Sydney – Brambles Limited has reported sales revenue from continuing operations of almost US$3.8 billion for the first nine months of the year ending 30 June 2021 (FY21), representing an increase of 8% at actual FX rates on the prior corresponding period.
Investments in pallet purchases increased in the third quarter in response to elevated demand levels, longer cycle times, and higher-than-anticipated lumber costs.
At constant currency, the sales growth of 6% included a ~1 percentage point contribution from customer and retailer inventory stocking, primarily in the US and Europe. Volume growth was 3% as increased demand in the global Pallets and Australian RPCs businesses offset declines in Automotive, with all businesses cycling pre-pandemic trading conditions in the prior year. Price growth of 3% reflected cost-to-serve increases in all regions.
“Customer demand for our pallets remained strong in the third quarter. COVID-19 related restrictions continued to support high levels of at-home consumption in key markets, while general uncertainty across global supply chains led customers and retailers to increase inventory levels, particularly in the US and Europe,” said Brambles’ CEO, Graham Chipchase on the third-quarter performance of the company.
“As our teams work to support the efficient and safe operation of supply chains globally, we have remained focused on striking the right balance between managing operating costs and capital investments in our pool. Investments in pallet purchases increased in the third quarter in response to elevated demand levels, longer cycle times, and higher-than-anticipated lumber costs. While these additional pallet purchases and lumber inflation have driven increased investment in pooling CAPEX, the cash flow generation across the Group remains strong and we expect Free Cash Flow to fully fund capital expenditure and dividends on a full-year basis.
“Operationally, capacity across labor and transport markets remains tight in all regions and we continue to see increasing levels of lumber inflation, especially in the US market. Despite these additional costs, we continue to generate supply-chain efficiencies and indirect cost savings which, in combination with the benefit of surcharge income and price realization, are offsetting input-cost pressures and additional repair and handling costs across our network. We continue to make good progress with the implementation of our US automation program and remain on track to deliver an improvement in US margins and Group operating leverage in FY21.”
By segment, revenue growth in the first nine months of FY21 was as follows:
• CHEP Americas sales revenue increased 7% at constant FX rates driven by price realization across the region and sustained high levels of pallet demand from existing customers in North America and inventory stockpiling in the US. Net new business growth was broadly flat as the business responded to record levels of demand from existing customers;
• CHEP EMEA sales revenue increased 4% at constant FX and included Pallets growth of 5% driven by volume growth and price realization in the European business. Volume growth reflected new customer wins in Central & Eastern Europe, elevated levels of demand from existing customers, and inventory stockpiling due to COVID-19 and Brexit. Automotive revenues remain below prior-year levels despite a better than expected recovery in automotive manufacturing volumes in the year to date; and
• CHEP Asia-Pacific sales revenue increased 8% at constant FX rates, driven by strong pallet demand across the region and the onboarding of a large Australian RPC contract won in the second half of the prior year.