26/08/05 Brambles turnround in no doubt now the pallets are all stacked up

Pallet distributor Brambles Industries results yesterday provided further confirmation of the company's turnround. Profits and revenues were up and the outlook from the company was bullish about growth across all sectors.

The figures also ensured that the troubles encountered a few years ago, when 14m pallets were "lost" in Europe, were firmly put behind it. Tracking of the pallets has been sorted out and the problem is now history.
Brambles Industries financials

Scratching beneath the headline sales and profit numbers, the story continued to be good. A few years ago the company was focused on headline figures funding an increasing number of pallets but cash flow was suffering.

The company has turned that round too. After dividends, Brambles had in the year to June free cashflow of £200m - most of it used to repay debt.

For good measure, those dividends were increased to 9p from 8.1p last year. The forecast dividend yield is 2.7pc.

However, the company's performance has not gone unnoticed. The stock has risen more than 50pc in the past year to close yesterday at 331¼p. That puts it at about 20 times forecast earnings which sounds pretty steep, although finding suitable benchmarks is difficult.

Support for the price may be forthcoming if the stock is admitted to the FTSE 100 at the next quarterly reshuffle which could trigger more buying from tracker funds. Changes to the index will be based on companies' market values on September 6.

In April, Questor recommended that shareholders strongly consider taking profits. The stock has defiantly risen almost 10pc since then. However, if you're sitting on large profits we once again recommend taking at least some of them now.