Brambles bumps up FY22 guidance in the face of severe cost inflation

Brambles (ASX: BXB) delivered a resilient financial performance in the first-half of FY22 in light of extraordinary cost inflation and disruption across global supply chains. 

Financials at a glance 

• Revenue of US$2,766.4m, up 8% 

• Net profit of US$304.8m, up 4% 

• Interim dividend of 15 cents per share, up 15%  

• Dividend in-line with 50% payout ratio

Net profit exceeded Bell Potter and Citi forecasts of US$287m. 

Another inflation victim

Brambles operates the world’s largest pool of approximately 345m pallets, crates and containers across 60 countries. Timber is a core material used to repair and produce pallets.

The business faced immense cost pressures from elevated timber prices, which have historically traded around the US$200-400 range. 

Source: Brambles 2022 Half-Year Result presentation

Timber inflation has cost the business an additional US$270m in the first-half.

Higher prices and scale pays off

Passing on prices to customers, supply chain efficiencies and repair cost timing benefits helped offset higher costs in the first-half.

"“Our scale, network advantages and the supply chain investments we have been making across our businesses have helped us respond to a range of cost and supply change challenges in the first half," said CEO Graham Chipchase.

In addition, Brambles said that new customer growth helped offset the like-for-like volume decline, which was impacted by pallet availability constraints.

Outlook upgrade

Brambles upgraded its full-year outlook slightly, now expecting: 

• Sales revenue growth between 6-8%, up from 5-7%

• Underlying profit growth between 3-5%, up from 1-2%

Brambles 12-month price chart