Brambles H1 Profit, Upbeat Outlook Boosts Shares


Brambles Ltd the world's biggest supplier of pallets, reported a 10 percent rise in first-half profit and said it expected solid sales and profit growth this year, sending its shares up as much as 8 percent.

Brambles' upbeat outlook, underpinned by U.S. demand for grocery products,reassured investors who had worried that economic downturns in the United States and Europe could pare demand for its CHEP pallets.

"It's just a good bit of relief that there weren't any nasty comments ornumbers that we've had in other results," said Ken West,a partner at Perennial Growth Management.

The company said it expected profit growth to slow in the second half as it spent money to improve operations.

Brambles, which sold its Cleanaway UKarm last year to round off a major restructure, said it planned to invest $750 million over the next three years to expand in the U.S. food and drinks sectors and in Europe and China, and set up in India.

The investment was expected to generate new sales of about $600 million a year, it said.

July-December profit from continuing operations rose to $296.7 million from $270.6 million.

Revenue grew 13 percent to $2.1 billion, with sales from CHEP Americas up 11 percent, boosted by demand for grocery products from major customers like Procter & Gamble, Kraft Foods and Kellogg.

"Not only did we continue to grow with our existing customers in the U.S., we also won, and are continuing to win, many new customers," Chief Executive, Mike Ihlein said in a statement.

Net profit was $293.7 million, including discontinued operations, just below analysts' forecasts of around $299 million in a poll by Reuters Estimates. Net profit a year ago was $982.6 million, which included the profit from the sale of Cleanaway.

Brambles shares jumped to a high of A$10.09 in early trade and last traded up 6 percent at A$9.88, outpacing a 1.1 percent rise in the broader market.

"The price movement today does reflect some confidence that, in the global sense, they seem to be operating quite steadily and are trying to create their own value without relying just on pure cycles," said Perennial's West. "I'm not sure this sort of share price performance is maintainable."

Brambles shares have tumbled 20 percent since Dec. 11, when port and rail operator Asciano Group Ltd ruled out making a bid for the company.

Its shares had been propped up last year by takeover interest from Asciano and its former parent, logistics group Toll Holdings Ltd. Toll said in October it remained interested in Brambles.