By Stuart Condie
SYDNEY--Brambles Ltd. reported a 3.5% rise in full-year operating profit, helped by unprecedented grocery supply chain demand for its CHEP pallets early in the coronavirus pandemic.
The Australia-listed company on Wednesday reported an operating profit of $767.0 million for the 12 months to June. Net profit fell to $448.0 million from $1.47 billion a year ago, when its bottom line was lifted by a $945.7 million gain on asset sales.
Sales revenue increased 3.0% to $4.73 billion, helped by buying in the early stages of the pandemic and new contract wins.
Market consensus was for net profit of $510 million off $4.76 billion in revenue, according to data compiled by FactSet.
Overall sales revenue rose 6% on a constant currency basis, hitting the midpoint of the company's 5%-7% guidance range. Underlying profit rose 4% in constant currency terms to $795 million, although Brambles' automotive business was hit by the temporary halt of vehicle manufacturing and its Kegstar unit suffered from the closure of licensed premises.
Brambles said it anticipates fiscal 2021 revenue will grow between 0% and 4% at constant currency rates, with improved underlying profit margins. It sees underlying profit growth of between 0% and 5% with sufficient free cash-flow to fund dividends, core business capex and investment to support new business opportunities.
It also anticipates the continuation of its share buy-back program.
The company declared a final dividend of 9.0 U.S. cents a share. That currently equates to 12.4 Australian cents, compared with 14.5 Australian cents a year ago, when the Australian dollar was weaker.
Shares in Brambles last traded at A$11.26, down 3.9% in 2020. That compares with a 7.7% decline by the benchmark S&P/ASX 200 index, with investors apparently attracted by Brambles' reiterated commitment to its dividend.
Brambles, which derives about 80% of its revenue from customers in consumer-staples sectors, said its CHEP pallets businesses experienced unprecedented demand in March and April amid lockdowns in all major markets and consumer stockpiling.
Servicing the additional customer demand and managing volatility and disruptions led to higher supply chain costs from March to June, largely related to additional transport, handling and repair costs.
Write to Stuart Condie at firstname.lastname@example.org