BXB Brambles Limited

   By Stuart Condie 
 

SYDNEY--Logistics company Brambles Ltd. reported a 13% fall in half-year profit against a backdrop of what its chief executive called increasing political instability and macroeconomic uncertainty.

Brambles reported a net profit of US$277.9 million for the six months through December, down from US$$319.8 million a year earlier, largely due to the absence of the year-ago period's contribution from its offloaded reusable plastic containers business.

Underlying profit, a measure of continuing operations that strips out financing costs, tax and discontinued items, rose by 8% to US$278.9 million, on a constant currency basis in the half-year period.

Half-year revenue rose by an above-guidance 7% to US$2.40 billion after stripping out the impact of currency swings, in line with management's expectation for sales growth of mid-single digits through the cycle.

Brambles said Monday that global transport and lumber inflation had moderated compared to a year ago. Combined with supply chain efficiencies, that helped offset anticipated direct cost increases in the U.S. and higher indirect costs across the group.

Labor and property related inflation and temporary inefficiencies during the rollout of Brambles' automation program drove an increase in plant costs in the U.S.

Brambles said Monday underlying profit growth across the full-year was expected to be in line with sales revenue growth.

"Our operating environment in the first half was characterized by increasing macroeconomic uncertainty and ongoing political instability, particularly evident in major European markets," Chief Executive Graham Chipchase said.

"Our first-half sales performance reflects the resilient nature of our business."

Directors cut the interim dividend to 13.38 Australian cents from 14.50 cents a year earlier.

Brambles shares have largely recovered from the 15% selloff that followed its fiscal 2019 result and cautious outlook due to an economic slowdown in major markets. Investors have seen the stock as a defensive exposure to developed market and consumable products, with limited exposure to Asia and the coronavirus.

That shortlived retreat represented a dip in a largely steady share price improvement since a rare profit warning and hefty writedowns in the 2017 fiscal year. Asset sales have steadied Brambles' share price, although labor shortages in key markets and import tariffs have bitten.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

February 16, 2020 17:07 ET (22:07 GMT)

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