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Brambles profit falls 69pct on write-down

Simone Ziaziaris  |  21 Aug 2017Text size  Decrease  Increase  |  

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SYDNEY - [AAP] Brambles (BXB) shares have fallen after the logistics firm's full-year profit slid 69 per cent, weighed down by challenging operating conditions in the US pallets division and a write-down of its North America recycled pallets business.

The company, which operates in more than 50 countries primarily through the CHEP and IFCO brands, says its net profit for the 12 months to June 30 fell to $US182.9 million ($A230.6 million), down from $US587.7 million in the previous corresponding period.

Sales revenue, however, rose 4 per cent to $US5.1 billion, largely helped by the IFCO re-usable plastic crates business and its pallets businesses in Europe and Latin America.

On a constant currency basis, revenue was up 6 per cent.

The company said net profit was hit by a $US243.8 million non-cash impairment in its North America recycled pallets business, CHEP Recycled, while its operating profit fell 18 per cent to $771.4 million due to a $US120 million write-down of its investment in the Hoover Ferguson Group joint venture.

Chief executive Graham Chipchase said Brambles had delivered strong volume growth in some of its pallets businesses despite a challenging year, with increasing competition and direct cost pressures impacting both revenue growth and profitability.

"The pricing environment remains challenged given competitive pressures and cyclically low whitewood pallet prices," he said.

"We are taking steps to address the impact of increased competition and the higher network cost structure in the US pallets business."

The logistics firm expects to deliver sustainable growth and returns well in excess of the cost of capital in the year ahead, but says a number of items, including investments and contract closures, will weigh on underlying profit growth.

Brambles shares were down 9.5 cents, or 0.97 per cent, to $9.67 at 1123 AEST.

IMPAIRMENTS HIT BRAMBLES' PROFIT:

* Net profit down 69pct to $US182.9m ($A230.6m)

* Revenue up 4pct to $US5.1bn

* Final dividend of 14.5 Australian cps, in line with last year but fully franked

 

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