Brambles Ltd. Assigned ‘BBB+’ Corporate Credit Rating; Outlook Stable
December 21, 2009 by Rick LeBlanc
Filed under Latest News
Melbourne, Dec. 22, 2009—Standard & Poor’s Ratings Services said today that it had assigned its ‘BBB+’ corporate credit rating to Australian-based Brambles Ltd. We also assigned a stable rating outlook.
The rating on Brambles reflects our opinion of the company’s leading global position in pallet and container pooling services; solid logistic management capability and asset utilization; good geographic and customer diversity; and sound operating margins and stable cash flow, despite difficult economic conditions. Offsetting these strengths is Brambles’ sizable ongoing capital-expenditure requirements, particularly in the CHEP business; changing customer preferences to alternative pallet products; the company’s expansion into developing markets such as China and India, which introduces execution risk; and its capital returns, which rely on effective management of pallet logistics and pallet-repair processes.
“The stable rating outlook reflects the underlying strength of the CHEP business, which underpins Brambles’ overall business prospects and capacity to maintain financial metrics at a level supportive of the ‘BBB+’ rating,” Standard & Poor’s credit analyst Craig Parker said.
The rating could be raised if we felt that the business returns were suitably robust to weather a prolonged decline in activity levels within the developed economies; the execution risks in the company’s emerging markets diminished; and management adopted more conservative financial targets. The rating could come under pressure if CHEP’s market position erodes; Brambles’ expansion into the targeted emerging economies falters; and financial metrics were outside our expectations.
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