US market fuels Brambles growth
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 announced a net profit increase for the six months to December from $US239.5 million ($232 million) to $US302.5 million.
Underlying profit rose 7 per cent to $US490 million.
The 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 a interim dividend of 13.5¢ a share, 30 per cent franked, up 0.5¢ 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 the net profit being slightly less than 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 revenues.
It also owns the Recall document management business, having aborted attempts to sell the business last year after failing to generate enough interest.
Operating profit in the Americas rose 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 as a result of 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. The group president of the Americas, Peter Mackie, will assume leadership of all pallet operations globally from next month.