2006-11-09 Brambles may return cash to shareholders

Logistics group Brambles Industries Ltd may consider returning more cash to its shareholders, following $US3.6 billion ($A4.7 billion) of asset sales.

Chairman Don Argus flagged a possible return of surplus cash at the company's annual general meeting on Thursday and reiterated a positive outlook for Brambles in fiscal 2007.

"I think our actions speak louder than words - we're showing that we will give back the surplus capital after we've considered the growth opportunities are there," Mr Argus told shareholders at the meeting in Melbourne.

"There's a range of options we will consider including special dividends."

But Mr Argus explained that reinvestment in the business and maintaining the balance sheet would be priorities.

"As a board you would want us to reinvest into growth. It is a little simple equation ... that shareholder value comes from profitability and growth," he said.

"Clearly we need to be able to get a good balance sheet as we go forward."

In 2005/06, the company paid a 34.5 cent special dividend and increased its final dividend to 13.5 cents from 11.5 cents.

But Brambles warned that before the Anglo-Australian company decided on any cash returns, it wanted to see how many investors decided to take a cash alternative rather than shares in its planned new, unified company.

The process of unification got the nod from Federal Treasurer Peter Costello on Thursday, reversing conditions made in 2001 when Brambles merged with UK-based GKN plc in a dual-listed company structure.

Brambles' chief executive officer and chief financial officer will still have their principal places of residence in Australia.

"Based on this confirmation, and noting that the restructure and listing would continue Brambles' strong Australian identity and focus, I have also decided that the conditions that I imposed in July 2001 are revoked, subject to the termination of the dual listed companies structure," Mr Costello said.

Brambles has been conducting a divestment program and reorganisation, so it can concentrate on its key operations - the global pallet business CHEP and digital information storage business Recall.

Mr Argus repeated the positive forward outlook he gave at a meeting for London shareholders on November 1.

"The outlook for Brambles remains positive," he said.

"In 2007 we expect further good progress for CHEP and Recall together with solid cash generation for the group.

"Overall CHEP is expected to deliver another year of good performance in 2007, with continued operational improvements across the region," Mr Argus said.

Brambles shares on Thursday ended three cents lower at $12.65.