Brambles Packages Solid Quarter Despite Global Gloom

By Glenn Dyer | More Articles by Glenn Dyer

For a company dependent on the health of the global economy, the current slowdown and Donald Trump-inspired volatility doesn’t seem to have hurt logistics giant, Brambles, all that much judging by its third-quarter update yesterday.

Investors thought that as well and pushed the shares up 3.5% to $11.40 on a day when the wider ASX struggled to find momentum and ended up just 0.001%.

Brambles said in the statement that a solid jump in revenue in the quarter was due to a mix of higher prices and volume growth from its operations in the Americas, combined with new contract wins in Europe.

The company said revenue rose 5% to $US1.16 billion ($A1.72 billion) for the quarter on a constant currency basis.

The update was provided ahead of the company’s AGM yesterday.

The company’s Americas division, which includes the United States, Canada, and Latin America was again the driver of the rise with sales revenue up 7% to $US602 million on a constant currency basis.

Other regions saw slower growth – in Europe and Middle Eas sales revenue increased 4% driven by net new business wins in European pallets and modest price realisation across the region. Like-for-like volumes were broadly flat reflecting economic conditions in Europe, the company said yesterday.

And sales revenue in Asia Pacific “increased 2% as like-for-like volume growth and price realisation in the pallets business offset lower volumes following a contract loss in Australia.”

“Our first-quarter sales performance reflects pricing discipline and ongoing volume momentum despite increasing macroeconomic uncertainty in our major markets,” said Brambles CEO Graham Chipchase.

“We continue to make good progress with our US automation and procurement programs and we remain on track to deliver an annual one percentage point of US margin improvement in each of financial year 2020, 2021 and 2022,” he said.

The company’s stock price has been soft in recent weeks after it released a cautious outlook for the new financial year after releasing what some thought were soft results for 2018-19 with a weak outlook for 2019-20.

Mr. Chipchase said in the statement that the company’s 20920 guidance “provided at the FY19 result remains unchanged. On a constant-FX basis, we continue to expect sales revenue growth to be at the lower end of our mid-single-digit objective and Underlying Profit to be in line with, or slightly above sales revenue growth, including the impact of the new leasing standard.”

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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