Reporting Season

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

Fri 25 Feb 22, 1:05pm (AEST)
Pallet Logistics

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Key Points

  • Timber costs have gone berserk compared to pre-covid levels
  • Brambles mitigated costs by passing on higher prices and supply chain efficiencies
  • Earnings came in slightly ahead of Bell Potter and Citi forecasts

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. 

Brambles Timber Prices
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 Ltd (ASX BXB) Share Price - Market Index
Brambles 12-month price chart

 

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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