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American gains help Brambles

22 Feb 2013 THE AGE - PHILIP WEN



GLOBAL logistics company Brambles has reported a 26 per cent rise in first-half profit after winning new customers in North America despite the region's economic weakness.

The world's largest supplier of pallets grew its net profit for the six months to December 31 from $US239.5 million to $US302.5 million. Underlying profit rose 7 per cent to $US490 million.

Brambles chief executive Tom Gorman said the result reflected the strength in the group's established operations and its ability to deliver profit growth through expansion and diversification. "The continued growth and improved efficiency of the Americas region of our pallets segment, despite only moderate improvement in economic conditions to date, is particularly pleasing," he said.

Mr Gorman said the company expected to report an underlying profit for the full year of about $US1.05 billion. It declared an interim dividend of 13.5¢ a share, 30 per cent franked, up half a cent from last year, payable on April 11.

Shares in Brambles defied a wide selloff in the broader market, gaining 8¢ to $8.59. This was despite its net profit coming in slightly under consensus analyst estimates of $US326.3 million.

Brambles shares are up nearly 40 per cent this financial year and are trading at their highest levels since the global financial crisis.

The company's core business is its "pooling solutions", or the distribution and collection of pallets, crates and containers to transport goods in bulk quantities, provided through its CHEP and IFCO brands. Pallet sales in the Americas account for about a third of revenue.

It also owns the Recall document management business, having aborted attempts to sell the business last year after failing to generate enough interest.

Brambles grew its operating profit in the Americas by 23 per cent, and in Europe, Middle East and Africa by 11 per cent on a constant currency basis. Its reusable plastic containers division also delivered strong profit gains due to cost management, but fell short of its sales growth target.

"The benefits of our increasing scale will enable us to continue to improve profitability as we expand," Mr Gorman said.

Brambles also said it would simplify its organisation structure, as it continued to integrate its IFCO acquisition.