBP 60 million and a tax rate of 26% are both consistent with our full-year guidance. Adjusted earnings per share increased by 11% over the period, further supported by the timing of share buybacks in 2025. After a few years of deflation and market price normalizations, we thought it would be helpful to provide some color on the inflation trends we are seeing.

Speaker #3: Moving down the P&L, adjusted net finance expense of £60 million and the tax rate of 26% are both consistent with our full-year guidance.

Speaker #3: Adjusted earnings per share increased by 11% over the period, further supported by the timing of share buybacks in 2025. After a few years of deflation and market price normalizations, we thought it would be helpful to provide some color on the inflation trends we are seeing.

Richard Howes: After a few years of deflation and market price normalizations, we thought it would be helpful to provide some color on the inflation trends we are seeing. We started to put through price increases in certain product categories, like disposable gloves, in Q2 as product costs increased due to the geopolitical backlog. The impact of higher selling prices in Q2 benefited our top line, but also our operating margin, given the positive impact of selling through previously purchased inventory at lower cost. The cost of plastics, which accounts for around 30% of our purchases, has increased meaningfully and drives the overall impact seen to date. However, we are already starting to see selling prices reduce from peak prices in certain categories and are expecting to see more in Q3.

Speaker #3: We started to put through price increases in certain product categories, like disposable gloves, in the second quarter, as product costs increased due to the geopolitical backdrop.

Richard Howes: We started to put through price increases in certain product categories, like disposable gloves, in Q2 as product costs increased due to the geopolitical backlog. The impact of higher selling prices in Q2 benefited our top line, but also our operating margin, given the positive impact of selling through previously purchased inventory at lower cost. The cost of plastics, which accounts for around 30% of our purchases, has increased meaningfully and drives the overall impact seen to date.

Speaker #3: The impact of higher selling prices in the second quarter benefited our top line but also our operating margin, given the positive impact of selling through previously purchased inventory at lower cost.

Speaker #3: The cost of plastics, which accounts for around 30% of our purchases, has increased meaningfully and drives the overall impact seen to date. However, we are already starting to see selling prices reduced from peak levels in certain categories, and we expect to see more reductions in Q3.

Richard Howes: However, we are already starting to see selling prices reduce from peak prices in certain categories and are expecting to see more in Q3. Paper accounts for another 25% of our purchases, but we saw limited change in pulp and paper prices in H1. When it comes to operating costs, wages and property cost inflation have been at more typical levels across our businesses. However, we have seen increased fuel and freight costs, some of which have been passed on through surcharges. As usual, we will continue to look to offset operating cost inflation through ongoing efficiencies where possible.

Speaker #3: Paper accounts for another 25% of our purchases, but we saw limited change in pulp and paper prices in the first half. When it comes to operating costs, wages and property cost inflation have been at more typical levels across our businesses.

Richard Howes: Paper accounts for another 25% of our purchases, but we saw limited change in pulp and paper prices in H1. When it comes to operating costs, wages and property cost inflation have been at more typical levels across our businesses. However, we have seen increased fuel and freight costs, some of which have been passed on through surcharges. As usual, we will continue to look to offset operating cost inflation through ongoing efficiencies where possible. Turning now to the business areas. In North America, we saw underlying revenue growth of 4.6%, supported by both volume and inflation. Although the inflation benefit was partially offset by reduction in US tariff rates. Revenue growth was led by a recovery in our distribution business, which saw strong growth driven by new business wins in Q4 2025.

Speaker #3: However, we have seen increased fuel and freight costs, some of which have been passed on through surcharges. As usual, we’ll continue to look to offset operating cost inflation through ongoing efficiencies where possible.

Speaker #3: Turning now to the business areas: In North America, we saw underlying revenue growth of 4.6%, supported by both volume and inflation, although the inflation benefit was partially offset by a reduction in US tariff rates.

Richard Howes: Turning now to the business areas. In North America, we saw underlying revenue growth of 4.6%, supported by both volume and inflation. Although the inflation benefit was partially offset by reduction in US tariff rates. Revenue growth was led by a recovery in our distribution business, which saw strong growth driven by new business wins in Q4 2025. Encouragingly, we also saw good growth in our food service redistribution business, supported by both volume and inflation. Strong growth in our safety businesses was largely supported by inflation.

Speaker #3: Revenue growth was led by a recovery in our distribution business, which saw strong growth driven by new business wins in Q4 2025. Encouragingly, we also saw good growth in our food service redistribution business, supported by both volume and inflation.

Richard Howes: Encouragingly, we also saw good growth in our food service redistribution business, supported by both volume and inflation. Strong growth in our safety businesses was largely supported by inflation. Operating profits were flat as the net benefits of higher inflation were offset by business mix, particularly the growth in lower margin grocery, as well as higher variable costs relating to the improved profit performance. There were continued end market challenges in our retail, Mexico, and convenience store businesses. Nevertheless, margins did increase in our distribution business. Return on average operating capital declined with the stronger profit performance in H2 2024, supportive of the prior year metric, and with an investment in working capital.

Speaker #3: Strong growth in our safety businesses was largely supported by inflation. Operating profits were flat, as the net benefits of higher inflation were offset by business mix—particularly the growth in lower-margin grocery—as well as higher variable costs related to the improved profit performance.

Richard Howes: Operating profits were flat as the net benefits of higher inflation were offset by business mix, particularly the growth in lower margin grocery, as well as higher variable costs relating to the improved profit performance. There were continued end market challenges in our retail, Mexico, and convenience store businesses. Nevertheless, margins did increase in our distribution business. Return on average operating capital declined with the stronger profit performance in H2 2024, supportive of the prior year metric, and with an investment in working capital.

Speaker #3: There were continued end-market challenges in our retail, Mexico, and convenience store businesses. Nonetheless, margins did increase in our distribution business. Return on average operating capital declined, with the stronger profit performance in the second half of 2024 supportive of the prior-year metric.

Speaker #3: And with an investment in working capital. In contrast to Europe, underlying revenue growth was just over 2% and accelerated through the period, driven by improved volumes across most countries and higher selling prices.

Richard Howes: In Continental Europe, underlying revenue growth was just over 2% and accelerated through the period, driven by improved volumes across most countries and higher selling prices, which also supported a strong increase in gross margin. Inflation was most prevalent in Turkey, where we sell disposable gloves, as well as in some of our online businesses and in Spain. Spain saw very strong revenue growth also supported by acquisitions, and the performance within our online businesses continued to improve. France delivered some volume growth, which was partially offset by selling price deflation, which had been moderating. Our largest business in cleaning and hygiene completed its warehouse consolidations, offsetting operating cost inflation to drive a strong improvement in operating profit. The increase in operating margin was driven by the positive net inflation impact. Higher working capital offset the business area's higher margin, resulting in a broadly stable return on average operating capital.

Speaker #3: This also supported a strong increase in gross margin. Inflation was most prevalent in Turkey, where we sell disposable gloves, as well as in some of our online businesses and in Spain.

Speaker #3: Spain saw very strong revenue growth, also supported by acquisitions, and the performance within our online businesses continued to improve. France delivered some volume growth, which was partially offset by selling price deflation, which has been moderating.

Richard Howes: France delivered some volume growth, which was partially offset by selling price deflation, which had been moderating. Our largest business in cleaning and hygiene completed its warehouse consolidations, offsetting operating cost inflation to drive a strong improvement in operating profit. The increase in operating margin was driven by the positive net inflation impact. Higher working capital offset the business area's higher margin, resulting in a broadly stable return on average operating capital.

Speaker #3: Our largest business in cleaning and hygiene completed its warehouse consolidations, offsetting operating cost inflation to drive the strong improvement in operating profit. The increase in operating margin was driven by the positive net inflation impact.

Speaker #3: Higher working capital offset the business area's higher margin, resulting in a broadly stable return on average operating capital. The UK and Ireland delivered slight underlying revenue growth, mostly driven by volume, with price increases only seen towards the end of the second quarter.

Richard Howes: The UK and Ireland delivered slight underlying revenue growth, mostly driven by volume, with price increases only seen towards the end of Q2. Both gross margin and operating margins were higher in the period. Growth was driven by food service, cleaning and hygiene, and our businesses in Ireland, with a partial offset from a decline in safety due to the completion of some larger infrastructure projects. Adjusted operating profit increased 9%, and strong operating margin expansion was driven by the annualization of Nisbets synergies and a one-off property related gain despite overhead inflation. The increase in operating margin also translated into a strong increase in the UK and Ireland's return on average operating capital. Finally, in the rest of the world, acquisitions are the main driver of a 5% increase in constant currency revenues, with underlying revenue also contributing almost 2%.

Speaker #3: Both gross margin and operating margins were higher in the period. Growth was driven by food service, cleaning and hygiene, and our businesses in Ireland.

Speaker #3: With a partial offset from a decline in safety, due to the completion of some larger infrastructure projects. Adjusted operating profit increased 9%, and strong operating margin expansion was driven by the annualization of NISBE synergies and a one-off property-related gain.

Speaker #3: Despite overhead inflation, the increase in operating margin also translated into a strong increase in the UK and Ireland's return on average operating capital. Then finally, in the rest of the world, acquisitions were the main driver of a 5% increase in constant currency revenues, with underlying revenue also contributing almost 2%.

Richard Howes: The increase in operating margin also translated into a strong increase in the UK and Ireland's return on average operating capital. Finally, in the rest of the world, acquisitions are the main driver of a 5% increase in constant currency revenues, with underlying revenue also contributing almost 2%. Underlying revenue growth was driven by Asia Pacific, particularly our healthcare businesses, although within this, our operations in New Zealand have been impacted by reduced public healthcare spending.

Speaker #3: Underlying revenue growth was driven by Asia Pacific, particularly our healthcare businesses. However, within this, our operations in New Zealand have been impacted by reduced public healthcare spending.

Richard Howes: Underlying revenue growth was driven by Asia Pacific, particularly our healthcare businesses, although within this, our operations in New Zealand have been impacted by reduced public healthcare spending. While Brazil benefited from inflation in certain categories, which supported moderating deflation overall, there was more limited inflation impact in Asia Pacific. Rest of the world's operating profit grew by just over 15% as gross and operating margins increased strongly, particularly in Brazil. This offset a healthcare-related margin decline in Asia Pacific. The higher adjusted operating profit drove an increase in return on average operating capital. This slide provides an overview of our performance across sectors in H1. Overall, we delivered modest organic revenue growth across safety, clean hygiene, and healthcare, driven by strong growth across our Asia Pacific healthcare businesses, as well as higher inflation in North America.

Speaker #3: While Brazil benefited from inflation in certain categories, which supported moderating deflation overall, there was a more limited inflation impact in Asia Pacific. Rest of the world's operating profit grew by just over 15%, as gross and operating margins increased strongly, particularly in Brazil.

Richard Howes: While Brazil benefited from inflation in certain categories, which supported moderating deflation overall, there was more limited inflation impact in Asia Pacific. Rest of the world's operating profit grew by just over 15% as gross and operating margins increased strongly, particularly in Brazil. This offset a healthcare-related margin decline in Asia Pacific. The higher adjusted operating profit drove an increase in return on average operating capital. This slide provides an overview of our performance across sectors in H1.

Speaker #3: This offset a healthcare-related margin decline in Asia Pacific. The higher adjusted operating profit drove an increase in return on average operating capital. This slide provides an overview of our performance across sectors in the first half.

Speaker #3: Overall, we delivered modest organic revenue growth across safety, cleaning and hygiene, and healthcare, driven by strong growth across our Asia Pacific healthcare businesses, as well as higher inflation in North America.

Richard Howes: Overall, we delivered modest organic revenue growth across safety, clean hygiene, and healthcare, driven by strong growth across our Asia Pacific healthcare businesses, as well as higher inflation in North America. Growth in food service and grocery were both driven by the strong performance of our North American distribution business. Within distribution, grocery saw strong volume growth driven by new customer wins in H2 2025, as well as good growth at some of its largest grocery customers. Moving on to cash flow.

