Brambles cost focus as Recall float looms
Brambles has launched a thorough review of overheads with the spin-off of its Recall documents handling business as it seeks to drive return on capital to 20 per cent over the next five years.
The return on capital is around 15 per cent at present.
Recall Holdings is to list on Tuesday on the Australian Stock Exchange, after recent shareholder approval.
Frustrated with its earlier attempts to sell this business, Brambles decided earlier this year to give the business to its shareholders.
The sale now puts renewed focus on the main pallets logistics business globally.
"We are absolutely committed to getting costs out of the business," the chief executive, Tom O'Gorman told analysts on Monday.
Work is already advanced on standardising a series of finance division activities.
Additionally, it is now working on human relations and information technology across the group's sprawling spread of operations globally.
Brambles is working with US company Genpact in a bid to reduce costs across these functions, which have traditionally been done locally, although it is now seeking to streamline these processes across the business, Mr O'Gorman said.
Reversing the trend of most companies, Brambles has flagged a stronger first-half profit when compared with the second half, while leaving unchanged its full-year profit guidance.
It earlier flagged an underlying profit of $US930-965 million for the full year to June, which is a rise of 4-8 per cent.
It said the macroeconomic environment is expected to see flat growth in major economies amid ongoing cost pressures.
In the September quarter, Brambles reported sales of $US1.31 billion in its pooling division, up 7 per cent.