Sydney – Brambles Limited has reported sales revenue from continuing operations of US$3,409.0 million for the first nine months of the fiscal year ending 30 June 2019 (FY19), up 7% on the prior corresponding period at constant FX rates. Actual FX growth of 2% is below constant FX growth due to a stronger US dollar (Brambles’ reporting currency) relative to all other major operating currencies in the period.
Constant FX growth from continuing operations of 7% comprised volume growth of 5% and price realization of 2%:
– CHEP Americas sales revenue up 6% driven by strong price realization and ongoing expansion with new and existing customers in the US, Canadian and Latin American pallet businesses;
– CHEP EMEA sales revenue up 8% driven by net new business wins and price realization across the region. Like-for-like volume growth was modest in the European pallet and automotive businesses; and
– CHEP Asia-Pacific sales revenue up 4% driven by solid like-for-like volume growth and price realization in the Australian pallets business.
Commenting on the year-to-date sales performance from continuing operations, Brambles’ CEO Graham Chipchase said: “Volume momentum was strong across all CHEP segments as we continue to convert new customers to our sustainable share-and-reuse solutions. Notwithstanding positive volume growth, we saw a moderate slowdown in the growth of like-for-like volumes during the third quarter, particularly in Europe which is consistent with broader macroeconomic conditions in that region. Price realization continued during the third quarter and reflects ongoing pricing actions to offset input-cost inflation and cost-to-serve increases, particularly in CHEP Americas.”
FY19 expectations remain unchanged
Brambles continues to expect FY19 constant-currency Underlying Profit growth to show modest improvement over the prior year, with increased price realization and the delivery of cost efficiencies largely offset by ongoing global input-cost inflation.
Cash generation is expected to improve in 2H19 from 1H19 levels, notwithstanding investment in growth and business improvement projects and excluding IFCO transaction-related proceeds and costs.
Brambles’ global automation, productivity and supply chain cost-out programmes remain on track to progressively deliver margin benefits and improved business outcomes over the medium term.
IFCO sale process update and discontinued operations
The IFCO sale process is expected to be completed by the end of FY19 and as detailed in the table below, IFCO is now presented in discontinued operations.
As outlined in the IFCO sale announcement on 25 February 2019, proceeds from the transaction will be used to fund an on-market share buyback of up to US$1.65 billion, a capital return of AU29 cents per share and to pay down debt.
Brambles intends to commence the buyback shortly after the completion of the transaction and will seek shareholder approval for the capital return at its 2019 Annual General Meeting in October 2019.