Speaker #3: Growth in food service and grocery were both driven by the strong performance of our North American distribution business. Within distribution, groceries saw strong volume growth, driven by new customer wins in the second half of 2025, as well as good growth at some of its largest grocery customers.

Richard Howes: Growth in food service and grocery were both driven by the strong performance of our North American distribution business. Within distribution, grocery saw strong volume growth driven by new customer wins in H2 2025, as well as good growth at some of its largest grocery customers. Moving on to cash flow. We generated GBP 328 million of free cash flow in the period, which includes an inflow of GBP 71 million related to tariff refunds. Excluding this inflow, cash conversion was 90%, slightly lower than usual due to an investment in working capital, but in line with our target. Free cash flow increased 5.6% year on year, driven by higher adjusted operating profit and lower net interest paid. Inclusive of the tariff refund, total cash generation prior to acquisitions, disposals, and share buybacks was GBP 268 million.

Speaker #3: Moving on to cash flow, we generated £328 million of free cash flow in the period, which includes an inflow of £71 million related to tariff refunds.

Richard Howes: We generated GBP 328 million of free cash flow in the period, which includes an inflow of GBP 71 million related to tariff refunds. Excluding this inflow, cash conversion was 90%, slightly lower than usual due to an investment in working capital, but in line with our target. Free cash flow increased 5.6% year on year, driven by higher adjusted operating profit and lower net interest paid. Inclusive of the tariff refund, total cash generation prior to acquisitions, disposals, and share buybacks was GBP 268 million. GBP 26 million was spent on net acquisitions, resulting in a net cash inflow of GBP 242 million.

Speaker #3: Excluding this inflow, cash conversion was 90%, slightly lower than usual due to an investment in working capital, but in line with our target. Free cash flow increased 5.6% year on year, driven by higher adjusted operating profit and lower net interest paid.

Speaker #3: Inclusive of the tariff refund, total cash generation prior to acquisitions, disposals, and share buybacks was £268 million. £26 million was spent on net acquisitions, resulting in a net cash inflow of £242 million.

Richard Howes: GBP 26 million was spent on net acquisitions, resulting in a net cash inflow of GBP 242 million. Turning to the balance sheet at actual exchange rates with comparisons made to the position at the end of 2025. Working capital was largely unchanged overall, with an increase in payables, which includes the US tariff refunds, partially offset by an increase in receivables and slightly higher inventory. Deferred consideration relating to acquisitions decreased by GBP 12 million to GBP 213 million, driven by earn-out payments related to previous acquisitions. There was an increase of GBP 164 million in other net liabilities, which primarily relates to our final dividend, which was paid in July. Our adjusted net debt to EBITDA was 1.8 times, excluding the cash inflow related to the tariff refund.

Speaker #3: Turning to the balance sheet and actual exchange rates, with comparisons made to the position at the end of 2025. Working capital was largely unchanged overall, with an increase in payables—which includes the US tariff refunds—partially offset by an increase in receivables and slightly higher inventory.

Richard Howes: Turning to the balance sheet at actual exchange rates with comparisons made to the position at the end of 2025. Working capital was largely unchanged overall, with an increase in payables, which includes the US tariff refunds, partially offset by an increase in receivables and slightly higher inventory. Deferred consideration relating to acquisitions decreased by GBP 12 million to GBP 213 million, driven by earn-out payments related to previous acquisitions. There was an increase of GBP 164 million in other net liabilities, which primarily relates to our final dividend, which was paid in July.

Speaker #3: Deferred consideration relating to acquisitions increased by decrease by 12 million pounds, to 213 million pounds, driven by earn-out payments related to previous acquisitions. There was an increase of 164 million pounds in other net liabilities, which primarily relates to our final dividend, which was paid in July.

Speaker #3: Our adjusted net debt to EBITDA was 1.8 times, excluding the cash inflow related to the tariff refund. Over the medium term, we aim, on average, to maintain and manage leverage within our target range of 2 to 2.5 times adjusted net debt to EBITDA.

Richard Howes: Our adjusted net debt to EBITDA was 1.8 times, excluding the cash inflow related to the tariff refund. Over the medium term, we aim, on average, to manage leverage within our target range of 2 to 2.5 times adjusted net debt to EBITDA. Before the pandemic, we consistently operated within this range. Returns were slightly higher in the H1, driven by a higher operating margin with return on invested capital of 13.3% and a return on average operating capital of 38%. Our capital allocation priorities remain unchanged:

Richard Howes: Over the medium term, we aim, on average, to manage leverage within our target range of 2 to 2.5 times adjusted net debt to EBITDA. Before the pandemic, we consistently operated within this range. Returns were slightly higher in the H1, driven by a higher operating margin with return on invested capital of 13.3% and a return on average operating capital of 38%. Our capital allocation priorities remain unchanged: To invest in the business to support organic growth and operational efficiencies, to pay a progressive dividend, to invest in value-accretive bolt-on acquisitions, and finally, to distribute excess cash. In the 21 years up to and including the H1 of 2026, Bunzl has returned GBP 2.7 billion through dividends, committed GBP 6.2 billion in acquisitions, and returned GBP 450 million through share buybacks.

Speaker #3: Before the pandemic, we consistently operated within this range. Returns were slightly higher in the first half, driven by a higher operating margin, with return on invested capital of 13.3% and a return on average operating capital of 38%.

Speaker #3: Our capital allocation priorities remain unchanged: to invest in the business to support organic growth and operational efficiencies; to pay a progressive dividend; to invest in value-accretive bolt-on acquisitions; and, finally, to distribute excess cash.

Richard Howes: To invest in the business to support organic growth and operational efficiencies, to pay a progressive dividend, to invest in value-accretive bolt-on acquisitions, and finally, to distribute excess cash. In the 21 years up to and including the H1 of 2026, Bunzl has returned GBP 2.7 billion through dividends, committed GBP 6.2 billion in acquisitions, and returned GBP 450 million through share buybacks. When we are deciding where to deploy capital, we have a strong focus on the return on invested capital and the relative value creation of different opportunities.

Speaker #3: In the 21 years up to and including the first half of 2026, Bunzl has returned £2.7 billion through dividends, committed £6.2 billion in acquisitions, and returned £450 million through share buybacks.

Richard Howes: When we are deciding where to deploy capital, we have a strong focus on the return on invested capital and the relative value creation of different opportunities. As a result, we have a strong preference to prioritize capital to invest in our own business and in bolt-on acquisitions. Acquisitions represent a significant opportunity for Bunzl as we operate in large and fragmented markets, and we have a very strong track record of consolidating the market. Of the 77 announced acquisitions between 2020 and 2025, 74 were bolt-on acquisitions where committed spend per deal averaged around GBP 25 million. Over this period, we spent an average of GBP 300 million per annum on bolt-ons. The average multiple that we have paid for these businesses has been consistently around 8 times operating profit. Recent deals have demonstrated a strong 2-year return on invested capital of 13.3%, comfortably ahead of our project work.

Speaker #3: When we are deciding where to deploy capital, we have a strong focus on the return on invested capital and the relative value creation of different opportunities.

Speaker #3: As a result, we have a strong preference to prioritise capital to invest in our own business and in bolt-on acquisitions. Acquisitions represent a significant opportunity for Bunzl, as we operate in large and fragmented markets.

Richard Howes: As a result, we have a strong preference to prioritize capital to invest in our own business and in bolt-on acquisitions. Acquisitions represent a significant opportunity for Bunzl as we operate in large and fragmented markets, and we have a very strong track record of consolidating the market. Of the 77 announced acquisitions between 2020 and 2025, 74 were bolt-on acquisitions where committed spend per deal averaged around GBP 25 million. Over this period, we spent an average of GBP 300 million per annum on bolt-ons.

Speaker #3: And we have a very strong track record of consolidating the market. Of the 77 announced acquisitions between 2020 and 2025, 74 were bolt-on acquisitions, where committed spend per deal averaged around £25 million.

Speaker #3: Over this period, we spent an average of £300 million per annum on bolt-ons. The average multiple that we have paid for these businesses has been consistently around 8 times operating profit.

Richard Howes: The average multiple that we have paid for these businesses has been consistently around 8 times operating profit. Recent deals have demonstrated a strong 2-year return on invested capital of 13.3%, comfortably ahead of our project work. We have over 1,300 potential acquisition targets identified across countries and customer end markets, but the timing of deals can be uncertain. Periods of lower acquisition spend are not unusual, and annual spend varies. In 2019, we spent just over GBP 100 million on bolt-on acquisitions, whilst in 2023, we spent nearly GBP 500 million.

Speaker #3: Recent deals have demonstrated a strong two-year return on invested capital of 13.3%, comfortably ahead of our project work. We have over 1,300 potential acquisition targets identified across countries and customer end markets.

Richard Howes: We have over 1,300 potential acquisition targets identified across countries and customer end markets, but the timing of deals can be uncertain. Periods of lower acquisition spend are not unusual, and annual spend varies. In 2019, we spent just over GBP 100 million on bolt-on acquisitions, whilst in 2023, we spent nearly GBP 500 million. Our pipeline is active, and we continue to expect committed spend to be more in 2026 than 2025. With current leverage of 1.8 times and strong annual cash flow, we have significant headroom. This is supported by the fact we have spent less than GBP 150 million on acquisitions over the last 20 months, compared to a typical spend of around GBP 600 million over a 2-year period. On this high level illustration, we have headroom of 0.15 to 1 times net debt to EBITDA.

Speaker #3: But the timing of deals can be uncertain. Periods of lower acquisition spend are not unusual, and annual spend varies. In 2019, we spent just over £100 million on bolt-on acquisitions, whilst in 2023, we spent nearly £500 million.

Speaker #3: Our pipeline is active, and we continue to expect committed spend to be higher in 2026 than in 2025. With current leverage of 1.8 times and strong annual cash flow, we have significant headroom.

Richard Howes: Our pipeline is active, and we continue to expect committed spend to be more in 2026 than 2025. With current leverage of 1.8 times and strong annual cash flow, we have significant headroom. This is supported by the fact we have spent less than GBP 150 million on acquisitions over the last 20 months, compared to a typical spend of around GBP 600 million over a 2-year period. On this high level illustration, we have headroom of 0.15 to 1 times net debt to EBITDA.

Speaker #3: This is supported by the fact that we have spent less than £150 million on acquisitions over the last 20 months, compared to a typical spend of around £600 million over a two-year period.

Speaker #3: On this high-level illustration, we have headroom of 0.15 to 1 times net debt to EBITDA. Every £100 million allocated to bolt-on acquisitions initially impacts leverage by a little under 0.1 times.

Richard Howes: Every GBP 100 million allocated to bolt-on acquisitions initially impacts leverage by a little under 0.1 times. We therefore have a level of excess cash that supports a GBP 500 million share buyback over the next 12 months without compromising our pursuit of bolt-on acquisitions and the increasing acquisition momentum we are seeing. As part of our capital allocation framework, we commit to a progressive dividend policy and have delivered dividend per share CAGR of circa 9% since 1992. Today, we have announced an increase of 3% in our interim dividend. Our expected dividend cover for 2026 is 2.4 times, in line with last year. Looking ahead to the full year, we upgrade our 2026 guidance. We continue to expect revenue growth at constant exchange rates, excluding US tariff refunds, to be driven by modest underlying growth, supported by some inflation alongside a small benefit from acquisitions.

Speaker #3: We therefore have a level of excess cash that supports a £500 million share buyback over the next 12 months, without compromising our pursuit of bolt-on acquisitions and the increasing acquisition momentum we are seeing.

Speaker #3: As part of our capital allocation framework, we commit to a progressive dividend policy and have delivered a dividend per share CAGR of approximately 9% since 1992.

Speaker #3: Today, we have announced an increase of 3% in our interim dividend. Our expected dividend cover for 2026 is 2.4 times, in line with last year.

Richard Howes: Our expected dividend cover for 2026 is 2.4 times, in line with last year. Looking ahead to the full year, we upgrade our 2026 guidance. We continue to expect revenue growth at constant exchange rates, excluding US tariff refunds, to be driven by modest underlying growth, supported by some inflation alongside a small benefit from acquisitions. We now expect group operating margin to be broadly flat year on year compared to the 7.6% margin reported in 2025, which excluded the GBP 8 million share-based payment credit.

