06/02/22 Brambles expected to grow earnings

Brambles Industries Ltd is expected to have grown earnings in the first half of the year, as the logistics group embarked on the sale of non-core assets.

Brambles - the world's biggest supplier of wooden pallets for storage and transport - has not provided any quantitative earnings guidance for the 2005/06 first half.

But it has forecast "further good growth" in profits this financial year.

Analysts are expecting an interim result in the range of $A342 million ($US253.25 million) and $A408 million ($US302.12 million), with a consensus of $A373.33 million ($US276.45 million), according to a survey by AAP.

That would compare to an net profit of $A234.8 million ($US173.87 million) in the first half of 2004/05.

Brambles, which will announce its interim results on Thursday, will be reporting for the first time in US dollars and under the new international accounting standards.

CommSec analyst Matt Crowe said the market will be looking for further guidance on Brambles recently-announced asset sale.

"What we're looking for is whether the asset sales of Cleanaway and Brambles Industrial Services have progressed any further and guidance on what prices to expect," he said.

"The focus of Brambles is always on (pallet business) CHEP, especially these days with the assets sale, and to a lesser extent Recall."

Brambles announced in November that it would sell its waste management division Cleanaway, steel industry support unit Brambles Industrial Services and its regional businesses, and focus on its core pallet business CHEP and its document management assets Recall.

At the same time, Brambles unveiled plans to scrap its dual-listed structure and create of a new holding company, which would have a primary listing on the Australian Stock Exchange (ASX) and a secondary listing on the London Stock Exchange.

Mr Crowe said CHEP's US operations were performing very well, while its European business had some way to go following its restructuring efforts in recent years.

"Europe is performing well but it's mostly because of price increases," he said.

"The key thing people will focus on in the outlook is whether they will start to grow their volumes now that they've got their price changes pushed through."

Brambles estimates that the divestment of its waste management, industrial services and regional businesses could generate as much as $2.8 billion in capital, which will be returned to shareholders via a share buyback or other means.

Analysts put the value of the sell-off even higher, at around $3.5 billion.

Brambles began offloading non-core assets in the first half with the sale of Cleanaway Germany for $893 million, its northern hemisphere industrial services business, the US plastic container operations and its specialised tank container assets.