Brambles' profit meets guidance, CEO retires
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The world's biggest pallet pooling services provider posts fiscal 2016 earnings in line with guidance but just short of Morningstar's expectations.
Brambles Limited (ASX: BXB) on Thursday announced an underlying profit of US$623.1 million for fiscal 2016, up 8 per cent on the prior year in constant currency terms, and underlying earnings per share (EPS) of 39.5 US cents, up 7 per cent.
The results were just shy of Morningstar's expectations for a profit and EPS of US$640 million and 41 US cents, respectively.
The result was underpinned by an 8 per cent rise in sales revenue to around US$5.5 billion, as growth was witnessed in developed markets, emerging market and in the European reusable plastic crates business.
However, cash flow from operations for the year was US$513.8 million, down US$215.7 million on prior year, which Brambles said was largely due to higher growth-related capital expenditure and adverse working capital movements.
Brambles CEO Tom Gorman said he was "extremely proud" of what the company had achieved over the year.
"We delivered accelerated revenue growth and strong operating leverage, despite macroeconomic uncertainty, industry headwinds and cost pressures in certain markets," he said.
On Thursday, Gorman also announced his decision to retire as CEO and as a director of the company effective 28 February 2017, and retire from the Brambles Group effective 30 June 2017.
The Brambles board has appointed Graham Chipchase to succeed Gorman, who until June this year was at the helm of Rexam plc, one of the world's largest consumer packaging companies.
The company declared a final dividend of 14.5 Australian cents a share, in line with the half-year dividend and up 0.5 cents a share on the previous final dividend.
The final dividend will be franked at 25 per cent and is payable on 13 October 2016 to shareholders on the register as at 8 September 2016.
This brought total dividends for the year to 29 Australian cents a share, up 1 cent and 25 per cent franked. The full-year payment was also shy of Morningstar's forecast of 35.5 cents.
"The 4 per cent increase in Brambles' total dividends for the 2016 financial year reflects the board's confidence in the group's ability to deliver sustainable profit growth and generate cash over the medium to long term," Brambles chairman Stephen Johns said.
While the company's dividend reinvestment program (DRP) will remain in place for the final dividend, shares issued under the DRP will no longer attract a discount.
Brambles also provided guidance for fiscal 2017 sales revenue growth at constant currency of between 7 per cent and 9 per cent, as well as underlying profit growth of between 9 per cent to 11 per cent.
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Nicholas Grove is a Morningstar journalist.
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