22 WESTERN PALLET
Brambles announces FY 2018 results: US Pallet Volumes Rebound
Results feature strong revenue growth, dividends fully funded by free cash flow and progress toward strategic objectives
Brambles Highlights
- Sales revenue up 6% at constant currency largely reflecting strong volume growth in key CHEP pallet and IFCO RPC businesses. Price growth of one percentage point included benefits of pricing initiatives in US pallets, emerging markets and IFCO North America.
- Underlying Profit in line with prior year at constant currency: Profit growth in CHEP EMEA and IFCO, along with cost control and higher asset compensations in CHEP Asia-Pacific offset a number of headwinds during the year including inflationary cost pressures in most major markets.
- CHEP US pallets: Solid volume growth and pricing actions primarily realized in the second half of the year. Effective price, which includes inflation-related surcharges recognized as an offset to costs, increased 2% in 2H18.
- FY18 Statutory profit after tax includes US$127.9 million non-cash tax benefit resulting from the USA tax reform. FY17 statutory profit included the US$120.0 million non-cash impairment of the HFG joint venture (JV).
- Material increase in Cash Flow from Operations and positive Free Cash Flow: Cash flow from operations, before the HFG JV loan repayment, fully funded dividends and capital expenditure reflecting focus on sustainable cash flow generation. Cash Flow from Operations was further strengthened by the HFG JV loan repayment of US$150.0 million which will partially fund the US accelerated automation program in FY19-21.
- 2018 final dividend in line with prior year: 14.5 Australian cents per share, with franking of 30%.
- Corporate actions: Brambles intends to separate its IFCO RPC business. This decision together with the divestment of CHEP Recycled and the HFG joint venture reflects a focus on optimizing long-term shareholder value.
“Our FY18 result reflects the significant progress we have made towards our strategic objectives,” said Brambles’ CEO Graham Chipchase. “Revenue momentum was strong despite robust competition in all major markets and Free Cash Flow fully funded dividends for the first time since FY15. This cash flow result was particularly pleasing as it was achieved during a period of ongoing capital investment to fund growth, automation programs and innovation initiatives, including BXB Digital. While Underlying Profit remains below revenue growth, we have identified and commenced implementing numerous initiatives to improve profitability over the medium term.