Sluggish North American Pallets Market Puts Drag on Brambles 1H Results

Brambles have announced that based on preliminary, unaudited financial accounts for the six months ended December 31, 2016, it expects first-half constant-currency sales revenue growth of approximately 5% and constant currency underlying profit growth of approximately 3%.

In light of this first-half performance, Brambles expects constant currency sales revenue and underlying profit growth for the year ending June 30, 2017, to be below its current guidance range for constant currency sales revenue growth of between 7% and 9% and underlying profit growth of between 9% and 11%.

Brambles’ CEO, Tom Gorman, said: “In the first half, we delivered sales revenue growth in every operating segment and, with the exception of our North America pallets business, we delivered underlying profit growth across the Group.

“In our North America pallets business, we experienced some revenue and cost pressures during the back end of the first half. These pressures were partly due to US retailer destocking which impacted volumes and resulted in increased transport and plant costs associated with higher-than-expected pallet returns. In addition, we have continued to see a deferral of potential customer conversions to pooling in North America and pricing pressure across our recycled pallet operations.

“Our first-half result also includes a small loss arising from our investment in the HFG joint venture, which continues to operate in challenging market conditions. Due to its recent financial performance, an impairment review of our investment in HFG is underway.

“Notwithstanding these challenges, the fundamentals of our business remain strong and we are focused on driving improvement actions in the second-half of the year. We will provide updated full-year guidance as part of our half year result announcement on 20 February 2017, which will take into account our final half year results and an assessment of January trading volumes.”

Brambles share value initially tumbled as low as 16% following the announcement.