US market fuels Brambles growth
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.
Frequently Asked Questions about this Article…
Brambles reported a 26% rise in first-half net profit for the six months to December, with net profit up from US$239.5 million to US$302.5 million. Management attributed the growth to winning new customers in North America and improved efficiency across its established operations.
Underlying profit rose 7% to US$490 million for the half. Brambles said it expects underlying profit for the full year to be about US$1.05 billion, providing investors with a clear earnings guidance for the fiscal year.
Yes. Brambles declared an interim dividend of 13.5 cents a share, 30% franked, which is up 0.5 cents from the prior year. The dividend is payable on April 11, according to the company announcement.
Brambles shares rose 8 cents to $8.59 after the results. Shares are up nearly 40% this financial year and are trading at their highest levels since the global financial crisis, even though the reported net profit was slightly below consensus analyst estimates of US$326.3 million.
Brambles' core business is its 'pooling solutions' — the distribution and collection of pallets, crates and containers — provided mainly through its CHEP and IFCO brands. Pallet sales in the Americas account for about one third of the group's revenues.
Operating profit in the Americas rose 23%, while the Europe, Middle East and Africa region improved by 11% on a constant currency basis. Management highlighted the Americas pallet segment as a key driver of growth despite only moderate economic improvement in the region.
Brambles' reusable plastic containers division delivered strong profit gains driven by cost management, although it fell short of its sales growth target. The company also still owns the Recall document management business after aborting attempts to sell it last year due to insufficient buyer interest.
Brambles said it will simplify its organisational structure as it continues to integrate the IFCO acquisition. The group president of the Americas, Peter Mackie, will assume leadership of all pallet operations globally from next month to streamline management of its pallet business.
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