British business supplies distributor Bunzl on Tuesday said that low prices, especially in continental Europe, would have a 'slight impact' on its annual profit, sending its shares down more than 5%.
Bunzl has been balancing sales declines in the US, a key market, by raising prices for daily-use items such as stationery and food packaging, but prices in Europe have remained soft.
The company did not go into detail on the impact on profit but said in a statement that lower prices in the fourth quarter looked 'more persistent than previously anticipated.'
Bunzl said it expected group revenue for the year to be between 0% and 1% lower compared with last year at actual exchange rates, and 3% higher at constant exchange rates.
'It (Bunzl) makes a small margin on supplying products, but a deflationary environment can act as a headwind if it has already bought a lot of stock at higher prices and has to sell them for less than originally expected,' said investment firm AJ Bell.
Bunzl, a supplier of everything from stationery to food packaging, was the top percentage loser on London's benchmark index .FTSE, with its shares down 5% at 3,380 pence at 0842 GMT.
Analysts at JP Morgan estimated that Bunzl's fourth quarter organic growth was around 1%, below JPM's expectations of 3%.
Bunzl has been expanding its business through acquisitions and forecast 'robust' revenue growth for 2025, supported by its recently acquired businesses.
The company also announced share buybacks of £200 million (€190.5 million) for next year.
