14/11/05 Brambles says Q1 sales, profits ahead

Brambles Industries Ltd (BI.L: Quote, Profile, Research) (BIL.AX: Quote, Profile, Research), the world's biggest pallet supplier, said on Friday first-quarter sales and profits were well ahead of the same period last year and it expected to make further good progress over the full year.

"We continue to expect further good progress in profit and solid cash generation in the year ahead," Chairman Don Argus told the firm's annual shareholders meeting.

The dual-listed Anglo-Australian group said the performance would be led by its main CHEP unit, which provides pallet and plastic container pooling services, with some 550 outlets in 40 countries leasing some 200 million pallets.

CHEP, it said, had performed strongly in each region during the first quarter to end-September, with sales in the Americas region 10 percent higher in the first quarter, and 5 percent higher in Europe.

"Overall, CHEP is expected to deliver good growth in all regions in 2006, driven by continued sales growth and continuing benefits from operational improvements," Argus said.

Brambles said it expected the sale of its Cleanaway waste management business in Germany to be completed early next year, and added that the UK business was showing improvements and gaining from a restructuring that took place last year.

"For the full year, a marked improvement in performance is expected from the continuing Cleanaway activities in the UK and (the) Rest of (the) World, with the first half being particularly strong when compared with the prior comparative period," it added.

Brambles shares closed 0.9 percent up at A$8.98 in Australia on Friday. In London, they ended at 335 pence on Thursday.

Pallet retreat won't stop Brambles

Brambles is confident it can continue its profit recovery and return to market favour this year, but admits its core pallet business in Europe has suffered reductions in volume because of price increases.

The company reiterated its profit guidance at its annual meeting in Sydney on Friday, saying first quarter sales and profits were well ahead of last year.

Chief executive David Turner said the company expected to continue making "good progress" in profit and cash generation.

He said price increases in its CHEP pallet business in Europe had caused a fall in some volumes but major customers had not been lost.

"At the fringe there are some volumes that are going away because it's just too expensive for the customers to use our pallets, and that's fine by us," he told reporters.

The pallet pool division is the jewel in the crown of Brambles' overall business, helping the company to boost profit by 72 per cent to $528.8 million in 2004-05.

On Friday, chairman Don Argus was forced to defend the company's dual listing in Australia and the United Kingdom, saying "if you didn't have the DLC I would hate to think where the share price would be today".

The board also faced the wrath of shareholders over the company rule that directors seeking re-election, including Mr Argus, were not permitted to address them on the subject.

Brambles said such addresses were not necessary because details on the directors' backgrounds and contributions to the company were clearly outlined in the annual report.

Shares in Brambles rose 8c to $8.98, which is not far off a three-year high of $9.12 reached in August.