Bunzl, a distributor of non-resale goods including food packaging, safety equipment, and cleaning products, continues to demonstrate resilience amid persistent high inflation that is challenging many FTSE 100 companies. The firm’s ability to transfer rising input costs onto customers has supported its financial performance in recent months.

In its latest third-quarter trading update, Bunzl reported a 3.7 percent increase in revenue, partly driven by price adjustments. This follows a strong first half of the year, where the company achieved a 30 basis point improvement in its operating profit margin, reaching 7.3 percent. As a result, Bunzl revised its financial guidance upward for the full year.

Established in 1854 by Moritz Bunzl in Slovakia, the company has grown substantially, now holding a market capitalization of £9.1 billion, making it the 56th-largest listed company in the UK. While the United Kingdom contributes approximately 14 percent of its sales, North America remains its dominant market, accounting for around 53 percent of annual revenue. Bunzl supplies a broad range of sectors, from retail and care homes to hotels and commercial food grocers, supported by an extensive history of acquisitions—over £6 billion spent on more than 230 transactions since 2004.

The firm’s earnings per share (EPS) are forecast to increase by 6 percent in the upcoming financial year, roughly matching the typical growth rate of the broader index. However, this could become relatively attractive if sustained elevated inflation continues to pressure profit margins across other FTSE 100 companies. Inflation in Bunzl’s key markets, particularly the U.S., is expected to remain high in the near term despite Federal Reserve efforts to reach a 2 percent target by 2029. The Fed has missed this goal for 67 consecutive months, and further delays could arise.

Bunzl’s capacity to effectively pass on costs to its customers may provide a defensive advantage amid these inflationary challenges. Its valuation supports this view, trading at a historical price-to-earnings ratio of 16.1—below the FTSE 100 index average of 17.9—indicating potential for an upward re-rating. Additionally, with a dividend yield of 2.6 percent, the company appears positioned to deliver total returns that could outperform the wider market.

The firm is engaged in a £500 million share buyback program set to continue until next September and has recently completed several smaller acquisitions. Its financial health supports ongoing expansion through mergers and acquisitions, with a net debt-to-equity ratio of 74 percent reported in June and operating profits covering net interest costs 5.8 times in the first half of the year. These metrics suggest Bunzl is well equipped to navigate economic and geopolitical uncertainties that could introduce volatility in the short term.

Despite an 18 percent share price increase over the past six months—outperforming the FTSE 100 by 15 percentage points—Bunzl still offers value relative to the broader index. Its consistent EPS growth prospects amid persistent inflation, sturdy financial position, and potential M&A catalysts contribute to an outlook favoring continued index outperformance.