Shares in the global logistics group, Brambles jumped almost 6% after the company upgraded 20121 earnings after a better than expected 7% rise in first-quarter revenue.
The company said the September quarter revenue was boosted to $US1.19 billion ($1.7 billion), thanks to increased demand for consumer staples and higher prices charged to its customers.
On Tuesday Brambles reported higher revenue across all geographies, the Americas, Europe, and the Middle East and Africa, and the Asia Pacific. The Americas led the pack, with revenue up 7%.
“Trading conditions in the first quarter were characterised by stronger than expected demand for consumer staples. Our teams continue to show resilience and dedication, overcoming challenges to successfully provide customers with uninterrupted supply of pallets, crates, and containers,” said Brambles CEO Graham Chipchase.
“Overall demand for pallets in grocery supply chains was strong during the first quarter notwithstanding variability in certain categories such as beverages, cleaning products, and home DIY,” he said.
Overall demand for pallets in grocery supply chains such as such as beverages, cleaning products and home DIY remained strong. Retailers have increased inventory levels in preparation of the holiday season and potential second-wave lockdown.
But these positives were offset by weak news from its automotive and Kegstar (beer delivery) businesses declined by 20% in revenue as the pandemic severely impacted the automotive industry and out-of-home consumption of beer (in hotels, bars, clubs etc).
The company lifted its 2020-21 financial year outlook to the upper end of its guidance, sending the shares higher where they closed at $10.13, up 5.9% on the day.
Brambles had told the market in August that for 2020-21 it was expecting revenue growth in the range of “flat to +4 per cent” and said it expected improved underlying profit margins. It also forecast underlying profit growth in “the range of flat to +5 per cent”.
On Tuesday Brambles said it is now forecasting sales revenue growth between 2% and 4% at constant currencies.
Underlying profit is predicted to improve by between 3% and 5%, and free cash flow is expected to fund business expenditure.
Brambles said its dividend pay-out ratio for 2020-21 would be consistent with its policy of 45% to 60% of net earnings.
