Brambles resolves deal with Wal-Mart

Brambles' shares gained 24, or 3.3%, to close at $7.59, after it announced a formal agreement to continue supplying CHEP pallets to Wal-Mart's logistics network.

The deal will have a limited financial impact, costing Brambles $US5 million ($A7.28million) a year from 2009-10 on top of the previously announced one-off cost of $US30million .

The uncertainty about the Wal-Mart contract had sent Brambles' shares plunging when the US retail giant announced a review of its logistics operations this year.

Wal-Mart accounts for 25% of Brambles' CHEP pallet business in the US.

Brambles' shares were at $14.90 a year ago. Under the new agreement, Wal-Mart third-party service providers will inspect and sort CHEP pallets according to quality. Pallets that have to be repaired will still be processed at CHEP service centres before being re-sent to customers.

Brambles chief executive Mike Ilhein said the new arrangement would have no impact on sales revenue or issue volumes. However, the deal came after undesirably long negotiations.

"Over the last few months, I've indicated that while developing a solution was taking longer than I wanted, it was important to develop the best sustainable solution and not simply the quickest," he said.

Shaw Stockbroking analyst Brent Mitchell said the deal would not have a big financial impact.

"It takes away the uncertainty in relation to Wal-Mart," he said. "It puts another cog in place to fine-tune Brambles' US network and reduce overall costs."

The world's biggest maker and distributor of pallets posted $US648.7million net profit in 2007-08, a 50% fall from $US1.29 billion the year before. But the previous year's result was bolstered by proceeds from the sale of the Cleanaway UK and Asia businesses.