Brambles Reports 11% Operating Profit Growth and Confirms FY14 Guidance

Brambles Ltd. has announced a healthy rise in half-year profits for the six months ending December 31, 2013, aided by a US$663.7 million gain on the demerger of its Recall document storage and destruction business. Net profits for the six months were US$959 million, up from $303 million a year earlier. The company also anticipates trimming $100 million annually in overhead over the course of FY15 to FY19.

“In the Pallets segment, better economic conditions are supporting our ongoing efforts to improve our sales mix and run our pools more efficiently in CHEP’s major countries of operation,” commented Brambles CEO Tom Gorman. “We are able to be more selective and disciplined in the opportunities we pursue as we continue to focus on serving our customers better and developing a stronger asset utilisation profile.

“In the RPCs segment, we have achieved continued strong volume growth in all regions, although this was insufficient to offset in full some expected increases to depreciation and marketing costs, as well as adverse sales mix and pricing pressures in North America, and some one-off costs. We are confident the actions we are undertaking under new leadership in North America will mitigate pressures in that region.

“The Containers business achieved higher sales and profitability in the period, reflecting the strong contribution of Pallecon, acquired in December 2012, improved organic conditions in most business units, and the more efficient utilisation of overhead costs as the business grows.”

Gorman expects constant-currency sales revenue growth for FY14 to be approximately 7 percent with underlying profit to be within the previous guidance range of US$930 million to US$965 million. Brambles expects second-half profit growth to be slower due to smaller contribution to growth from net new business wins in the short term; the timing of the Pallecon acquisition; ongoing cost headwinds; and the potential impact of ongoing severe weather in the Northern Hemisphere.

“Separately, we have committed to a significant program to manage overheads more effectively across the Group,” added Gorman. “Over the FY15 to FY19 period, we are confident of progressively removing US$100 million from our current levels of overhead costs and of managing future increases.”