Brambles Sees Positive Outcome to Wal-Mart Talks

Brambles, the world's biggest pallet supplier, flagged solid profit growth this fiscal year and sought to reassure investors it was not about to lose valuable business from U.S. retail
giant Wal-Mart Stores.

In a trading update on Tuesday, Brambles said sales rose 13 percent in the 11 months to the end of May in what the company described as a challenging environment in many markets.

Brambles shares fell sharply in April after it said Wal-Mart was reviewing its use of pallets.

"Good progress has been made and Brambles is confident that it will shortly reach agreement with Wal-Mart on a positive outcome for future ongoing arrangements that will also maintain the efficiency of the overall supply chain," the statement added.

Brambles also signed new contracts worth $180 million in annualised sales in the first 11 months and said it faced no major refinancing before 2010.

"Brambles' underlying profit growth for the full year -- that is, before the non-recurring $13 million profit on sale of a Madrid property in 2007 -- is expected to be solid, reflecting the strength of Brambles' business models," the company said in a statement.

Ahead of the trading update, analysts had projected Brambles' annual net profit to climb 6.5 percent to $624 million. Brambles is due to announce its results on Aug. 20.

Brambles sales also rose 13 percent in the first 10 months to May 2, underpinned by strong demand for U.S. grocery products.

Its shares are down 35 percent in 2008, more than double the drop in the
benchmark S&P/ASX 200 index.