Speaker #3: Looking ahead to the full year, we upgrade our 2026 guidance. We continue to expect revenue growth at constant exchange rates, excluding US tariff refunds, to be driven by modest underlying growth, supported by some inflation, alongside a small benefit from acquisitions.

Speaker #3: We now expect group operating margin to be broadly flat year on year, compared to the 7.6% margin reported in 2025, which excluded the £8 million share-based payment credit.

Richard Howes: We now expect group operating margin to be broadly flat year on year compared to the 7.6% margin reported in 2025, which excluded the GBP 8 million share-based payment credit. This is due to stronger than expected profitability in H1, which was driven by the net impact of inflation, much of which is expected to be temporary. Overall, we expect modest growth in adjusted operating profit. Within this, there are a few things to remember when considering our expectations for the H2. Comparatives get tougher. You will remember that we had significant business wins towards the end of last year, which will annualize. We are already starting to see some selling price normalization, with this expected to be a margin drag for the group. Gross margin peaked in June, with July already declining from that level, and with price reductions in certain categories building since July.

Speaker #3: This is due to stronger-than-expected profitability in H1, which was driven by the net impact of inflation—much of which is expected to be temporary.

Richard Howes: This is due to stronger than expected profitability in H1, which was driven by the net impact of inflation, much of which is expected to be temporary. Overall, we expect modest growth in adjusted operating profit. Within this, there are a few things to remember when considering our expectations for the H2. Comparatives get tougher. You will remember that we had significant business wins towards the end of last year, which will annualize. We are already starting to see some selling price normalization, with this expected to be a margin drag for the group.

Speaker #3: Overall, we expect modest growth in adjusted operating profit. Within this, there are a few things to remember when considering our expectations for the second half.

Speaker #3: Comparatives get tougher. You will remember that we had significant business wins towards the end of last year, which will annualise. We are already starting to see some selling price normalisation, with this expected to be a margin drag for the Group.

Speaker #3: Gross margin peaked in June, with July already declining from that level, and with price reductions in certain categories building since July. In addition, the second half will also continue to be impacted by an increase in variable operating costs, linked to improved profit performance.

Richard Howes: Gross margin peaked in June, with July already declining from that level, and with price reductions in certain categories building since July. In addition, the H2 will also continue to be impacted by an increase in variable operating costs linked to improved profit performance. Tax guidance is unchanged at 26%, while net interest is expected to be between GBP 125 and GBP 130 million. I will now hand back to Frank to take you through our business update.

Richard Howes: In addition, the H2 will also continue to be impacted by an increase in variable operating costs linked to improved profit performance. Tax guidance is unchanged at 26%, while net interest is expected to be between GBP 125 and GBP 130 million. I will now hand back to Frank to take you through our business update.

Speaker #3: Tax guidance is unchanged at 26%, while net interest is expected to be between £125 and £130 million. I will now hand back to Frank to take you through our business update.

Speaker #1: Thank you, Richard. Firstly, let me give you an update on North America. As part of this, we thought it would be helpful to provide you with some updated disclosure, including our end-customer revenue split.

Frank van Zanten: Thank you, Richard. Firstly, let me give you an update on North America. As part of this, we thought it would be helpful to provide you with some updated disclosure, including our end customer revenue split. As a reminder, our operating companies operate across customer sectors, and so our businesses are not run simply in our accordance with the chart here. As you can see, distribution accounts for around 60% of North America revenues. Therefore, a now stabilized distribution business is very important for the resilience of North America and the group. Within distribution, approximately half of its revenues are generated from grocery customers, with another quarter coming from food service redistribution. The remainder is made up of customers across retail, food processor, and cleaning and hygiene. The other 40% of North America is diversified across many sectors.

Speaker #1: Although, as a reminder, our operating companies operate across customer sectors, and so our businesses are not run simply in accordance with the chart here.

Speaker #1: As you can see, distribution accounts for around 60% of North America revenues. Therefore, a now-stabilised distribution business is very important for the resilience of North America and the Group.

Speaker #1: Within Distribution, approximately half of its revenues are generated from grocery customers, with another quarter coming from food service redistribution. The remainder is made up of customers across retail, food processor, and cleaning and hygiene.

Frank van Zanten: Within distribution, approximately half of its revenues are generated from grocery customers, with another quarter coming from food service redistribution. The remainder is made up of customers across retail, food processor, and cleaning and hygiene. The other 40% of North America is diversified across many sectors. This diverse sector mix supports the resilience of North America and the group.

Speaker #1: The other 40% of North America is diversified across many sectors. This diverse sector mix supports the resilience of North America and the group. North America's largest 40 customers are mostly distribution customers, and have an average partnership with Bunzl of over 20 years.

Frank van Zanten: This diverse sector mix supports the resilience of North America and the group. North America's largest 40 customers are mostly distribution customers and have an average partnership with Bunzl of over 20 years. Customers are very sticky in our industry, and we enjoy very high retention rates in general, given the essential nature of our products and services. While North America has a more concentrated customer base than other parts of the group, its top three customers account for less than 25% of revenue, with this weighted to our largest customer. Customers 4 to 10 account for less than 15% of revenue. There is then a very long tail of smaller customers. In terms of financials, margins vary across businesses, but those with lower margins tend to have higher inventory turns, and as a result, return on average operating capital is broadly similar and attractive across sectors.

Frank van Zanten: North America's largest 40 customers are mostly distribution customers and have an average partnership with Bunzl of over 20 years. Customers are very sticky in our industry, and we enjoy very high retention rates in general, given the essential nature of our products and services. While North America has a more concentrated customer base than other parts of the group, its top three customers account for less than 25% of revenue, with this weighted to our largest customer. Customers 4 to 10 account for less than 15% of revenue. There is then a very long tail of smaller customers.

Speaker #1: Customers are very sticky in our industry, and we enjoy very high retention rates in general, given the essential nature of our products and services.

Speaker #1: While North America has a more concentrated customer base than other parts of the group, its top three customers account for less than 25% of revenue, with this weighted to our largest customer.

Speaker #1: And customers 4 to 10 account for less than 15% of revenue. There is then a very long tail of smaller customers. In terms of financials, margins vary across businesses, but those with lower margins tend to have higher inventory turns, and as a result, return on average operating capital is broadly similar and attractive across sectors.

Frank van Zanten: In terms of financials, margins vary across businesses, but those with lower margins tend to have higher inventory turns, and as a result, return on average operating capital is broadly similar and attractive across sectors. Focusing now specifically on our North America Distribution business, where we have continued to make strong operational progress. I have spent a lot of time in this business, and the actions we have taken have significantly improved execution within our new organizational structure.

Speaker #1: Focusing now specifically on our North America Distribution business, we have continued to make strong operational progress. I've spent a lot of time in this business, and the actions we have taken have significantly improved execution within our new organisational structure.

Frank van Zanten: Focusing now specifically on our North America Distribution business, where we have continued to make strong operational progress. I have spent a lot of time in this business, and the actions we have taken have significantly improved execution within our new organizational structure. The new sales and operations model, which enables a much greater focus on long-term growth opportunities, now has the right processes in place to enable effective servicing of both local and national customers. The model is working well. As part of actions taken, we have reinforced our leadership structure within local food service, and that has brought greater focus in that sector. Importantly, agility has now been restored in the local business, with local teams responsible for pricing and inventory decisions for local customers, as well as for local sourcing decisions.

Speaker #1: The new sales and operations model, which enables a much greater focus on long-term growth opportunities, now has the right processes in place to enable effective servicing of both local and national customers.

Frank van Zanten: The new sales and operations model, which enables a much greater focus on long-term growth opportunities, now has the right processes in place to enable effective servicing of both local and national customers. The model is working well. As part of actions taken, we have reinforced our leadership structure within local food service, and that has brought greater focus in that sector. Importantly, agility has now been restored in the local business, with local teams responsible for pricing and inventory decisions for local customers, as well as for local sourcing decisions.

Speaker #1: The model is working well. As part of the actions taken, we have reinforced our leadership structure within local food service, and that has brought greater focus in that sector.

Speaker #1: Importantly, agility has now been restored in the local business, with local teams responsible for pricing and inventory decisions for local customers, as well as for local sourcing decisions.

Speaker #1: As a result, our availability and commercial responsiveness are now back at our desired levels, as are our service levels—with on-time in full now back to 2019 levels.

Frank van Zanten: As a result, our availability and commercial responsiveness are now back at our desired levels, as are our service levels, with On-Time In-Full now back to 2019 levels. Our sales teams are motivated and engaged, and collaboration between teams has noticeably improved. Staff turnover, which we believe has always been well below industry averages, but increased in 2025, has fallen meaningfully over the last 12 months. Finally, we have strengthened our relationship with customers and our engagement with third-party suppliers. This has included a more balanced approach to own brand that also focuses on growth we can achieve with preferred branded suppliers. For example, on the bottom right is a recent promotional program we ran for hygiene products alongside multiple branded suppliers. Customers are also noticing these improvements, as highlighted by the quote in the top right of the page.

Speaker #1: Our sales teams are motivated and engaged, and collaboration between teams has noticeably improved. Staff turnover, which we believe has always been well below industry averages but increased in 2025, has fallen meaningfully over the last 12 months.

Speaker #1: And finally, we have strengthened our relationships with customers and our engagement with third-party suppliers. This has included a more balanced approach to own-brand, which also focuses on growth we can achieve with preferred branded suppliers.

Frank van Zanten: This has included a more balanced approach to own brand that also focuses on growth we can achieve with preferred branded suppliers. For example, on the bottom right is a recent promotional program we ran for hygiene products alongside multiple branded suppliers. Customers are also noticing these improvements, as highlighted by the quote in the top right of the page. The operational improvements outlined on the previous slide are now visible in Distribution's improved financial performance. Distribution delivered 8% underlying revenue growth in H1.

Speaker #1: For example, on the bottom right is a recent promotional programme we ran for hygiene products, alongside multiple branded suppliers. Customers are also noticing these improvements, as highlighted by the quote in the top right of the page.

Speaker #1: The operational improvements outlined on the previous slide are now visible in Distribution's improved financial performance. Distribution delivered 8% underlying revenue growth in the first half.

Frank van Zanten: The operational improvements outlined on the previous slide are now visible in Distribution's improved financial performance. Distribution delivered 8% underlying revenue growth in H1. This was mostly driven by volume growth, including the new business wins in Q4 of last year and success with established grocery partnerships. In Q2, volumes grew by 2% in our redistribution segment, which service customers. This is an encouraging performance given continued market challenges for customers in that particular segment. Inflation was also positive in the period for Distribution. The business saw a moderate increase in operating margin, outperforming North America as a whole. The improved performance of the business, alongside the net positive impact from inflation, more than offset the mix headwind from strong growth in grocery, new business wins that are typically lower margin initially, and higher variable cost as a result of the improved performance.

Speaker #1: This was mostly driven by volume growth, including the new business wins in the fourth quarter of last year, and success with established grocery partnerships.

Frank van Zanten: This was mostly driven by volume growth, including the new business wins in Q4 of last year and success with established grocery partnerships. In Q2, volumes grew by 2% in our redistribution segment, which service customers. This is an encouraging performance given continued market challenges for customers in that particular segment. Inflation was also positive in the period for Distribution. The business saw a moderate increase in operating margin, outperforming North America as a whole.

Speaker #1: Second quarter volumes grew by 2% in our redistribution segment, which services customers. This is an encouraging performance, given continued market challenges for customers in that particular segment.

Speaker #1: Inflation was also positive in the period for distribution. The business saw a moderate increase in operating margin, outperforming North America as a whole. The improved performance of the business, alongside the net positive impact from inflation, more than offset the mix headwinds from strong growth in grocery, new business wins that are typically lower margin initially, and higher variable costs as a result of the improved performance.

