Brambles to lift full-year profit despite tough market conditions
The company forecast a strong final three months of the financial year that will help deliver an underlying profit of $US1.03 billion to $US1.06 billion for the full year. That compares with its underlying profit of $US1.01 billion for the previous financial year .
Brambles' core business is pooling, which involves supplying, collecting and reissuing pallets, crates and containers to some of the largest companies in the world, to move consumer products.
A severe northern hemisphere winter affected revenue growth in the US, including the output of farms that supply products to food companies.
Despite this, Brambles lifted sales revenue by 4 per cent to $US4.35 billion for the nine months to the end of March compared with the previous year.
Investors pushed the company's shares higher by 15¢, or 1.7 per cent, to $8.80, just below last month's year-high of $8.81, which was the company's highest level in nearly five years.
Sentiment around Brambles' stock was lifted by the release of low Australian inflation figures on Wednesday. These keep interest rates down and help the transport sector. The possibility of improving conditions in US retail and construction could provide a further boost.
Group chief executive Tom Gorman said the result reflected growth in the group's pooling operations, the expansion of the reusable plastic crate segment and the acquisition of Pallecon, a containers business.
Pallet business revenue increased by 5 per cent to $US2.92 billion, driven by growth in the Americas - representing more than half the total - and Asia-Pacific, but tempered by flat revenue in Europe.
The reusable plastic crates division performed below expectations, growing by 5 per cent to $US602 million.
Mr Gorman said he remained confident that full-year sales revenue growth in reusable plastic crates would be at least 10 per cent, now that winter in the northern hemisphere was over.
The company's document storage and destruction business, Recall, proved a drag, with revenue declining 5 per cent to $US607 million. Some investors and analysts are encouraging Brambles to demerge that business. An auction was called off last year because of poor market conditions.
Brambles made a net profit of $US302.5 million in the six months to December 31, with its underlying profit before finance costs and one-off charges at $US490 million.
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Brambles has maintained guidance for a higher full-year underlying profit above US$1 billion, forecasting US$1.03 billion to US$1.06 billion for the full year. That compares with an underlying profit of US$1.01 billion in the previous financial year.
Brambles lifted sales revenue by 4% to US$4.35 billion for the nine months to the end of March compared with the prior year, despite muted conditions in its main North American market.
Investors pushed Brambles shares up 15 cents, or 1.7%, to $8.80 — just below last month's year-high of $8.81 and the company's highest level in nearly five years. Market sentiment was helped by low Australian inflation figures.
Brambles said growth was driven by its core pooling operations, expansion of the reusable plastic crate segment and the acquisition of Pallecon. Pallet business revenue rose 5% to US$2.92 billion, supported by growth in the Americas (more than half of the total) and Asia‑Pacific, while Europe was flat.
The reusable plastic crates division grew 5% to US$602 million, which was below expectations. Group CEO Tom Gorman said he remains confident full‑year sales revenue growth for the division will be at least 10% now that the severe northern‑hemisphere winter is over.
Brambles' document storage and destruction business, Recall, saw revenue decline 5% to US$607 million, which has led some investors and analysts to encourage a demerger. An auction for Recall was called off last year due to poor market conditions.
A severe northern‑hemisphere winter hurt revenue growth in the US — including reduced farm output that supplies food companies — which weighed on Brambles. On the positive side, low Australian inflation (keeping interest rates down) and the prospect of improving US retail and construction could help the transport and pallet sectors.
For the six months to December 31, Brambles reported a net profit of US$302.5 million, with underlying profit before finance costs and one‑off charges of US$490 million.
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