28 WESTERN PALLET
Brambles: Strong revenue momentum offsets inflation and cost challenges
Brambles says it delivered a solid FY19 result in a challenging economic and operating environment. Sales revenue momentum was strong, with growth of 7% exceeding the company's mid-single digit revenue growth objective. It managed impressive volume growth in spite of strong competition in every market and a moderation in like-for-like volumes in line with the slowdown in most major economies and the global automotive industry.
Underlying Profit growth of 2% was achieved despite the inflationary environment and the continuation of broader cost challenges in the CHEP Americas segment. Despite a moderation in the rate of transport and lumber inflation increases, price realization continued to lag input cost increases during the Year. The company anticipates this dynamic to persist into FY20 given industry expectations for ongoing transport, labor and property inflation.
"In CHEP Americas, the rollout of our US margin improvement initiatives, including the accelerated automation program, is progressing well," stated Graham Chipchase, Brambles CEO. "We continue to expect these initiatives to help offset cost pressures from network capacity constraints and changes in customer behavior to deliver progressive
margin improvement over the next three fiscal years."
Commenting on the FY20 operating environment, Chipchase said: “Volatile global trading conditions and political instability which have led to a slowdown in organic growth in core European markets such as the UK, France and Germany in FY19 are expected to continue. Similarly, the contagion effect of the US-China trade war has the potential to lead to a broader slowdown in global underlying economies in FY20."
Chipchase added: “While competition remains rational in most markets, the retail landscape continues to evolve and challenge our customers’ established business models, leading to additional demands upon suppliers. At the same time, while industry expectations around broader inflation expectations vary, we anticipate sustained inflationary pressures in labor, transport and property in core markets such as the United States and Europe."