Brambles’ pallets business boosts Q1 sales

A strong performance in Brambles’ European pallets business and continued expansion of its IFCO business has helped boost the company’s first-quarter sales six per cent.

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Brambles, which operates in more than 60 countries primarily through the CHEP and IFCO brands, says sales revenue grew six per cent to $US1.37 million, on a constant currency basis, compared to the prior corresponding period.

The news triggered a lift in the company’s share price which rose 10.5 cents, or 1.13 per cent, to $9.37 at 1408 AEDT on Wednesday.

Driving the boost was an eight per cent rise in the European pallets division on the back of new business and solid existing customer demand in Western Europe.

But the company’s business in the Americas was still the main sales contributor, delivering $546.2 million in revenue, up five per cent on the period corresponding period.

Brambles said pallet sales revenue in Africa, India and the Middle East and the European automotive business also made a solid contribution to growth in the quarter.

In its IFCO business, benefits from North America and continued expansion with existing retailers in Europe helped drive sales up nine per cent in the quarter.

Chief executive Graham Chipchase said the company’s pallet and RPC businesses were enjoying strong expansion in Europe and making good progress in emerging markets such as Latin America, despite competitive environment conditions.

“We continue to operate in a challenging operating and competitive environment, with cost pressures across our portfolio, particularly in our US pallets business,” Mr Chipchase said on Wednesday.

He said the company is using its expertise in the industry to reduce cost increases in order to become more competitive.

The results come as the logistics company faces the prospect of a shareholder class action following alleged failures to disclose important company information.

Law firm Maurice Blackburn Lawyers on Wednesday said it had opened an online registration to shareholders who have allegedly suffered significant losses on the back of Brambles’ revised guidance earlier this year when it stated it would not meet the sales and profit growth forecast it had earlier affirmed.

Brambles said in a statement to the ASX, it has not received any formal communication, nor had it been served any proceeding, but will said it will “vigorously defend” any action if filed.

“Brambles strongly believes that it has at all times complied with its continuous disclosure and other regulatory obligations,” the company said.