Brambles releases FY19 Third Quarter Trading Update

Brambles Limited (ASX: BXB), a supply-chain logistics company that works as an invisible backbone of the global supply chain is based out of Pitt Street, Sydney, Australia and operates in more than 60 countries having its largest operations in Western Europe and North America. The company possesses around 630 million crates, pallets and containers and works and helps in efficient, sustainable and safe transport of goods across the world.

In its recently released Q3 update, Brambles stated that its company’s sales revenue was recorded at US$3,409 million for the first nine months of FY19, an increase of 7%. The actual FX growth of 2% is lower than the constant FX growth due to a stronger Brambles’ reporting currency, i.e. USD compared to all other dominant operating currencies in the period.

The constant FX growth of 7% from continuing operations included price realisation of 2% and volume growth of 5%.

The net new business wins and price realisation across the region boosted CHEP EMEA sales revenue by 8%. CHEP Americas sales revenue rose by 6% boosted by robust price realisation and ongoing development in the Latin American, US and Canadian pallet businesses with new and existing customers. Price realisation and solid equivalent volume growth in the Australian pallets business helped CHEP Asia-Pacific sales revenue to rise by 4%.

The ability of Brambles to transform its new customers to its sustainable share-and-reuse solutions helped the company achieve strong volume momentum across all CHEP segments, states Brambles’ CEO Graham Chipchase. The company witnessed a slight downturn in the growth of equivalent volumes during the third quarter, especially in Europe which was in harmony with that region’s macroeconomic conditions.

The company expects an Underlying Profit growth (in cc terms) with a moderate recovery over the previous year. The delivery of cost efficiencies broadly balanced by ongoing global input-cost inflation and improved price realisation will be observed in FY19.

In spite of investment in growth and business improvement projects, the company expects an improvement in cash generation in 2H19 from 1H19 levels. The company’s productivity, global automation, and supply chain cost-out programmes remain strong to deliver margin benefits in a phased manner and better business outcomes over the medium term.

Brambles predict that IFCO sale process will be completed by the end of financial year 2019 as it is now being counted under the company’s discontinued operations. As per IFCO sale announcement done on 25th February 2019, proceeds from the transaction will be used for a capital return of AU29 cents per share, to settle debt and to finance an on-market share buyback of up to US$1.65 billion. Post the completion of the transaction, the firm plans to begin the buyback and will look for shareholder approval for the capital return in upcoming AGM.

The company’s stock closed at AUD 11.980 on 17th April 2019), 1.268% higher than the previous day’s market price. The company’s market capitalisation is recorded at 18.87 billion with 1.59 billion shares currently outstanding.


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