Frank van Zanten: The improved performance of the business, alongside the net positive impact from inflation, more than offset the mix headwind from strong growth in grocery, new business wins that are typically lower margin initially, and higher variable cost as a result of the improved performance. While the end markets remain challenging, we are now in a good position from which we can focus on increasing market share through new customer wins and increased wallet share.

Speaker #1: While the end markets remain challenging, we're now in a good position from which we can focus on increasing market share through new customer wins and increased wallet share.

Frank van Zanten: While the end markets remain challenging, we are now in a good position from which we can focus on increasing market share through new customer wins and increased wallet share. Near-term priorities for the business also include hiring a new CEO of Distribution and opening two mixing centers on the East and West Coast, which will hold imported products for our distribution centers. This will improve product availability across the business, enhance warehouse productivity, and create commercial opportunities with customers. The actions we have taken and continue to take will strengthen our distribution business and provide it with a strong platform to deliver sustainable long-term growth. Turning to Continental Europe. A significant warehouse consolidation project is now fully operational in our largest French business, where we have gone from 15 to 6 warehouses.

Speaker #1: Near-term priorities for the business also include hiring a new CEO of Distribution, and opening two mixing centres on the East and West Coast, which will hold imported products for our distribution centres.

Frank van Zanten: Near-term priorities for the business also include hiring a new CEO of Distribution and opening two mixing centers on the East and West Coast, which will hold imported products for our distribution centers. This will improve product availability across the business, enhance warehouse productivity, and create commercial opportunities with customers. The actions we have taken and continue to take will strengthen our distribution business and provide it with a strong platform to deliver sustainable long-term growth.

Speaker #1: This will improve product availability across the business, enhance warehouse productivity, and create commercial opportunities with customers. The actions we have taken, and continue to take, will strengthen our distribution business and provide it with a strong platform to deliver sustainable, long-term growth.

Speaker #1: Turning to continental Europe, a significant warehouse consolidation project is now fully operational in our largest French business, where we have gone from 15 to 6 warehouses.

Frank van Zanten: Turning to Continental Europe. A significant warehouse consolidation project is now fully operational in our largest French business, where we have gone from 15 to 6 warehouses. This has been a large undertaking by the team, and it will make a big difference to our operational efficiency, improving product availability and delivery time for our customers.

Speaker #1: This has been a large undertaking by the team, and it will make a big difference to our operational efficiency, improving product availability and delivery time for our customers.

Frank van Zanten: This has been a large undertaking by the team, and it will make a big difference to our operational efficiency, improving product availability and delivery time for our customers. We are already benefiting from some tangible improvements with higher service levels, lower inventory, increased warehouse capacity, as well as improved health and safety. There will be further productivity improvements as we fully roll out a number of digital tools, including warehouse management systems and demand management planning. Whilst this was a bigger project, warehouse consolidations are a key lever for operating efficiencies across the group, and we are always looking for these types of incremental opportunities. We have also entered into an exciting partnership with Adidas, which is a great example of the group's entrepreneurial culture and continued focus on driving organic growth.

Speaker #1: We are already benefiting from some tangible improvements, with higher service levels, lower inventory, increased warehouse capacity, as well as improved health and safety. There will be further productivity improvements as we fully roll out a number of digital tools, including warehouse management systems and demand management planning.

Frank van Zanten: We are already benefiting from some tangible improvements with higher service levels, lower inventory, increased warehouse capacity, as well as improved health and safety. There will be further productivity improvements as we fully roll out a number of digital tools, including warehouse management systems and demand management planning. Whilst this was a bigger project, warehouse consolidations are a key lever for operating efficiencies across the group, and we are always looking for these types of incremental opportunities.

Speaker #1: Whilst this was a bigger project, warehouse consolidations are a key lever for operating efficiencies across the group, and we are always looking for these types of incremental opportunities.

Speaker #1: We've also entered into an exciting existing partnership with Adidas, which is a great example of the group's entrepreneurial culture and continued focus on driving organic growth.

Frank van Zanten: We have also entered into an exciting partnership with Adidas, which is a great example of the group's entrepreneurial culture and continued focus on driving organic growth. This focus achieves net new business wins worth around €30 million of annualized revenue in the H1 in Europe overall. The Adidas partnership is a global exclusive license agreement for the design, manufacture, and distribution of safety footwear. The initial launch is in a number of European countries across different businesses. The partnership is testament to our safety expertise and global network of safety distribution businesses.

Speaker #1: This focus achieves net new business wins worth around €30 million of annualised revenue in the first half, in Europe overall. The Adidas partnership is a global exclusive licence agreement for the design, manufacture, and distribution of safety footwear. The initial launch is in a number of European countries, across different businesses.

Frank van Zanten: This focus achieves net new business wins worth around €30 million of annualized revenue in the H1 in Europe overall. The Adidas partnership is a global exclusive license agreement for the design, manufacture, and distribution of safety footwear. The initial launch is in a number of European countries across different businesses. The partnership is testament to our safety expertise and global network of safety distribution businesses. These benefits were recognized by Adidas and instrumental in them choosing to partner with Bunzl to introduce Adidas Pro Work. Looking forward, there is significant growth potential as we look to expand the product range, the product categories, and the number of geographical markets. Turning to our long-term growth model. Bunzl is fully focused on delivering against its well-established compounding growth strategy, and a good H1 performance reaffirms our expectation that 2026 will be the foundation for future profit growth.

Speaker #1: The partnership is a testament to our safety expertise and global network of safety distribution businesses. These benefits were recognized by Adidas and were instrumental in their decision to partner with Bunzl to introduce Adidas workwear shoes.

Frank van Zanten: These benefits were recognized by Adidas and instrumental in them choosing to partner with Bunzl to introduce Adidas Pro Work. Looking forward, there is significant growth potential as we look to expand the product range, the product categories, and the number of geographical markets. Turning to our long-term growth model. Bunzl is fully focused on delivering against its well-established compounding growth strategy, and a good H1 performance reaffirms our expectation that 2026 will be the foundation for future profit growth.

Speaker #1: Looking forward, there's significant growth potential as we look to expand the product range, product categories, and the number of geographical markets. Turning to our long-term growth model.

Speaker #1: Bunzl is fully focused on delivering against its well-established compounding growth strategy, and a good first-half performance reaffirms our expectation that 2026 will be the foundation for future profit growth.

Speaker #1: I therefore want to take a moment to briefly remind you of its building blocks. Firstly, Bunzl's growth opportunities are supported by its underlying resilience. This resilience is driven by the geographic and sector diversification of our 150 businesses, and their focus on essential products.

Frank van Zanten: I therefore want to take a moment to briefly remind you of its building blocks. Firstly, Bunzl's growth opportunity is supported by its underlying resilience. This resilience is driven by the geographic and sector diversification of our 150 businesses and their focus on essential products. The group benefits further from its scale, strong cash generation, and its entrepreneurial culture. These fundamentals underpin our growth strategy, which is founded on profitable organic growth and disciplined value-creative acquisitions. We also continue to drive ongoing operational efficiencies and, where appropriate, distribute additional returns of capital. Bunzl has a strong total return model. Part of the group's resilience stems from its geographic and sector diversification. We provide you with an updated snapshot on this slide. This resilience in part reflects the fact that grocery and food service revenues are relatively similar in scale and tend to have opposing trends.

Speaker #1: The group benefits further from its scale, strong cash generation, and its entrepreneurial culture. These fundamentals underpin our growth strategy, which is founded on profitable organic growth and disciplined, value-creative acquisitions.

Speaker #1: We also continue to drive ongoing operational efficiencies and, where appropriate, distribute additional returns of capital. Bunzl has a strong total return model. Part of the group's resilience stems from its geographic and sector diversification.

Frank van Zanten: We also continue to drive ongoing operational efficiencies and, where appropriate, distribute additional returns of capital. Bunzl has a strong total return model. Part of the group's resilience stems from its geographic and sector diversification. We provide you with an updated snapshot on this slide. This resilience in part reflects the fact that grocery and food service revenues are relatively similar in scale and tend to have opposing trends.

Speaker #1: We provide you with an updated snapshot on this slide. This resilience, in part, reflects the fact that grocery and food service revenues are relatively similar in scale, and tend to have opposing trends.

Speaker #1: When people eat out more, they eat at home less, and vice versa. Furthermore, around half of the Group's profit is now generated from the three sectors where we see the greatest growth opportunity and that have the highest operating margins.

Frank van Zanten: When people eat out more, they eat at home less, and vice versa. Furthermore, around half of group's profit is now generated from the three sectors that we see the greatest growth opportunity and that have the highest operating margins: safety, healthcare, and cleaning and hygiene. However, it is important to remember that while these six sectors have different margin profiles, their return on capital employed are all attractive and broadly similar. Those with lower margins tend to have higher inventory turn. All are highly cash generative. Organic growth remains a key focus for all of our businesses. We drive volume growth through exposure to growing customers, increase share of wallet with existing customers, and through winning new customers. These factors all contributed to our volume growth in the H1. Across our diversified operations, activity in our end markets is important.

Speaker #1: Safety, healthcare, and cleaning and hygiene. However, it is important to remember that while these six sectors have different margin profiles, their returns on capital employed are all attractive and broadly similar.

Speaker #1: Those with lower margins tend to have higher inventory turn. All are highly cash generative. Organic growth remains a key focus for all of our businesses.

Speaker #1: We drive volume growth through exposure to growing customers, increased share of wallet with existing customers, and winning new customers. These factors all contributed to our volume growth in the first half.

Frank van Zanten: We drive volume growth through exposure to growing customers, increase share of wallet with existing customers, and through winning new customers. These factors all contributed to our volume growth in the H1. Across our diversified operations, activity in our end markets is important. Therefore, on average, we expect group volume growth to be driven by real GDP in our markets. We drive price growth to offset inflation, and we have shown that we are very good at navigating volatile trading conditions while also focusing on long-term customer relationships.

Speaker #1: Across our diversified operations, activity in our end markets is important. Therefore, on average, we expect group volume growth to be driven by real GDP in our markets.

Frank van Zanten: Therefore, on average, we expect group volume growth to be driven by real GDP in our markets. We drive price growth to offset inflation, and we have shown that we are very good at navigating volatile trading conditions while also focusing on long-term customer relationships. We also target ongoing operating efficiencies where small incremental improvements compound significantly over time and support our management of cost inflation. We completed 15 warehouse consolidations and relocations in the H1 of 2026, a larger number than we would typically expect over six months. In the H1, 78% of our orders were processed digitally. This compares to 76% across 2025. As we implement new systems to improve productivity, artificial intelligence is playing an ever-increasing role. Our entrepreneurial and data-driven culture lends itself well to adopting new technology, and AI is becoming embedded into everyday sales, operations, and support processes.

Speaker #1: We drive price growth to offset inflation, and we have shown that we are very good at navigating volatile trading conditions, while also focusing on long-term customer relationships.

Speaker #1: We also target ongoing operating efficiencies, where small incremental improvements compound significantly over time and support our management of cost inflation. We completed 15 warehouse consolidations and relocations in the first half of 2026, a larger number than we would typically expect over six months.

Frank van Zanten: We also target ongoing operating efficiencies where small incremental improvements compound significantly over time and support our management of cost inflation. We completed 15 warehouse consolidations and relocations in the H1 of 2026, a larger number than we would typically expect over six months. In the H1, 78% of our orders were processed digitally. This compares to 76% across 2025. As we implement new systems to improve productivity, artificial intelligence is playing an ever-increasing role.

Speaker #1: And in the first half, 78% of our orders were processed digitally. This compares to 76% across 2025. As we implement new systems to improve productivity, artificial intelligence is playing an ever-increasing role.

Speaker #1: Our entrepreneurial and data-driven culture lends itself well to adopting new technology, and AI is becoming embedded into everyday sales, operations, and support processes. On top of organic growth, Bunzl has an excellent long-term track record of delivering growth through acquisitions.

