Shares in logistics group Brambles (BXB) fell yesterday, despite the wider rebound on the ASX and in spite of what should have been positive news.
The company told the first session of a two day investor briefing in the US that it is looking to boost investment faster than previously reported.
Brambles says it will boost capital investment by $US1.5 billion over the next four years.
Instead of taking that as a vote of confidence investors sold the shares down by more than 2% at one stage to a day’s low of $9.34. They ended off just 1% at $9.52.
BXB 1Y – Brambles lower on capex lift, weak outlook
What investors did (short-sightedly) was focus on was the company maintaining its weak outlook delivered with the final profit figures in August.
Brambles lifted full-year underlying profit 3% to $US985.8 million and expects another rise this financial year despite uncertainty over demand in the US.
Brambles told the investment market briefing in California that the higher investment spending will be heavily weighted toward well-established businesses.
Looking out to the 2018-19 objectives, Brambles said its average capital invested CAGR (compounded annual growth rate) is likely to exceed the original 5% expectation.
The company reiterated its fiscal 2016 target for an underlying profit of $US1 billion to $US1.02 billion, representing growth between 6% and 8%. The average analyst expectation was for higher growth of 10%.
The forecasts were drawn up immediately after the annual results announcement in August, so they are overly optimistic, but investors took the difference between the 6% to 8% range and the 10% estimate as an earnings downgrade, which sounds bone-headed.
