BRAMBLES has predicted an end to the worst of the downturn, which left its depots in the United States and Europe flush with pallets sent back by hard-pressed clients.

The freight pallet company yesterday posted a 30 per cent fall in net profit to $US453 million ($546 million) for the full year. Sales revenue rose just 1 per cent to $US4.01 billion.

The company's automotive and recycled paper operations were hardest hit by the slowdown, but Brambles also incurred an increase in storage and handling costs as customers destocked to counter the economic slump and returned CHEP pallets to its depots. Pallets account for about 89 per cent of Brambles' sales revenue.

The chief executive, Mike Ihlein, insisted the storage costs would be a ''temporary phenomenon'' and said he hoped the company would return to growth in its biggest markets.

Shares in Brambles, the world's biggest supplier of pallets, rose 25c to an eight-month high of $7.15 after the earnings report, which surpassed market expectations.

Mr Ihlein has a bullish reputation and said his optimistic view was based on signs of improvement in the French and German economies. But he admitted it would be difficult to increase prices over the next 12 months.

''There are some positive signs, and I think we are seeing signs that the destocking our customers were putting in place … is coming to an end,'' he said.

The company has laid off about 600 of the 750 workers it said it would axe in February. It is also part way through scrapping 7 million CHEP pallets in the US - or almost one in 10 - after manufacturers and retailers returned the stock.

Fears among investors that iGPS, a rival based in Florida, had lured customers away from its US CHEP business were somewhat allayed by Brambles report that it had won more business than it had lost.

The company provided few details about the progress of a review of its US operations that is set to be made public in October.

But Mr Ihlein said it was ''absolutely clear'' wood pallets would not be altogether replaced by plastic ones, even though plastic was an option in niche markets.

''Wood is here to stay. It doesn't mean we won't continue to look to alternatives … but there is no question that wood is the long-term sustainable solution for the lowest cost.''

Brambles will pay a final dividend of 12.5c a share, down from 17.5c last year