On Wednesday, Brambles (ASX:BXB) shares soared to a 52-week high of $15.22, driven by robust financial results and a positive outlook for 2023-24 from the global logistics leader.
Following a more promising performance for 2022-23 than initially perceived, the company's shares surged by over 7%. The market responded favorably to Brambles' decision to raise its final dividend, predict a further increase in underlying profit for the upcoming year, and employ price hikes to counteract inflationary pressures.
For the 12 months ending June, the international pallet supplier reported an underlying profit of $1.07 billion USD, reflecting a significant 19% surge in constant currency terms, after accounting for currency fluctuations. This outpaced the improved guidance issued in April of a 17%-19% increase and the $930.0 million result from the previous year.
Continuing operations recorded a 14% rise in sales revenue, reaching $6.08 billion USD, also on a constant-currency basis, exceeding the previously guided 14%-15% growth despite a decrease in pallet volumes over the year.
On a statutory basis and in constant currency terms, net profit climbed by 24% to $703.3 billion USD.
Directors announced a final dividend of 14 US cents, up from 12 US cents the previous year. In Australian dollars, the final dividend reached 21.83 cents per share, in addition to the final dividend of 17.67 cents, totaling 28.5 Australian cents for the year.
Looking ahead to 2023-24, Brambles projected a 9-12% rise in underlying profit, accompanying a 6-8% increase in revenue and positive free cash flow before dividends, expected to range between $450 million and $550 million USD.
The company attributed the substantial revenue increase for 2022-23 to "contributions from contractual repricing and indexation initiatives" along with specific pricing actions aimed at addressing high-risk lanes. Although overall volumes decreased by 2%, net new business growth of 1% was driven by the European pallet business.
The 19% growth in underlying operating profit resulted from pricing actions that countered cost-to-serve increases, incorporating input-cost inflation, lost equipment charges, and incremental overhead investments.
While net financing costs rose by 34% (in constant currencies) due to higher interest rates, CEO Graham Chipchase expressed pride in the company's achievements amid macroeconomic uncertainty. Despite inflationary pressures and sluggish consumer demand, Brambles achieved double-digit revenue growth and maintained a positive Free Cash Flow after dividends.
Chipchase highlighted the focus on sustainable Free Cash Flow generation and the consistent delivery of operating leverage in the company's FY24 financial outlook, emphasising the investments made in their "Shaping Our Future" transformation initiative to support these goals.