Frank van Zanten: Our entrepreneurial and data-driven culture lends itself well to adopting new technology, and AI is becoming embedded into everyday sales, operations, and support processes. On top of organic growth, Bunzl has an excellent long-term track record of delivering growth through acquisitions. In large and very fragmented markets, Bunzl is one of very few scale players and a natural consolidator. The sticky nature of customers in this industry makes bolt-on acquisitions at attractive valuations a compelling growth lever.

Frank van Zanten: On top of organic growth, Bunzl has an excellent long-term track record of delivering growth through acquisitions. In large and very fragmented markets, Bunzl is one of very few scale players and a natural consolidator. The sticky nature of customers in this industry makes bolt-on acquisitions at attractive valuations a compelling growth lever. Having done over 230 acquisitions since 2004, we have very strong acquisition capabilities and processes across the organization. Central expertise alongside local market knowledge reduces the execution risk of acquiring businesses. We are also an attractive acquirer for potential targets, a long-term home for businesses with benefits from our scale, investments made for the benefit of all our businesses, knowledge-sharing opportunities, and our entrepreneurial culture. As Richard demonstrated earlier, bolt-on acquisitions are highly value accretive. Between 2021 and 2025, bolt-on acquisitions contributed on average annual revenue growth of 2.6%.

Speaker #1: In large and very fragmented markets, Bunzl is one of very few scale players and the natural consolidator. The sticky nature of customers in this industry makes bolt-on acquisitions at attractive valuations a compelling growth lever.

Speaker #1: Having done over 230 acquisitions since 2004, we have very strong acquisition capabilities and processes across the organisation. Central expertise, alongside local market knowledge, reduces the execution risk of acquiring businesses.

Frank van Zanten: Having done over 230 acquisitions since 2004, we have very strong acquisition capabilities and processes across the organization. Central expertise alongside local market knowledge reduces the execution risk of acquiring businesses. We are also an attractive acquirer for potential targets, a long-term home for businesses with benefits from our scale, investments made for the benefit of all our businesses, knowledge-sharing opportunities, and our entrepreneurial culture. As Richard demonstrated earlier, bolt-on acquisitions are highly value accretive.

Speaker #1: We are also an attractive acquirer for potential targets—a long-term home for businesses—with benefits from our scale and investments made for the benefit of all our businesses.

Speaker #1: Knowledge-sharing opportunities and our entrepreneurial culture. And as Richard demonstrated earlier, bolt-on acquisitions are highly value-creative. Between 2021 and 2025, bolt-on acquisitions contributed, on average, annual revenue growth of 2.6%.

Frank van Zanten: Between 2021 and 2025, bolt-on acquisitions contributed on average annual revenue growth of 2.6%. We also actively recycle capital, including four disposals since 2022. In summary, Bunzl has delivered a good performance in the H1 of 2026, with broad-based volume growth led by North America Distribution, effective management of inflation, and strong profit growth. In particular, the period reflects a turning point for our distribution business. The group has also continued to demonstrate the strength of its resilient business model in an uncertain macroeconomic and geopolitical environment.

Speaker #1: We also actively recycled capital, including for disposals, since 2022. In summary, Bunzl has delivered a good performance in the first half of 2026, with broad-based volume growth led by North America distribution, effective management of inflation, and strong profit growth.

Frank van Zanten: We also actively recycle capital, including four disposals since 2022. In summary, Bunzl has delivered a good performance in the H1 of 2026, with broad-based volume growth led by North America Distribution, effective management of inflation, and strong profit growth. In particular, the period reflects a turning point for our distribution business. The group has also continued to demonstrate the strength of its resilient business model in an uncertain macroeconomic and geopolitical environment. Overall, I am pleased that we can now guide to modest profit growth for 2026 and look forward to this year being the foundation for future profit growth and a return to Bunzl's successful compounding growth algorithm. Thank you for your attention. We are now happy to take your questions.

Speaker #1: In particular, the period reflects a turning point for our distribution business. The Group has also continued to demonstrate the strength of its resilient business model in an uncertain macroeconomic and geopolitical environment.

Speaker #1: Overall, I am pleased that we can now guide to modest profit growth for 2026, and I look forward to this year being the foundation for future profit growth and a return to Bunzl's successful compounding growth algorithm.

Frank van Zanten: Overall, I am pleased that we can now guide to modest profit growth for 2026 and look forward to this year being the foundation for future profit growth and a return to Bunzl's successful compounding growth algorithm. Thank you for your attention. We are now happy to take your questions.

Speaker #1: Thank you for your attention. We are now happy to take your questions.

Speaker #2: Thank you. To ask a question, please press star 4 by 1 on your telephone keypad now. If you change your mind, please press star 4 by 2.

Operator: Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. We will pause here briefly as questions are being registered. Our first question today comes from Zach Akwa Yuti from Morgan Stanley. Your line is now open.

Speaker #2: When preparing to ask your question, please ensure your device is unmuted locally, or pause here briefly as questions are being registered. Our first question today comes from Zach Alcaute from Morgan Stanley.

Speaker #2: Your line is now open.

Speaker #3: Good morning, Frank. Richard, I have two questions, please. Firstly, could you please unpack the moving parts for the operating margin and the second half; i.e., what is embedded in your full-year guidance?

Zach Akwa Yuti: Good morning, Frank, Richard. I have two questions, please. Firstly, could you please unpack the moving parts for the operating margin in H2, what is embedded in your full year guidance? For example, how is gross margin developing so far, and how do you assume that that will evolve over the remainder of the year? Similarly, your assumptions around OpEx. The second question on M&A in the context of still a lower deal spend relative to history, how has the M&A landscape evolved? I appreciate you called out unexpected acceleration in H2. Should that signal to us that the landscape has improved recently, or is it driven more by the timing of you getting certain deals over the line? Thank you very much.

Speaker #3: For example, how is gross margin developing so far, and how do you assume that will evolve over the remainder of the year? And then similarly, your assumptions around OPEX.

Speaker #3: And then the second question on M&A. In the context of still a lower deal spend relative to history, how has the M&A landscape evolved?

Speaker #3: I appreciate that you called out the unexpected acceleration in the second half. Should that signal to us that the landscape has improved recently, or is it driven more by the timing of you getting certain deals over the line?

Zach Akwa Yuti: Should that signal to us that the landscape has improved recently, or is it driven more by the timing of you getting certain deals over the line? Thank you very much.

Speaker #3: Thank you very much.

Speaker #1: Well, let me take the operating margin one to begin with. So, when we look at the first half, margins have improved by 30 basis points.

Richard Howes: Let me take the operating margin one to begin with. When we look at H1, margins have improved 30 basis points, which has been largely benefited from the inflation effect, i.e., the inventory gain, net of fuel and freight increases. If we take those out, actually margins are still slightly up in H1, but the effect is largely down to the inflation inventory gain. When we look into H2, we are expecting margins to be lower year on year. The extent is essentially the same as we talked about at the pre-close statement back in June. The factors and the parts of the bridge, firstly, we do expect to see this inventory gain unwind. We have already seen gross margins peak in June and reduce in July. We are effectively also seeing selling prices reduce alongside that.

Speaker #1: This has been largely benefited from the inflation effect, i.e., inventory gain, net of fuel and freight increases. If we take those out, actually, margins are still slightly up in the first half.

Speaker #1: But the effect is largely due to the inflation inventory gain. When we look into the second half, we are expecting margins to be lower year-on-year.

Speaker #1: The extent is essentially the same as we talked about at the pre-close statement back in June. The factors and the parts of the bridge—I mean, firstly, we do expect to see this inventory gain unwind.

Speaker #1: We have already seen gross margins peak in June and reduce in July. We're effectively also seeing selling prices reduce alongside that. The first half also benefits from Nisbet synergies, which are analysed in the first half and therefore will not repeat in H2.

Richard Howes: We have already seen gross margins peak in June and reduce in July. We are effectively also seeing selling prices reduce alongside that. H1 also benefits from Nisbets synergies which annualize in H1 and therefore will not repeat in H2. Obviously, we have got the new business wins which we achieved in Q4 last year, which will annualize in H2, and we will continue to see ongoing higher variable costs linked to profit performance. Those together explain the reason why margins in H2 will be down year on year as opposed to up in H1.

Richard Howes: H1 also benefits from Nisbets synergies which annualize in H1 and therefore will not repeat in H2. Obviously, we have got the new business wins which we achieved in Q4 last year, which will annualize in H2, and we will continue to see ongoing higher variable costs linked to profit performance. Those together explain the reason why margins in H2 will be down year on year as opposed to up in H1.

Speaker #1: Obviously, we've got the new business wins, which we achieved in Q4 last year, which we'll analyse in the second half. And we'll continue to see ongoing higher variable costs linked to profit performance.

Speaker #1: Those factors together explain the reason why margins in the second half will be down year on year, as opposed to up in the first.

Speaker #3: Okay, let me take the M&A question. Obviously, we are operating in large, fragmented markets. We have about 1,300 targets in our database. We are the largest business in our field that consolidates these markets.

Frank van Zanten: Okay. Let me take the M&A question. We are operating in large fragmented markets. We have about 1,300 targets in our database. We are the largest business in our field that consolidate these markets. Sometimes uncertainty in markets can make people wait in selling their businesses. We certainly have seen that effect in the last 18 months. I would say the magic word in an acquisition strategy that Bunzl follows is discipline. We want to do the right things. We see an active pipeline, so we feel good about that. I also say, we always say champagne at the finish. I am not getting worried if we are not able to close an acquisition in December and it ends up to be January. We want to do the right things. We have seen years where we did GBP 100 million on acquisitions, build ons.

Speaker #3: Let's say, sometimes, uncertainty in markets can make people wait to sell their businesses. We certainly have seen that effect in the last 18 months.

Speaker #3: I would say the magic word in an acquisition strategy that Bunzl follows is discipline. We want to do the right things, and we see an active pipeline.

Speaker #3: So we feel good about that. But I'll also say, we always say, "champagne at the finish." I'm not getting worried if we are not able to close an acquisition in December and it ends up being January—we want to do the right things.

Frank van Zanten: I am not getting worried if we are not able to close an acquisition in December and it ends up to be January. We want to do the right things. We have seen years where we did GBP 100 million on acquisitions, build ons. We have seen years of GBP 500 million. So these things can be a bit lumpy. I am building this group for the long term. We have a massive opportunity. Our overall market shares are still relatively low in most markets, but we are leading, and I feel good about that. So, I hope that answers your question.

Speaker #3: We've seen years where we did $100 million on acquisitions, bolt-ons. We've seen years of $500 million. So these things can be a bit lumpy.

Frank van Zanten: We have seen years of GBP 500 million. So these things can be a bit lumpy. I am building this group for the long term. We have a massive opportunity. Our overall market shares are still relatively low in most markets, but we are leading, and I feel good about that. So, I hope that answers your question.

Speaker #3: But I'm building this group for the long term. We have a massive opportunity, and our overall market shares are still relatively low in most markets.

Speaker #3: But we are leading, and I feel good about that. So I hope that answers your question.

Speaker #4: Yeah, very clear.

Zach Akwa Yuti: Yeah. Very clear. Thank you both.

Speaker #3: Thank you both.

Speaker #2: Thank you. The next question is from Rory Mackenzie at UBS. Your line is now open.

Operator: Thank you. The next question is from Rory McKenzie from UBS. Your line is now open.

Rory McKenzie: Morning all, it's Rory here. Thanks very much for taking my questions.

Speaker #4: Morning all, it's Rory here. Thanks so much for taking my questions. Firstly, I just wanted to clarify the modelling of the tariff refunds. Is it effectively removing £70 million of revenues at a 0% operating margin?

Operator: Yeah.

Rory McKenzie: Firstly, I just wanted to clarify the modeling of the tariff refunds. Is it effectively removing GBP 70 million of revenues at a 0% operating margin? On what basis are you now guiding for FY or full year margins? In the presentation, you referred to a 7.3% margin in H1, but technically it's a 7.4% margin. How does that accounting change fit into the changed margin guidance language, please? Secondly, I had two questions about the inflation tailwinds. Just to follow up on that point you made on the guidance, Richard. If we attribute all of the 60 bps gross margin improvement to that inventory gain, then that's about a GBP 35 million gross benefit in H1. Why would that necessarily all reverse in H2?

