Profits stacking up like pallets
BRAMBLES has delivered a half year of profit, revenue and volume growth, but the logistics giant faces rising costs pressures in its key US and European operations.
Sales hit $ 3.47 billion ($ US2.75 billion) for the six months to December, up 5 per cent on the same period a year earlier, Brambles said yesterday.
The rise in sales was driven by volume growth in Europe and the Americas, including double- digit revenue growth in its Latin America pallets business.
Net profit for the half year more than tripled to $ US447.2 million with the bottom line aided by $ US130.1 million of deferred US tax liabilities flowing from the cut to the US corporate tax rate.
Net profit in the prior reporting period had also been weighed down by a $ US120 impairment linked to a US oil and gas container joint- venture.
Chief executive Graham Chipchase said while volume growth had improved in the company’s major international markets, it continued to face cost pressures in transport, handling and lumber.
“We continue to face structural cost challenges,” Mr Chipchase said.
“It is something we have to get on and action in the next six months.”
Underlying profit rose 5 per cent to $ US493.7 million, despite the loss of a contract with Woolworths and the impact of the shutdown of Australian automotive manufacturing.
Mr Chipchase said Brambles was looking at cost- cutting options, including passing on higher prices.
“I don’t think you should see the opportunity for a massive price increase but we’ll do what we can, we have to, because transport and lum- ber inflation is significant,” he said.
Chief financial officer Nessa O’Sullivan said the long- term effect of the US corporate tax changes would be negligible.
“We expect our annual effective tax rate from FY19 onwards to be between 27 to 29 per cent,” Ms O’Sullivan said.
Brambles is maintaining its forecast of full- year sales revenue to grow in the mid- single digits, while underlying profit growth is likely to be in excess of sales revenue growth.
The company declared an interim dividend of 14.5c, in line with what it declared a year earlier.