As reported by Australian Stock Exchange, a supplier of reusable pallets, crates and containers for the supply chain industries, Brambles, recorded strong revenue growth but its profit was much lower in the first half of its financial year.
Sales revenue increased by 3 percent
Sales revenues were up three percent in the first half of the Australian financial year (which runs from July to June) to stand at US$2.56 billion. Revenues were driven by “momentum across all segments” and “improved price realisation.”
Sales growth was driven by expansion with new and existing customers in “CHEP” pallet operations, in its Europe-Middle East-Africa (EMEA) automotive business and its IFCO RPC business. Price realization around the world was said to be “strong.”
Brambles did less well on profits
Brambles said underlying profit and operating profit increased by one percent on a “constant” currency basis, calculated by converting reported results into U.S. dollars at the actual monthly foreign exchange rates applicable in the prior corresponding period.
However, on an actual foreign exchange basis, operating profit fell by three percent to stand at $498.9 million; this was attributed to “inflationary cost pressures in major markets and higher cost-to-serve.”
The company indicated that it had experienced challenges with higher transport costs, network inefficiencies and ongoing higher cost-to-serve in Latin America. Transport costs increased due to availability constraints and higher fuel costs, the company reported. Increases in wages were also “elevated” in most markets, affecting both direct and overhead costs, it added.
Brambles CEO Graham Chipchase defined: “In response to sustained levels of elevated cost inflation in most major markets, our businesses implemented surcharges and exercised contractual indexation clauses to offset three-quarters of the inflationary cost increases experienced during the period. Our teams continue to focus on aligning contractual terms and pricing with the prevailing cost-to-serve in each region”.
Brambles profit slides 27%
Profit after tax took a major hit at 27 percent (actual foreign exchange basis) to stand at $319.8 million. This was attributed to “a cycling of a $103.2 million non-cash tax benefit recognized in the first half of 2018 as a result of U.S. tax reform.” However, the company added that it had recorded a one percent underlying profit increase (on a constant foreign exchange basis) to stand at $504.4 million.