Speaker #4: And then, on what basis are you now guiding for FY or full-year margins? I mean, in the presentation, you throughout referred to a 7.3% margin in H1.

Speaker #4: But technically, it's a 7.4% margin. So, how does that accounting change fit into the changed margin guidance language, please? And then secondly, I had two questions about the inflation tailwinds.

Speaker #4: Just to follow up on that point you made on the guidance, Richard, if we attribute all of the 60 bps gross margin improvement to that inventory gain, then that's about a £35 million gross benefit in H1.

Rory McKenzie: If we attribute all of the 60 bps gross margin improvement to that inventory gain, then that's about a GBP 35 million gross benefit in H1. Why would that necessarily all reverse in H2? I'm just not clear why it would be symmetrical, as I don't think prices have quite fallen in the same pattern as they rose. Finally, Frank, can you just talk about how you've seen customers respond to the inflation spike and what your teams are doing to try and manage this new environment? It sounds like volume sensitivity has been high, but at a group level, you've kept good volume momentum through H1.

Speaker #4: Why would that necessarily all reverse in H2? I'm just not clear why it would be symmetrical, as I don't think prices have quite fallen in the same pattern as they rose.

Rory McKenzie: I'm just not clear why it would be symmetrical, as I don't think prices have quite fallen in the same pattern as they rose. Finally, Frank, can you just talk about how you've seen customers respond to the inflation spike and what your teams are doing to try and manage this new environment? It sounds like volume sensitivity has been high, but at a group level, you've kept good volume momentum through H1. What do you think's been behind that? Thank you.

Speaker #4: And then finally, Frank, can you just talk about how you've seen customers respond to the inflation spike, and what your teams are doing to try and manage this new environment?

Speaker #4: It sounds like volume sensitivity has been high, but at a group level, you've kept good volume momentum through H1. So, what do you think's been behind that?

Rory McKenzie: What do you think's been behind that? Thank you.

Speaker #4: Thank you.

Speaker #1: So let me take the first two. On the accounting for the tariff refunds—so overall, what we're seeing here is we're expecting this to be, this refund that we received just before the half-year, to be repaid over time, with our expectation that quite a lot of this will be repaid in the second half.

Richard Howes: So let me take the first two. On the accounting for the tariff refunds. Overall what we're seeing here is we're expecting this refund that we received just before the half year to be repaid over time, with I would imagine quite a lot of this being repaid in the H2. As a consequence, we are reflecting a deduction against our reported revenue, our underlying revenue of 1.2%, and we are then making adjustments to cost of sales to effectively mean there's no profit impact on this adjustment. We do, as you'll have seen throughout the statement or in the financial statements themselves, obviously includes all of the refund in all of the areas where it should be.

Speaker #1: As a consequence, we are reflecting a deduction against our reported revenue our underlying revenue, of 1.2%. And we are then making adjustments to cost of sales to effectively mean this is a not there's no profit impact on this adjustment.

Speaker #1: We do, as you'll have seen throughout the statement or in the financial statements themselves, obviously include all of the refund in all of the areas where it should be.

Richard Howes: We do, as you'll have seen throughout the statement or in the financial statements themselves, obviously includes all of the refund in all of the areas where it should be. When we are looking at the key metrics, we have sought to adjust them to try and get back to what we believe is true trading, meaning not trying to show true revenue growth, and indeed, to your point, not to show actual operating margins which look higher than they really are. So including the refund, you will see that margins are at 7.4% reported. But when we take it out, actually, the real underlying margin is 7.3%.

Speaker #1: When we're looking at the key metrics, we've sought to adjust them to try and get back to what we believe is true trading, i.e., not trying to show true revenue growth.

Richard Howes: When we are looking at the key metrics, we have sought to adjust them to try and get back to what we believe is true trading, meaning not trying to show true revenue growth, and indeed, to your point, not to show actual operating margins which look higher than they really are. So including the refund, you will see that margins are at 7.4% reported. But when we take it out, actually, the real underlying margin is 7.3%. And we are forecasting forward on the same basis. So when we talk about margins around 7.6% for the full year, that would be excluding any impact of tariffs. On the inflation piece, look, our view is very much that we are already seeing both selling prices reduce, and obviously we are increasingly selling through higher priced inventory as we have gone through Q2 in particular, and sold through the pre-tariff inventory or the pre-price increase inventory.

Speaker #1: And indeed, to your point, not to show actual operating margins, which look higher than they really are. So, including the refund, you'll see that margins are at 7.4% reported.

Speaker #1: But when we take it out, actually, the real underlying margin is 7.3%. And when we're forecasting forward on the same basis, so when we talk about margins around 7.6% for the full year, that would be excluding any impact of tariffs.

Richard Howes: And we are forecasting forward on the same basis. So when we talk about margins around 7.6% for the full year, that would be excluding any impact of tariffs. On the inflation piece, look, our view is very much that we are already seeing both selling prices reduce, and obviously we are increasingly selling through higher priced inventory as we have gone through Q2 in particular, and sold through the pre-tariff inventory or the pre-price increase inventory.

Speaker #1: On the inflation piece, look, our view is very much that we are already seeing both selling prices reduce, and obviously, we're increasingly selling through higher-priced inventory as we've gone through Q2 in particular.

Speaker #1: And sold through the pre-tariff inventory—well, the pre–price increase inventory. So we do expect to see selling prices reduced. We are seeing that.

Richard Howes: We do expect to see selling prices reduce. We are seeing that, and we are seeing gross margins decline. As to the pattern of change, we saw these prices increase quite quickly during Q2. We are seeing prices come down quite quickly as well. And I think that talks to the fact that there is a heightened sensitivity to volumes in our manufacturer base, who are wanting to make sure they want to protect volumes and do not hold prices high for too long. We are also of the same mind. We want to make sure that we bring our prices down appropriately, protecting volume.

Speaker #1: And we're seeing gross margins decline. As to the pattern of change, we saw these prices increase quite quickly during Q2. We are seeing prices come down quite quickly as well.

Speaker #1: And I think that speaks to the fact that there is a heightened sensitivity to volumes in our manufacturer base, who are wanting to make sure they don't—they want to protect volumes and don't hold prices high for too long.

Speaker #1: We're also of the same mind. We want to make sure that we bring our prices down appropriately, protecting volume.

Speaker #3: Yeah, just in terms of how our teams do, I think Bunzl's management teams around the world are very effective in terms of managing margins.

Frank van Zanten: Yeah. Just in terms of how our teams do, I think Bunzl is, the management teams around the world are very effective in terms of managing margins. It is a bit different than it was in COVID, where there were strong availability issues. This is a bit more like oil price related plastics. We have seen some big increases in disposable glove, for instance, as a category. These things change also. We run what we call an overwatch group, where we have the 150 top buyers across the world having weekly calls, monitoring the biggest product groups. A real big benefit of being part of Bunzl, to navigate all these things and ultimately make sure that we are doing the right thing on the margins, but also make sure that we are very focused on retaining and growing volumes as well.

Speaker #3: It's a bit different than it was during COVID, where there were strong availability issues. This is a bit more like oil price-related, plastics.

Speaker #3: We've seen some big increases in disposable gloves, for instance, as a category. These things change also. We run what we call an Overwatch Group, where we have the 150 top buyers across the world having weekly calls, monitoring the biggest product groups.

Frank van Zanten: A real big benefit of being part of Bunzl, to navigate all these things and ultimately make sure that we are doing the right thing on the margins, but also make sure that we are very focused on retaining and growing volumes as well.

Speaker #3: Real big benefit of being part of Bunzl to navigate all these things. And ultimately make sure that we're doing the right thing on the margins, but also make sure that we are very focused on retaining and growing volumes as well.

Speaker #4: Understood. Thank you both.

Rory McKenzie: Understood. Thank you both.

Speaker #2: Thank you. The next question is from Will Kirkness from Bernstein. Your line is now open.

Operator: Thank you. The next question is from Will Kirkness from Bernstein. Your line is now open.

Speaker #4: Good morning. Thanks. I just wanted to, sorry, follow up on the margins, and then I had a couple of other questions. So I think you said your margin assumptions are largely unchanged from the first-half pre-close.

Will Kirkness: Morning. Thanks. I just wanted to, sorry, follow up on the margins, and then I had a couple of other questions. I think you said your margin assumptions are largely unchanged from the H1 pre-close, but if we looked at oil pricing, which should feed into that plastics component, I mean, they are up sort of 20%, 25%. I appreciate you have probably got prices coming back a bit, and then we have the dynamics with your suppliers. Is there not a view that there is potentially a resurgence in pricing that happens and maybe flows through a little bit later? I guess it is maybe a little bit early, but how would that feed into a view on 2027 margins?

Speaker #4: But if we look at oil pricing, which should feed into that plastics component, I mean, they're up sort of 20–25%. So, I just appreciate you've probably got prices coming back a bit, and then we have the dynamics with your suppliers.

Speaker #4: But is there not a view that there's potentially a resurgence in pricing that happens and maybe flows through a little bit later? I guess it may be a little bit early, but how would that feed into a view on '27 margins?

Will Kirkness: I guess it is maybe a little bit early, but how would that feed into a view on 2027 margins? Linked to that, I guess thinking about margins longer term, is flat the right way to think about that, or does mix, own brand, warehouse consolidation, all the stuff you talked about, drive longer term accretion? My final question was just on North America. I think in the presentation Bunzl Distribution saw underlying revenue growth of 8%. Does that mean the rest of the business was about flat? Thank you.

Will Kirkness: Linked to that, I guess thinking about margins longer term, is flat the right way to think about that, or does mix, own brand, warehouse consolidation, all the stuff you talked about, drive longer term accretion? My final question was just on North America. I think in the presentation Bunzl Distribution saw underlying revenue growth of 8%. Does that mean the rest of the business was about flat? Thank you.

Speaker #4: And then, linked to that, I guess thinking about margins longer term—is flat the right way to think about that, or does mix, own brand, warehouse consolidation, and the support stuff you've talked about drive longer-term accretion?

Speaker #4: And then my final question was just on North America. I think in the presentation, distribution saw underlying revenue growth of 8%. So, does that mean the rest of the business was about flat?

Speaker #4: Thank you.

Speaker #1: Yeah, let me take the margin. The short-term margin point—well, look, I hear what you're saying. I think despite the fact that we've seen, when we did our pre-close, oil prices dropped significantly.

Richard Howes: Yeah. Let me take the short-term margin point. Well, look, I hear what you are saying, Will. I think despite the fact that we have seen. When we did our pre-close, oil prices dropped significantly, and on the day, I think we were back to pre-war prices at the time. Subsequent to that, we have seen oil prices rise again. But actually what we have seen on the ground is that our input prices of particular categories and also our selling prices are starting to reduce. So even though we do see higher levels, we are certainly not seeing it at the moment. All we are seeing is actually prices reduce. Is there a potential for resurgence? Look, we do not think so. It is not what we are seeing.

Speaker #1: And on the day, I think we were back to pre-war prices at the time. Subsequent to that, we've seen oil prices rise again. But actually, what we've seen on the ground is that our input prices—across particular categories—and also our selling prices are starting to reduce.

Speaker #1: So even though we still do see higher levels, we're certainly not seeing it at the moment. All we're seeing is actually prices reduced.

Speaker #1: Is there a potential for resurgence? Look, we don't think so. It's not what we're seeing. If it did happen, then yes, presumably there would be some level of price increases, albeit it's often harder to put prices up if this is just a very volatile movement up and down.

Richard Howes: Look, we do not think so. It is not what we are seeing. If it did happen, then yes, presumably there would be some level of price increases, albeit it is often harder to put prices up if this is just a very volatile movement up and down short term, and it is obviously being played out very publicly, which would make that harder. I think the right assumption is the assumption we are guiding to, which is the margins, selling prices and margins decline. We see lower margins H2 than the second half of last year, and that provides a sensible exit rate when looking at 2027.

