18 WESTERN PALLET
Brambles Delivers Strong Results in a Year of Dramatic Shifts and Challenges
Brambles delivered strong full year 2021 results in its CHEP business in spite of shifting consumer demand, extreme lumber shortages and Brexit.
Customer demand for pallets was elevated but unpredictable, reflecting COVID-19 related increases in at-home consumption of consumer staple products and numerous changes in restrictions impacting on-premise consumption. In Europe, Brexit added further supply chain uncertainty resulting in increased inventory levels and changes in demand patterns driving network inefficiencies including higher transport, handling and repair costs.
Inflationary pressures accelerated in the second half of the year with higher lumber and transport costs in all regions. Lumber costs were driven by increased demand and supply challenges which impacted pallet availability and resulted in both higher pallet CAPEX costs and increased repair costs.
The impact was particularly evident in the US and resulted in record levels of lumber inflation and industry-wide pallet shortages in key markets, with manufacturers and retailers also increasing pallet balances across their operations to avoid disruptions to their supply chains. COVID-19 and Brexit, combined with lumber and transport availability constraints, drove higher operating costs and capital expenditure, impacted pallet recoveries in the US, and limited access to lumber in the second half of the year.
Lumber surcharge income linked to market indices in North America only partially recovered the impact of higher lumber costs in the year, which was primarily reflected in higher pallet costs included in capital expenditure and, to a lesser extent, higher lumber costs used for pallet repairs reflected in operating costs.
Sales revenue from continuing operations of $5.2 billion increased 7% at constant currency with pricing growth of 4% and volume growth of 3%. Pricing growth reflected initiatives to recover cost-to-serve increases in all regions due to inflationary pressures and challenging operating conditions.
Commenting on the FY21 result Brambles’ CEO, Graham Chipchase, said: “This is a strong result for Brambles as we continue to support our customers to deliver goods safely and sustainably around the world.
“I am very proud of how our teams responded to the challenges we faced in 2021 and our ability to strengthen our global leading position in sustainability while continuing to manage ongoing uncertainty across supply chains due to COVID-19, Brexit, and the unprecedented conditions experienced across global lumber markets.
“Looking forward, we are accelerating our Shaping Our Future program to transform our business to benefit our people, our customers, and our shareholders. This will include a step change in digitization and improved customer experience as well as further developing our culture of innovation and continuous improvement. We look forward to outlining our ambitions and the next phase of value creation at our Investor Day in September.”