Brambles flies high

SHARES in logistics company Brambles have climbed almost 6 per cent after it forecast fullyear earnings growth of about 5 per cent as margins improve in its US business.

Brambles posted a 9 per cent drop in first half net profit to $US277.9 million ($A413.3 million), on a constant currency basis, compared to the prior first half result of $US319.8 million ($A475.6 million).

The result was 13 per cent lower after currency costs, but comes mostly after missing revenue from discontinued operations.

Brambles’ underlying profit was up 5 per cent at $US435.5 million ($A647.7 million) for the first half — on a constant currency basis — after sales revenue of $US2.3976 billion ($A3.5705 billion) .

Chief executive Graham Chipchase said the pallets and containers business has delivered sales and earnings growth across all its segments, and improved cash flow generation.

Doing this despite ongoing challenges demonstrates the resilient nature of Brambles’ business, he said.

Brambles is expecting mid single-digit sales revenue for the full financial year and underlying profit in line with sales on a constant currency basis, Mr Chipchase said yesterday.

“Our operating environment in the first-half was characterised by increasing macroeconomic uncertainty and ongoing political instability,” Mr Chipchase said in a statement.

“(This is) particularly evident in major European markets.”

Mr Chipchase said sales revenue was above their guidance range for the first half.

More than 40 per cent of sales revenue comes from Brambles’ United States business. Brambles said its United States business margins had improved about one percentage point in the first half and they continue to aim for a 2 to 3 percentage point improvement through measures including pricing and efficiency gains.

The dividend of US nine cents will be paid as 13.38 Australian cents.

This time last year it was

14.5 Aussie cents.

Brambles’ ASX-listed shares were up 75 cents, or 5.93 per cent, at $13.40 by 11.20am yesterday.