Richard Howes: If it did happen, then yes, presumably there would be some level of price increases, albeit it is often harder to put prices up if this is just a very volatile movement up and down short term, and it is obviously being played out very publicly, which would make that harder. I think the right assumption is the assumption we are guiding to, which is the margins, selling prices and margins decline. We see lower margins H2 than the second half of last year, and that provides a sensible exit rate when looking at 2027. As to margins for the longer term, we do not give margin guidance in the longer term. What we do see is that we are very focused on making sure that profit growth, profits improve and grow.

Speaker #1: Short term, and this is obviously being played out very publicly, which would make that harder. So I think the right assumption is the assumption we're guiding to, which is that selling prices and margins decline. We see lower margins in H2 than in the second half of last year.

Speaker #1: And that provides a sensible exit rate when looking at 2027. As to margins for the longer term—look, we don't give margin guidance in the longer term.

Richard Howes: As to margins for the longer term, we do not give margin guidance in the longer term. What we do see is that we are very focused on making sure that profit growth, profits improve and grow. As we said, I think on a number of occasions, we see 2026 as a mechanism or a base from which we think we can grow profits organically and inorganically. There are plenty of things, actions we take, you mentioned some of them, to make sure that our margins in the longer term are either progressed or indeed are protected. We need to grow volume, and we do see further potential for own brand growth.

Speaker #1: But what we do see is that we're very focused on making sure that profits improve and grow. And as we’ve said, I think on a number of occasions, we see 2026 as a mechanism or a base from which we think we can grow profits organically and inorganically.

Richard Howes: As we said, I think on a number of occasions, we see 2026 as a mechanism or a base from which we think we can grow profits organically and inorganically. There are plenty of things, actions we take, you mentioned some of them, to make sure that our margins in the longer term are either progressed or indeed are protected. We need to grow volume, and we do see further potential for own brand growth. Of course, acquisitions will tend to be a net positive for us on the inorganic side. There are plenty of routes for us to protect, grow margins, but our focus is mainly on growing profits from a base that 2026 is establishing. Sorry, Frank.

Speaker #1: There are plenty of actions we take. You mentioned some of them. To make sure that our margins in the longer term are either progressed or, indeed, protected.

Speaker #1: We need to grow volume. We do see further potential for own brand growth. And, of course, acquisitions tend to be a net positive for us on the inorganic side.

Richard Howes: Of course, acquisitions will tend to be a net positive for us on the inorganic side. There are plenty of routes for us to protect, grow margins, but our focus is mainly on growing profits from a base that 2026 is establishing. Sorry, Frank.

Speaker #1: So there are plenty of routes for us to protect and grow margins, but our focus is mainly on growing profits from a base that 2026 is establishing.

Speaker #1: And sorry, Frank.

Speaker #3: Yeah, I think the question on the volume growth, North America. So, North America has been leading the pack, but I'm actually quite pleased that we have seen broad-based volume growth in all the regions.

Frank van Zanten: Yeah. I think the question on volume growth, North America. North America has been leading the pack, but actually we are quite pleased that we have seen a broad-based volume growth in all the regions. Inflation was strongest in North America and in Continental Europe, especially in Q2. What makes me very happy is, actually in the business where we have seen some of the execution issues, that we are now seeing there the strongest growth. Bunzl Distribution is leading the pack, which is clearly something we have been working very hard on, and to see that it is happening there is fantastic to see.

Speaker #3: Inflation was strongest in North America, and in continental Europe, especially in the second quarter. But what makes me very happy is actually in the business where we had—we have seen some of the execution issues—that we are now seeing there the strongest growth.

Speaker #3: So Bunzl Distribution is leading the pack, which is clearly something we've been working very hard on. To see that it's happening there is fantastic to see.

Speaker #1: And just on the point about growth in North America, obviously distribution growth of 8% is very strong and accounts for a very significant proportion of the total.

Richard Howes: Just on the point on growth in North America. Obviously, distribution growth of 8% is very strong and accounts for a very significant proportion of the total. We do have some parts of North America which have been under pressure. Our businesses in Mexico Retail, and in our Convenience Store business, we have also seen market softness. Our Convenience Store business has also lost volume. There has been a relatively mixed picture in some areas, but our distribution business has been very positive.

Speaker #1: We do have some parts of North America which have been under pressure. Our businesses in Mexico, retail, and in our convenience store business have also seen market softness.

Speaker #1: Our convenience store business has also lost volume, so there has been a relatively mixed picture in some areas. But our distribution business has been very positive.

Speaker #4: Great. Thank you very much.

Will Kirkness: Great. Thank you very much.

Speaker #5: Thank you. The next question is from David Brockton from Deutsche Bank. Your line is now open.

Operator: Thank you. The next question is from David Brockton from Deutsche Bank. Your line is now open.

David Brockton: Good morning. I wanted to pick up where that last question ended on the US distribution business and the 8% underlying growth you have seen there. You rightly caution that some of that growth reflects the annualization of wins from the prior year. Can you just touch on what the outlook is for similar volume wins to what you secured in Q4 of last year, either with new categories of existing customers or new customers? How should we think about the sustainable growth opportunity for the distribution business going forward on an organic basis? Finally related to that, do you feel that you have now got that sales channel for local customers fully restored and embedded in the business? Thank you.

Speaker #4: Good morning. I wanted to pick up where that last question ended, on the US distribution business and the 8% underlying growth. You said there, you rightly caution that some of that growth reflects the annualization of wins from the prior year.

Speaker #4: Can you just touch on what the outlook is for similar volume wins to what you secured in Q4 of last year, either with new categories with existing customers, or new customers?

Speaker #4: And how should we think about this as a sustainable growth opportunity for the distribution business going forward on an organic basis? And sorry, just a final question related to that—do you feel that you've now got that sales channel for local customers fully restored and embedded in the business?

David Brockton: Finally related to that, do you feel that you have now got that sales channel for local customers fully restored and embedded in the business? Thank you.

Speaker #4: Thank you.

Speaker #3: Yeah. So, well, basically, I think what is fundamental is to see that the distribution business—let's call it the machine—is operating in terms of on-time, in-full.

Frank van Zanten: Well, basically, I think what is fundamental is to see that the distribution business as a quality machine is operating in terms of On-Time In-Full. I would say, in distribution, there is three things important: On-Time In-Full, On-Time In-Full, and On-Time In-Full. A bit like property, location, location. Agility has returned and the motivation of the team is very effective. I think that is something that should be contributing everywhere. At the same time, we see that there is some disruption in the market with some competitors that are going to change processes or have a very difficult time. We believe that with a bit of focus, that we, longer term, should be benefiting from that.

Speaker #3: I would say, in distribution, there are three things that are important: on-time in full, on-time in full, and on-time in full—a bit like property: location, location, location.

Speaker #3: Agility has returned, and the motivation of the team is very effective. So I think that is something that should be contributing everywhere. At the same time, we see that there's some disruption in the market, with some competitors that are going to change processes or have a very difficult time.

Speaker #3: We believe that with a bit of focus, we should benefit from that over the longer term. So, let's say, having that business go from struggling to now being in a position to continue to focus on growing the business is obviously very important.

Frank van Zanten: We believe that with a bit of focus, that we, longer term, should be benefiting from that. So having that business struggling to now in a position to continue to focus on growing the business is obviously very important. The sales channel you were referring to in terms of the local business. Yes, we spend a lot of time on that particular part of the business. People locally are now able to make local decisions on price exceptions. We have that visibility on the true cost prices. They can bring in stock from the suppliers they prefer. They obviously benefit from the national own brand program.

Frank van Zanten: So having that business struggling to now in a position to continue to focus on growing the business is obviously very important. The sales channel you were referring to in terms of the local business. Yes, we spend a lot of time on that particular part of the business. People locally are now able to make local decisions on price exceptions. We have that visibility on the true cost prices. They can bring in stock from the suppliers they prefer. They obviously benefit from the national own brand program. Certainly, the last few times I was in the US, and when I am in the US, I always spend time with the sales teams because they give me the direct feedback from what customers are thinking.

Speaker #3: The sales channel you were referring to, in terms of the local business—yes, we spend a lot of time on that particular part of the business.

Speaker #3: People locally are now able to make local decisions on price exceptions. We have that visibility on the true cost prices. They can bring in stock from the suppliers they prefer.

Speaker #3: They obviously benefit from the national own brand program, so certainly the last few times I was in the US—and when I am in the US, I always spend time with the sales teams—because they give me direct feedback on what customers are thinking.

Frank van Zanten: Certainly, the last few times I was in the US, and when I am in the US, I always spend time with the sales teams because they give me the direct feedback from what customers are thinking. I have visited a lot of customers, spend a lot of time with our largest food redistribution customers, and you just feel that there is a very positive sentiment around what is happening. People are motivated. Yeah, I think we are in a good position. There are always things you can fine-tune, but I think the machine is working.

Frank van Zanten: I have visited a lot of customers, spend a lot of time with our largest food redistribution customers, and you just feel that there is a very positive sentiment around what is happening. People are motivated. Yeah, I think we are in a good position. There are always things you can fine-tune, but I think the machine is working. I think the focus is on growing the business and sometimes with the bigger accounts, like in grocery or national customers, that can also be a bit lumpy. Sometimes you win and then sometimes it takes a while, and then you bring something else in. But I think, let's say the broad-based organization is functioning, is set up for growth, and ultimately, that should help us develop the business in a positive way.

Speaker #3: I've visited a lot of customers and spent a lot of time with our largest food redistribution customers, and you just feel that there's a very positive sentiment around what is happening.

Speaker #3: People are motivated. So, yeah, I think we're in a good position. There are always things you can fine-tune, but I think the machine is working.

Speaker #3: I think the focus is on growing the business. And sometimes, with the bigger accounts—like in grocery or national customers—that can also be a bit lumpy.

Frank van Zanten: I think the focus is on growing the business and sometimes with the bigger accounts, like in grocery or national customers, that can also be a bit lumpy. Sometimes you win and then sometimes it takes a while, and then you bring something else in. But I think, let's say the broad-based organization is functioning, is set up for growth, and ultimately, that should help us develop the business in a positive way.

Speaker #3: Sometimes you win, and then sometimes it takes a while, and then you bring something else in. But I think, let's say, the broad-based organization is functioning, is set up for growth, and ultimately that should help us develop the business in a positive way.

Speaker #4: Thank you.

Richard Howes: Thank you.

David Brockton: Thank you.

Speaker #5: Thank you. As a reminder, to ask a question, please press Start followed by 1 on your telephone keypad now. We have a question from Tim Ramsgill from Bank of America.

Operator: Thank you. As a reminder, to ask a question, please press star followed by 1 on your telephone keypad now. We have a question from Tim Ramskill from Bank of America. Your line is now open.

Speaker #5: Your line is now open.

Speaker #4: Thanks. Good morning, gents. A few questions from me, please. I'll start with, again, some of the dynamics around growth. I guess you asked a moment ago about whether the rest of the US business, ex-distribution, is delivering any growth.

Tim Ramskill: Thanks. Good morning, gents. A few questions from me, please. I will start with, again, some of the dynamics around growth. I guess you asked a moment ago about whether the rest of the US business ex distribution is delivering any growth. It does not look like it is to me. I guess your growth rates outside of North America are somewhere between 1% to 2%, which again, given the backdrop of inflation being a feature everywhere, I am just interested in your thoughts as to whether those growth rates are acceptable to you, whether you think there is improvement potential. Perhaps you have not spent enough time talking about the other geographies. Richard, as you pointed out in your pre-prepared remarks, the comps are obviously going to be a bit more challenging in the H2 of this year.

Speaker #4: It doesn't look like it is to me. And then I guess your growth rates outside of North America are somewhere between 1% to 2%, which again, given the backdrop of inflation being a feature everywhere, I'm just interested in your thoughts as to whether those growth rates are sort of acceptable to you—whether you think there's improvement potential. Perhaps you haven't spent enough time talking about the other geographies.

