Brambles profit jumps on business ‘resilience’

The company, which helps move goods around the world on its CHEP pallets and containers, has reported an increase in profit despite fragile consumer confidence.

Brambles, which helps move goods around the world on its CHEP pallets and containers, said its financial performance remained resilient in the face of global economic headwinds.

The company, which owns 353 million pallets, crates and containers across 60 countries, reported a 19 per cent increase in full year profit to $US703m ($1.1bn).

Revenue rose 10 per cent to $US6.07bn as it chased new business in key markets and adopted digital tracking technology on pallets to boost efficiencies and reduce wastage.

Brambles chief executive Graham Chipchase said that in a year of economic uncertainty and cost pressures, the company had continued to strenghten following the impact of the Covid-19 pandemic on global trade.

Mr Chipchase said that while uncertainty remained about the broader economic outlook including inflation and supply chain issues, the company was confident it could successfully navigate these challenges. Shares in Brambles, whose financial perfornance is a bellwether for the health of the broader economy, closed 7.1 per cent stronger on Wednesday at $15.15.

Brambles CEO Graham Chipchase.

“In a year marked by uncertainty, we are extremely proud of our achievements across all aspects of the business,” Mr Chipchase said.

“The increase in cost of living globally was felt by our customers, but importantly, we kept our customers’ goods moving through supply chains while delivering another year of outstanding financial and operational outcomes. This was despite persistent inflationary pressures and slowing consumer demand.”

During the pandemic, as global supply chains were pushed to breaking point, Brambles struggled with wooden pallets failing to be returned into its global pool for re-use.

The company said pallet availability had improved across North America and Europe in the second half of the year, allowing the company to chase new business

Mr Chipchase said about 10 million pallets had been recovered and salvaged with the help of new tracking technology during the year, enabling Brambles to rebuild stock levels.

“Specifically, in North America and Europe, the improvement in pallet availability has also allowed the business to pursue new customer wins,” said Mr Chipchase.

The company was increasingly using data analytics and automated repair systems to reduce loss of pallets due to damage or theft.

Brambles has deployed 450,000 smart pallets with autonomous tracking devices in over 30 countries, to reduce losses and improve efficiencies.

In Chile, about one million unique tags had been installed on pallets, enabling testing of scanning and data collection technologies and processes.

Cranes and shipping containers in Footscray.

“These advanced analytics and machine learning solutions continue to be implemented across the business to improve commercial outcomes,” Mr Chipchase said.

Earlier this year, the company finalised its merger of rival Loscam Greater China and CHEP China, resulting in the largest pallet and automotive container pool in the region. That included a combined pool of over 20 million pallets and a million automotive containers and other crates, together with a nationwide network of service centres.

The company declared a final dividend of US14 cents, bringing the total dividend for the year to US26.25c a share, an increase of 15 per cent over the prior year.

Citi analyst Samuel Seow said risks facing Brambles included the possibility of deteriorating trading conditions in key European and North American markets, resulting in lower pallet and container volumes. Modernization of retail chains in key emerging market also could slow and with it the demand for pallets.

Brambles said it continued to develop sustainability programs including the planting of two trees for every tree required for its pallets. Brambles was partnering in Mexico and Zambia on large-scale tree projects. Separately, Brambles announced the appointment of Joaquin Gil as its new chief financial officer, replacing Nessa O’Sullivan, who has decided to retire.