Brambles says it’s looking forward to the coming year as it sees signs of improvement in some of its key markets.
The company yesterday revealed a lowered dividend, lowered profit and lower sales for the year to June.
Its exposure to the European and US economies, especially the cars and paper (the Recall business) industries in the US hit sales and margins, but directors described the performance as resilient.
Sales from continuing operations was up 1% in constant currency terms (down 8% in actual currency) to $US4 billion.
Underlying profit was $US900.6 million, down 8% in constant currency terms (down 16% in actual currency).
The company said that after significant items before tax of US$182.4 million, statutory operating profit was down 30% to US$718.2 million.
Profit after tax from continuing operations was down 33% to US$434.0 million.
Despite the upbeat nature of the release and comments from the board and CEO, Mike Ilhein, the board showed its true view of the outlook by trimming the final dividend to 12.5c a share from 17c, making a total of 30c for the year, down 13% after the interim of 17.5c a share was paid.
That interim was up half a cent a share, so even though the financial markets were stricken, with the recession developing, the board felt no need then to conserve cash. Six months later, that need is more evident; judging from the size of yesterday’s cut.
"This reflects the Board’s focus on prudent conservation of cash in the current environment," the release to the ASX said.
Brambles shares ended up 3.6%, or 25 cents to $7.15.
"The difficult economic conditions particularly impacted CHEP’s automotive sector (down 23%), gave rise to increased plant costs in CHEP and drove down recycled paper revenue in Recall’s Secure Destruction Services (SDS)," directors said in the statement to the ASX yesterday.
"Excluding automotive and SDS, Group sales revenue increased 3% and Underlying profit decreased 5%, a resilient result in the context of declining retail sales in the United States and key European markets during the year, Mr Ihlein said in the statement.
"The result also reflects the continued investment in growth initiatives such as China and India.
"Future growth will be driven by a combination of this investment, continuing new business wins, general operating leverage and any upswing in automotive and SDS paper revenues as economies recover.
"Recent early signs of improving macro-economic stability in a number of markets are encouraging.
"In particular, the destocking by Brambles’ customers that has been evident in the last year appears to be coming to an end.
"An improvement in economic conditions will, in due course, positively impact the Company’s major customers as they return to growth, which in turn will benefit Brambles due to its strong underlying business models and robust new business pipeline."
Mr Ihlein added, “Even in a severe economic downturn, Brambles has been able to deliver sales revenue growth.
"As global markets recover, we should experience a return to our traditional stronger rate of sales revenue growth reflecting both organic growth and new business wins together with expected improvements in the automotive sector and better recycled paper revenues.
"Combined with operating leverage in the pallet business in an upturn, an ongoing focus on cash generation and a solid balance sheet, Brambles is well placed to accelerate financial performance as economies recover.”
During the 2009 financial year the company renewed US$1.9 billion of debt facilities for terms between 3 and 5 years, and at balance date had undrawn committed bank facilities totalling US$1.2 billion.
CHEP Americas sales revenue grew 2% (down 2% in actual currency) while underlying profit was down 6% (down 10% in actual currency) primarily due to increased plant costs driven by the slowdown in the economy, and some increase in indirect costs.
In CHEP USA, overall volumes declined by 1%.
Net new business wins contributed 3% volume growth but were offset by a 4% decline in organic volume. Sales revenue remained in line with the prior year due to favourable price and mix.
CHEP Latin America continued to grow strongly with 12% sales revenue growth, while CHEP Canada achieved 4% sales revenue growth.
- CHEP Europe, Middle East & Africa (EMEA) sales revenue was in line with last year (down 12% in actual currency), reflecting net new business wins and favourable price/mix offsetting a 5% decline in organic volumes. Underlying profit was down 7%. Excluding the impact of automotive, sales revenue grew by 2% while Underlying profit was down by only 2%.
- CHEP Asia-Pacific sales revenue grew 1% (down 16% in actual currency) with Underlying profit impacted by a decline in automotive, costs associated with the continued investment China and India, the full year impact of a new regional management structure to support future growth, as well as the establishment costs of a major new RPC contract.
Excluding automotive, sales revenue was up 3% and underlying profit was down 12%.
Recall sales revenue grew 1% (down 8% in actual currency). A strong performance in the Document Management Solutions (DMS) business in all regions offset a decline in the SDS business. Underlying profit declined by 3% (down 15% in actual currency). Excluding SDS, sales revenue was up 6% and underlying profit was up 8%.
The surp