Tim Ramskill: Perhaps you have not spent enough time talking about the other geographies. Richard, as you pointed out in your pre-prepared remarks, the comps are obviously going to be a bit more challenging in the H2 of this year. Indeed, now we can see that the comps going into the H1 of next year are going to get more challenging still. Just your thoughts, early as they might be, on the early shape of 2027. The last one, if I can, just on tariffs, just to help bring us all up to speed on all the different moving parts. I guess part one, do you think this is all done now? Is there any residual effect you might see in the H2?

Speaker #4: And then, Richard, as you pointed out in your pre-prepared remarks, the comps are obviously going to be a bit more challenging in the second half of this year.

Speaker #4: But indeed, now we can see that the comps going into the first half of next year are going to get more challenging still. So, just your thoughts—early as they might be—on the early shape of 2027.

Tim Ramskill: Indeed, now we can see that the comps going into the H1 of next year are going to get more challenging still. Just your thoughts, early as they might be, on the early shape of 2027. The last one, if I can, just on tariffs, just to help bring us all up to speed on all the different moving parts. I guess part one, do you think this is all done now? Is there any residual effect you might see in the H2? Just how does it work through the supply chain in terms of these tariff rebates to your customers, from your suppliers to you, et cetera? Just interested in how that all flows and how it impacts on the cash flows. Thank you.

Speaker #4: And then the last one, if I can, just on tariffs—just to sort of help bring us all up to speed on all the different moving parts.

Speaker #4: I guess, part one: do you think this is all done now? Is there any sort of residual effect you might see in the second half?

Speaker #4: And then, just how does it work through the supply chain in terms of these tariff rebates—to your customers, from your suppliers to you, etc.?

Tim Ramskill: Just how does it work through the supply chain in terms of these tariff rebates to your customers, from your suppliers to you, et cetera? Just interested in how that all flows and how it impacts on the cash flows. Thank you.

Speaker #4: I'm just interested in how that all flows and how it impacts the cash flows. Thank you.

Speaker #3: Can you take this, Richard?

Frank van Zanten: Can you take this, Richard?

Richard Howes: Yes. Look, I think the growth across the group, we are actually pretty pleased with the fact in the H1 of this year, we are seeing not only good volume growth in North America, but actually volume growth across all of the business areas that we operate in. There is no doubt there has been an inflation benefit. I think as Frank talked to on the call these price increases do not put themselves up. Our sales teams have to manage that process, and I think they have done that very effectively. As to, is this an acceptable level of growth? Well, look, we also, and Frank covered it in his section, we think Bunzl should grow volumes by real GDP in the markets that we operate in. Real GDP at this point is probably quite low in many of our markets.

Speaker #2: Yes, so look, I think the growth across the group—we're actually pretty pleased with the fact that, in the first half of this year, we're seeing not only good volume growth in North America, but also volume growth across all of the business areas that we operate in.

Speaker #2: There's no doubt there has been an inflation benefit. I think it was Frank I talked to on the call. These price increases don't put themselves up.

Speaker #2: Our sales teams have to manage that process, and I think they've done that very effectively. As to whether this is an acceptable level of growth…

Speaker #2: Well, look, we also—and Frank covered it in his section—we think bonds all should grow volumes, while real GDP in the markets that we operate in.

Richard Howes: Well, look, we also, and Frank covered it in his section, we think Bunzl should grow volumes by real GDP in the markets that we operate in. Real GDP at this point is probably quite low in many of our markets. But nonetheless, I think we essentially service the activity in the economy. Not necessarily some of the more peaky CapEx type spend in data centers, for example, but general activity on the high street or on Main Street is what we do service, and that would lend itself to being in line with real GDP. I think a separate question is do you think there is going to be ongoing inflation in our markets?

Speaker #2: Now, real GDP at this point is probably quite low in many of our markets, but nonetheless, I think we essentially service the activity in the economy.

Richard Howes: But nonetheless, I think we essentially service the activity in the economy. Not necessarily some of the more peaky CapEx type spend in data centers, for example, but general activity on the high street or on Main Street is what we do service, and that would lend itself to being in line with real GDP. I think a separate question is do you think there is going to be ongoing inflation in our markets? I mean, certainly since COVID, we have seen a lot of inflation, the post-COVID inflation, and now of course, one linked to the Ukraine war. If you believe there is more net inflation around, then that is also additive to our growth and will be part of what we would see as our growth algorithm alongside of course, an ability to grow via acquisition and consolidate these highly fragmented markets. So that is the first question.

Speaker #2: Not necessarily all, some of the more peaky, CapEx-type spend in data centers, for example, but general activity on the high street or in mainstream is what we do service.

Speaker #2: And that would lend itself to being in line with real GDP. But I think a separate question is, do you think there's going to be ongoing inflation in our markets?

Speaker #2: I mean, certainly since COVID, we've seen a lot of inflation—the post-COVID inflation—and now, of course, one linked to the Iran War. If you believe there's more net inflation around, then that's also additive to our growth.

Richard Howes: I mean, certainly since COVID, we have seen a lot of inflation, the post-COVID inflation, and now of course, one linked to the Ukraine war. If you believe there is more net inflation around, then that is also additive to our growth and will be part of what we would see as our growth algorithm alongside of course, an ability to grow via acquisition and consolidate these highly fragmented markets. So that is the first question.

Speaker #2: And would be part of what we would see as our growth algorithm, alongside, of course, an ability to grow via acquisition and consolidate these highly fragmented markets.

Speaker #2: So that's the first question. On comps in 2026, H2, and exit rates into 2027, look, we do see the annualization that we've talked about of that new business wins in North America.

Richard Howes: On comps in 2026 H2 and exit rates into 2027. Look, we do see the annualization that we have talked about of that new business wins in North America. It is absolutely fair to say that all of our businesses around the world are very active in reviewing pipelines, looking to grow the top line, and I think we are seeing good levels of success. I mean, the Adidas initiative that Frank talked about is an interesting organic opportunity for us with a very, very well-respected brand. Now, I do not think that changes really H2 trends and into 2027, but nonetheless, it is a real focus for our businesses. As we exit the year with revenues lower than they have been during the year, particularly in volumes, yes, I do think there is an impact on 2027. We are not in a position to give any sense for 2027 at this stage.

Speaker #2: It is absolutely fair to say that all of our businesses around the world are very active in reviewing pipelines and looking to grow the top line.

Speaker #2: And I think we're seeing good levels of success. I mean, the Adidas initiative that Frank talked about is an interesting organic opportunity for us with a very, very well-respected brand.

Speaker #2: Now, I don't think that changes the second half trends and into 2027, but nonetheless, it is a real focus for our businesses. But as we exit the year with revenues lower than they have been during the year, particularly in volumes, yes, I do think there's an impact on 2027.

Richard Howes: As we exit the year with revenues lower than they have been during the year, particularly in volumes, yes, I do think there is an impact on 2027. We are not in a position to give any sense for 2027 at this stage. We will come back to that later in the year. But I think shape-wise, there is some impact. On tariffs, how is this going to work in H2? Look, as you would appreciate, this is uncharted territory for most people. I do not think anybody has really ever seen the US government handing back this sort of money to suppliers. We do not see any further tariff refunds coming. If they are, they will be very small.

Speaker #2: We're not in a position to give any sense for 2027 at this stage. We'll come back to that later in the year. But I think, shape-wise, there is some impact.

Richard Howes: We will come back to that later in the year. But I think shape-wise, there is some impact. On tariffs, how is this going to work in H2? Look, as you would appreciate, this is uncharted territory for most people. I do not think anybody has really ever seen the US government handing back this sort of money to suppliers. We do not see any further tariff refunds coming. If they are, they will be very small. I think we have had the lion's share of it. Our businesses litigated early in the process to make sure that we were towards the front of the queue, and that is how it has turned out. As to how it happens with the supply chain, the supply chain point is really us to customers. We will have, and are having conversations with customers around the returning these refunds.

Speaker #2: And on tariffs, how’s this going to work in the second half? Look, as you’d appreciate, this is uncharted territory for most people. I don’t think anybody’s really ever seen the US government handing back this sort of money to suppliers.

Speaker #2: We don't see any, but if there are, they'll be very small. I think we've had the lion's share of it. Our business is litigated early in the process to make sure that we were towards the front of the queue.

Richard Howes: I think we have had the lion's share of it. Our businesses litigated early in the process to make sure that we were towards the front of the queue, and that is how it has turned out. As to how it happens with the supply chain, the supply chain point is really us to customers. We will have, and are having conversations with customers around the returning these refunds. Look, we will know more as we go through H2, and we will keep the market updated.

Speaker #2: And that's how it's turned out. As to how it happens with the supply chain, I mean, really, it's not really a supply chain point; it's really us to customers.

Speaker #2: We will have, and are having, conversations with customers around the returning of these refunds. But look, we will know more as we go through the second half, and we'll keep the market updated.

Richard Howes: Look, we will know more as we go through H2, and we will keep the market updated.

Speaker #4: If you've had the cash and you expect the cash mostly to flow out in the second half, I think is what you said on that point.

Tim Ramskill: You've had the cash, and you expect the cash mostly to flow out in the H2, I think, is what you said on that point.

Speaker #2: Yes. Look, that's our sense, Tim. I think let's see how it goes. But yes, I think we'll be playing a backup for a lot of it in the second half.

Richard Howes: Well, that's our sense, Tim. I think let's see how it goes. But yes, I think we'll be paying it back up, a lot of it, in the H2.

Speaker #4: Okay, great. If I can be really cheeky, there are probably about six parts to my first question, but just on distribution, more broadly in North America—where are you guys at relative to the high watermarks?

Tim Ramskill: Okay, great. If I can be really cheeky, there's probably about six parts to my first question, but just on distribution more broadly in North America, where are you guys at relative to the high water marks? In other words, how much recovery potential does the business still have?

Speaker #4: In other words, how much recovery potential does the business still have?

Speaker #3: Yeah. So what I said is, if we really focus on the fundamental issues we had in the business—and just to put it in context, this is a $5 billion business.

Frank van Zanten: Yeah. What I said is if we really focus on the fundamental issues we had in the business and just to put in context, this is a $5 billion business. The change process we went through was never going to be easy. It's a fundamental change. Yes, we had some issues, but we fixed them relatively quickly. We have focused on the key components. They are operating now very well. I would say that I think the machine operates well. I think like in every business, there are always areas where you can still fine-tune it. I think the focus now is on growth, on winning back. Sometimes you can't win back what you have lost, but you win back something else, or other categories or newer or newer customers or newer types of customers.

Speaker #3: The change process we went through was never going to be easy. It's a fundamental change. So, yes, we had some issues, but we fixed them relatively quickly and have focused on the key components.

Speaker #3: They are operating now very well. So I would say that I think the machine operates well. I think, like in every business, there are always areas where you can still fine-tune it.

Speaker #3: I think the focus now is on growth, on winning back. Sometimes you can't win back what you have lost, but you win back something else, or other categories, or newer customers, or newer types of customers.

Frank van Zanten: Sometimes you can't win back what you have lost, but you win back something else, or other categories or newer or newer customers or newer types of customers. We are in this phase of the business is operating well, and there is more focus on growth and opportunities in the markets. I assume in the next couple of years, we will see the results of that coming through.

Speaker #3: So, we're in this phase where the business is operating well, and there is more focus on growth and opportunities in the markets. I assume, in the next couple of years, we will see the results of that coming through.

Frank van Zanten: We are in this phase of the business is operating well, and there is more focus on growth and opportunities in the markets. I assume in the next couple of years, we will see the results of that coming through.

Speaker #4: Great, thanks, Ryan. Frank, thanks. Richard.

Tim Ramskill: Great. Thanks, Frank. Thanks, Richard.

Speaker #1: Thank you. We have no further questions, so I'd like to hand back to Frank for closing remarks.

Operator: Thank you. We have no more further questions, so I would like to hand back to Frank for closing remarks.

Speaker #4: Thank you very much for attending our 2026 half-year results presentation. I hope you have a good day.

Frank van Zanten: Thank you very much for attending our 2026 H1 results presentation. I hope you have a good day.

Operator: This concludes today's call. Thank you for joining. You may now disconnect your line.

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Q2 2026 Bunzl PLC Earnings Call

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