Brambles Raises Dividend After Prices Help Lift Fiscal Year Profit 23% — Update

By Stuart Condie

SYDNEY--Brambles raised its final dividend after price rises and improving efficiency helped the pallet pooler lift annual profit.

The Australia-listed company, which reports in U.S. dollars, on Wednesday reported an underlying profit for the 12 months through June of US$1.26 billion. That was up 17% on the prior year once currency moves were stripped out, and ahead of February's improved guidance of a 13-15% increase.

Sales revenue from continuing operations rose by 7% to $6.545 billion, also on a constant-currency basis. On a statutory basis, Brambles reported a net profit of $779.9 million, up 17% on year at constant FX rates.

The average analyst forecast was for statutory net profit of $745 million from revenue of $6.60 billion, according to data compiled by FactSet. Analysts had expected an adjusted net profit of $750 million.

The board approved a final dividend of 19 U.S. cents, up from 14 U.S. cents a year ago. Free cashflow before dividends rose by 77% to $882.8 million.

Brambles, which leases its blue-painted CHEP pallets to companies including fast-moving consumer goods manufacturers, said it expects sales revenue to rise by 4-6% in constant-currency terms over its 2025 fiscal year.

It sees underlying profit rising by 8-11% and anticipates free cashflow before dividends of $750 million-$850 million, moderating from $883 million in fiscal 2024.

Brambles' pooling capital expenditure fell to 13% of sales, from 23%, over the past year as its investment in tracking technology cut the number of pallets it had to purchase by 15 million.

It said it largely completed its retailer and manufacturer inventory optimization efforts in North America and Europe, leading to 12 million additional pallet returns.

Brambles said the capital cost of new pallets across the decreased by about 15%, but remained above historical levels. It continued to recover costs through higher prices, having already raised prices by about a third across the previous two financial years in the aftermath of the Covid-19 pandemic.

"Our ongoing commercial discipline and changes to contractual terms continue to strengthen the alignment between pricing and the cost-to-serve, while incentivizing more efficient use of our assets across customer supply chains," Chief Executive Graham Chipchase said.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

August 20, 2024 19:08 ET (23:08 GMT)

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