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Pallet giant Brambles Ltd has reported a significant fall in its 2007-08 net profit, but it said the outlook remained buoyant backed by a boost in its operating profit and extensive organic growth prospects.
The Sydney-based company has announced a net profit of USD 648.7 million, 50 per cent lower than the previous year. The group’s profit from ongoing operations rose 12 per cent to USD 1.05 billion. Its sales revenues from ongoing operations were up 13 per cent to USD 4.4 billion, driven by volume growth across all regions of the two business units, CHEP and Recall.
CEO Mike Ihlein said he was pleased by the “solid” results achieved amid the slowing economy.
“This is a particularly pleasing result given the increasingly challenging economic environment in many markets and it confirms the strength of our business models,” Mr Ihlein said.
CHEP Asia-Pacific sales revenue particularly contributed to the profit growth, increasing 20 per cent driven by the emerging markets in China and India.
One of the worrisome factors for investors was the slow negotiation process with the US major retailer Walmart to restructure pallet flow management across its US distribution centres.
While the longer-than-expected transition would also cost the company around USD 41 million, Mr Ihlein said its outlook was still positive.
“Brambles remains confident that an agreement will be reached with Walmart to deliver the lowest cost overall supply chain solutions,” it said.
“As Walmart is not an emitter customer of CHEP, there is no impact expected on sales revenue or issue volumes from any new arrangement.”
Mr Ihlein said the company has extensive organic growth prospects in all its key markets as well as a number of significant geographic expansion opportunities.
The company spent around USD 35 million on new business activities including a significant expansion of business with Tyson Food, addition of new Chinese customers as well as new contracts with German and Polish businesses.
“Successful execution of the strategic investment program will contribute to Brambles’ objective to achieve 10 per cent compound sustainable revenue growth,” Mr Ihlein said.
“Our performance makes me optimistic about the medium to longer term growth outlook for Brambles.”
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