Brambles Reports Solid FY14 Result in Line with Guidance; Forecasts Further Profitable Growth in FY15
- Sales revenue growth and Underlying Profit delivered within management guidance range
- Pallets: constant-currency growth across all regions with strong operational efficiency in Europe
- RPCs: accelerated second-half growth reflecting ongoing investment and improving momentum
- Containers: strong contribution from Pallecon acquisition and improved margin performance
- FY14 Return on Capital Invested4 broadly unchanged at ~16%; on track for FY19 target of 20%
- Sales revenue consistent with five-year target: high single digit percentage growth at constant-currency
- Underlying Profit range of US$1,030 million to US$1,060 million (at 30 June 2014 FX rates)
- One Better program to drive reduction in overheads/sales ratio of at least 2 percentage points by FY19
Brambles generated sales revenue of US$5,405 million in the financial year ended 30 June 2014, up 6%, primarily driven by solid organic growth and new business wins in the core Pallets business, continued expansion in Reusable Plastic Crates (RPCs) and the first full-year contribution of the Pallecon acquisition in the Containers segment.
Operating profit was US$930 million, up 5%. This reflected the positive effect of asset utilisation and operational efficiency gains in Pallets and improved margins in Containers, as well as the negative impact of higher plant and transport costs in Pallets and one-off costs and higher depreciation in RPCs.
Underlying Profit, which excludes Significant Items6, was US$960 million, up 5%. Return on Capital Invested was broadly flat at 16.3%, reflecting the short-term profitability impact in RPCs, although Return on Capital Invested improved in the Pallets and Containers segments.
Cash Flow from Operations increased US$131 million to US$828 million, largely as result of increased earnings and a positive movement in working capital.
Brambles’ CEO Tom Gorman said: “We delivered a solid performance in the 2014 financial year as underlying economic conditions continued to improve gradually, with an encouraging fourth-quarter performance following the disappointment of the weather-affected third quarter.
“The solid result reflects our ability to deliver profitable, year-on-year expansion while we continue to lay the foundations for long-term growth and value creation and make efforts to streamline our business. At the same time, we completed the transition from our historical conglomerate structure with the demerger of Recall.
“Our Pallets business delivered solid growth in both emerging and developed markets. Efficiency improvements and growth in under-penetrated regions drove a strong performance in Europe, despite intensifying competitive activity in the UK, while asset management improvements continue across the business, particularly in the USA.
“In RPCs, the strategic refocus in North America coupled with strong progress in Europe, Australia, New Zealand and South Africa are delivering strong and improving growth. We are confident of delivering a return to profit growth in RPCs in FY15 at the same time as we continue to invest in expanding our position.
“While non-acquisitive growth was robust in the Containers segment in FY14, we have improving momentum with product launches and contract wins and continue to assess a broad range of organic and acquisitive growth opportunities that offer growth and return characteristics in line with the Group’s long-term targets.”
To see the Brambles investor presentation slides, click here.
To see the 2014 Brambles annual report, click here.