Brambles revenue down, struggles in USA, but outlook positive
Brambles has reported group sales revenue for the four months to 31 October 2009 of USD 1,402 million, 3 per cent lower than the prior corresponding period.
Brambles chairman Graham Kraehe said the company’s CHEP and Recall businesses were in a strong position to benefit from an improvement in economic conditions.
Mr Kraehe said both CHEP and Recall were performing solidly and continue to generate net new business wins in all regions, with the exception of CHEP USA, which experienced sales revenue below expectations over the four-month period.
Mr Kraehe told Brambles’ annual general meeting in Melbourne: “We have considerable leverage to a broad-based return to economic growth when it occurs. However, we are yet to witness a widespread pick-up in activity or restocking in our major markets.”
Making comparisons with the prior corresponding period was challenging as most of the prior corresponding period occurred before the escalation of the global financial crisis. In line with the broader economic trend, Brambles experienced business conditions in the four months to 31 October 2009 similar to those of the second half of the 2009 financial year.
CHEP’s revenue for the period was down 3 per cent on the prior corresponding period to USD 1,154 million, primarily reflecting CHEP Americas’ revenue decline of 5 per cent to USD 513 million. The decline in CHEP Americas’ revenue was due to CHEP USA, which had lower organic volumes as a result of prevailing economic conditions and had been unable to generate sufficient new business to offset fully the impact of customer losses. CHEP USA now anticipates total pallet issues for the 2010 financial year will be approximately 3 per cent lower than the 2009 financial year.
The slowdown in CHEP USA has resulted in the short-term accumulation of approximately 4 million additional idle pallets during the 2009 calendar year, which will result in associated short-term storage and handling costs. CHEP USA considers that these pallets are required to meet future customer growth requirements and does not plan to alter its previously announced program to scrap 7 million excess pallets.
As announced in October, CHEP USA is also investing in a comprehensive new service through the Better EveryDay program, to respond to evolving customer requirements and position itself for long-term growth. This program involves a fast-track investment spread across the 2010, 2011 and 2012 financial years. The implementation of Better EveryDay is proceeding as planned.
In other parts of Brambles’ business for the four-months to 31 October 2009:
CHEP EMEA’s revenue was down 1 per cent to US$515 million, primarily reflecting ongoing weakness in the automotive sector. Excluding automotive, CHEP EMEA’s revenue was up 1 per cent.
CHEP Asia-Pacific’s revenue was up 2 per cent to US$126 million as the growth of the reusable plastic crate business in Australia, and pallet volume growth in China, offset ongoing weakness in the automotive sector. Excluding automotive, CHEP Asia-Pacific’s revenue was up 4 per cent.
Recall’s revenue was down 3 per cent to US$248 million, reflecting the impact on the Secure Destruction Services (SDS) business of lower activity in the USA and Europe and lower paper prices. Excluding SDS, Recall’s revenue was up 2 per cent as its document management solutions business continued to grow.
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