Brambles Lifts Dividend, Fiscal Year Outlook as 1st Half Profit Rises 21% — Update
By Stuart Condie
SYDNEY--Brambles lifted its dividend and full-year outlook after the pallet supplier's first-half profit rose by 21% amid price rises, easing lumber costs and supply chain efficiencies.
The Australia-listed company, which reports in U.S. dollars, on Friday reported an underlying profit for the six months through December of $664.7 million. That was up 19% once currency moves were stripped out.
Sales revenue from continuing operations rose by 12% to $3.28 billion, also on a constant-currency basis. On a statutory basis, Brambles reported a net profit of $391.3 million, up 15% on year at constant FX rates.
The average analyst forecast had been for a statutory net profit of $384.9 million off revenue of $3.27 billion, according to data compiled by FactSet.
Brambles still expects revenue to rise by 6-8% on a constant currency basis but now expects underlying profit to rise by 13-15% at constant currency rates for the full 2024 fiscal year. It previously flagged a 9-12% rise.
It also hiked its guidance for positive free cash flow before dividends to $700 million-$800 million, compared with the $450 million-$550 million it previously cited.
Prices across the group were 11% higher than a year earlier, largely reflecting increases pushed through in fiscal 2023. Like-for-like volumes declined by 1% amid improved inventory management across both retailer and manufacturer supply chains.
Net new business volumes were flat as modest new contract wins in Europe pallets, Canada pallets and North America automotive businesses offset net losses in U.S. pallets. Brambles said that lower prices for so-called whitewood pallets, which customers buy, had caused some companies to delay transition to the rental, or pooling, model operated by Brambles.
"Our focus continues to be on driving profitable volume growth and our teams in North America and Europe are actively engaging with strong new business pipelines in these markets," Chief Executive Graham Chipchase said.
Jefferies analyst Anthony Moulder said this week that he would be looking for net new customer wins for evidence that higher prices were not affecting accretive growth in return on invested capital. That rose to 21.8% in the December half, up from 19.8% a year earlier, as underlying profit growth more than offset an 8% increase in average capital invested.
The return of 8 million additional pallets in the period helped lower capital expenditure to $527.5 million, from $862.2 million a year earlier.
CHEP Americas sales 10% to $1.80 billion, or by 8% in constant-currency terms. Volume growth in Canada and Latin America offset lower volumes in the U.S., where Brambles saw softer underlying consumer demand partially offset by increased beverage and dairy sector volumes.
Europe, Middle East and Africa revenue rose 16% to $1.21 billion, or by 11% in constant currency. Revenue in Asia-Pacific, where Brambles first began operating a pallets business in 1958, rose 8%, to $273.0 million, or by 11% in constant currency.
Write to Stuart Condie at stuart.condie@wsj.com
(END) Dow Jones Newswires
February 22, 2024 17:15 ET (22:15 GMT)
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