Brambles (BXB) shares dipped nearly 3% in yesterday’s generally stronger market, despite providing a solid trading update for the March quarter and first nine months of the 2014-15 financial year.
The shares fell 27c to close at $11.04 in the wake of the update which said revenue in the nine months ended March 31 rose 8% in constant currency terms to $US4.04 billion ($A5.2 billion) on steady growth in its key pallets business and new gains in its reusable crates business.
But on an actual currency basis (not smoothed out to take account of changes this year compared to the previous year), revenue was up a less impressive 2% as the company encountered headwinds from the stronger US currency.
As well the rise in revenue in its core business, pallets in the Americas, disappointed some analysts. Some saw a slight downgrading in the performance of the key North American pallets business (Wal-Mart is a major customer).
Brambles said revenue in its containers business jumped 31%, to $US344.8 billion, but pallets are the company’s mainstay, and that business in North and South America rose a slower 5% to $1.73 billion, while in Europe, Middle East and Africa pallet revenue also rose 5% to $1.04 billion.
BXB 1Y – Brambles disappoint investors
Chief executive Tom Gorman said in the statement that revenue “was solid”, saying momentum in the crates business was “particularly pleasing”.
“We now expect FY15 sales revenue growth for the group to be approximately 8 per cent, at constant currency," Mr Gorman said in the statement.
"Our expectation for FY15 underlying profit remains in the range of $US1.055 billion to $US1.085 billion…reflecting the offsetting of cost pressures through the ongoing delivery of efficiency programs," Gorman said, citing exchange rates from June 30, 2014.
In early November, Brambles lifted its 2014-15 earnings guidance from its earlier August forecast.
Now the guidance is a touch lower because of slower than expected growth in the pallets business in the March quarter.
