Brambles enjoyed a rare (these days) day in the sun with a 3% plus gain after the company revealed a surprise 6% jump in first quarter sales at yesterday’s annual meeting.
The news (which came after other news of a supposed class action against the company for inadequate disclosure) saw the shares jump to $A9.54 on the ASX yesterday. They closed still up 0.8% at $A9.34.
The company, which operates in more than 60 countries primarily through its CHEP and IFCO brands, reported higher quarterly revenues of $US1.37 million.
The better than expected result was helped by a strong performance in the company’s European pallets business and continued expansion of its IFCO business.
Its European pallets business rode the euro economy’s gathering rebound, reporting an 8% rise, on a constant currency basis, driven by new business and solid existing customer.
And the company’s problematic US business in saw a 5% rise to $US546.2 million in sales revenue, from the period corresponding period.
Brambles said pallet sales revenue in Africa, India and the Middle East and the European automotive business also made a solid contribution to growth in the quarter.
In its IFCO business, benefits from North America and continued expansion with existing retailers in Europe helped drive sales up 9% over the three months.
CEO Graham Chipchase told is first AGM as the company’s boss that said the pallet and RPC businesses were enjoying strong expansion in Europe and making good progress in emerging markets such as Latin America, despite competitive environment conditions.
“We continue to operate in a challenging operating and competitive environment, with cost pressures across our portfolio, particularly in our US pallets business," Mr Chipchase said.
"We are focused on leveraging our global expertise to mitigate network cost inflation and strengthen our competitive advantage." And in a separate statement on Wednesday Brambles made it clear that any class action would be strongly resisted.
"Brambles notes media reports today suggesting that Maurice Blackburn is assessing investor interest and the merits of a potential case against Brambles in relation to its FY17 first quarter trading update in October 2016.
"Brambles has not received any formal communication nor has it been served with any proceeding and so is not able to comment further.
"However, Brambles strongly believes that it has at all times complied with its continuous disclosure and other regulatory obligations. Brambles therefore intends to vigorously defend any action if filed.”
Meanwhile Brambles will revamp the pay for senior executives in the face of an investor backlash that almost delivered the company a first strike vote against its remuneration report at Wednesday’s AGM.
Following a year that saw the global pallet giant ditch profit targets in the face of strong competition and changing dynamics for its important customers, the AGM saw Brambles hit by a strong protest votes from investors over its pay structures.
The final vote tally was 76.77 % in favour of the remuneration report with 23.23% against, close to the 25% no vote threshold for a first strike.
Shareholders also voted strongly against the re-election of chairman Stephen Johns with proxy votes lodged ahead of the meeting recording a 24.77% vote against his continuing presence on the board. The changes to executive pay will see Brambles able to reclaim long and short term bonus share awards which had been awarded to executives but have not yet vested.
Director Tony Froggatt told the meeting that Brambles had reviewed its payment structure which will lead to the recasting of executive remuneration.
Key changes included a shift towards using underlying profit as the key measure for the determination of bonuses, delivering greater powers to the board to clawback bonuses and restrict the trading in shares by the chief executive.
