Brambles has changed CEOs and other senior managers and now the market is changing Brambles’ outlook to one not so rosy.
The company told yesterday’s AGM in Melbourne that group sales for the four months ended October 31 were $1.4 billion, down 3% from the previous corresponding period
Brambles new Chief Executive Officer Tom Gorman told the AGM: “I believe strongly in our businesses. We have outstanding market positions, financial strength and growth potential.
"Although short-term trading conditions remain somewhat subdued in our largest markets, we are very well-placed to benefit from global economic recovery.”
"Making comparisons with the prior corresponding period was challenging as most of the prior corresponding period occurred before the escalation of the Global Financial Crisis.
"In line with the broader economic trend, Brambles experienced business conditions in the four months to 31 October 2009 similar to those of the second half of the 2009 financial year."
The company said in a trading update that it is expecting a similar performance, especially from the US operations of CHEP where pallet issues will fall 3% for the 2010 financial year.
In the trading update the company said:
"CHEP’s revenue for the period was down 3 per cent on the prior corresponding period to US$1,154 million, primarily reflecting CHEP Americas’ revenue decline of 5 per cent to US$513 million.
"The decline in CHEP Americas’ revenue was due to CHEP USA, which had lower organic volumes as a result of prevailing economic conditions and had been unable to generate sufficient new business to offset fully the impact of customer losses.
"CHEP USA now anticipates total pallet issues for the 2010 financial year will be approximately 3 per cent lower than the 2009 financial year."
Brambles said the slowdown at CHEP USA had resulted in the short-term accumulation of around four million additional idle pallets during the 2009 calendar year, which will result in associated short-term storage and handling costs.
"CHEP USA considers that these pallets are required to meet future customer growth requirements and does not plan to alter its previously announced program to scrap 7 million excess pallets."
The build up of unwanted pallets and the extra costs comes as Brambles restructures CHEP USA to cut costs and improve service to customers.
"This program involves a fast-track investment spread across the 2010, 2011 and 2012 financial years," the company said.
Brambles said that in other parts of its business in the four-months to 31 October 2009:
"CHEP EMEA’s revenue was down 1 per cent to US$515 million, primarily reflecting ongoing weakness in the automotive sector. Excluding automotive, CHEP EMEA’s revenue was up 1 per cent.
"CHEP Asia-Pacific’s revenue was up 2 per cent to US$126 million as the growth of the reusable plastic crate business in Australia, and pallet volume growth in China, offset ongoing weakness in the automotive sector.
"Excluding automotive, CHEP Asia- Pacific’s revenue was up 4 per cent.
"Recall’s revenue was down 3 per cent to US$248 million, reflecting the impact on the Secure Destruction Services (SDS) business of lower activity in the USA and Europe and lower paper prices.
"Excluding SDS, Recall’s revenue was up 2 per cent as its Document Management Solutions business continued to grow.
"Brambles’ cash-flow and balance sheet positions are robust and the Company continues to manage both capital expenditure and working capital tightly. Brambles’ liquidity position is strong, with significant unused funding facilities and no requirement to refinance any borrowings until the 2011 financial year."
The trading update made no mention of any profit guidance or any estimate on what the recent rise in the value of the Australian dollar against the greenback, might do to revenues and earnings at December 31, or for full year.
Brambles shares rose on the news, finishing up 3 cents at $6.75.
