Brambles Ltd., the world's biggest supplier of pallets used to move and store goods, said full-year profit rose 36 percent as it attracted more U.S. customers.

Operating profit rose to $585.7 million, or 37.8 cents a share, in the 12 months ended June 30, from $430.1 million, or 25.5 cents, a year earlier, the Sydney-based company said in a statement to the Australian Stock Exchange today.

Chief Executive Officer Mike Ihlein is winning clients in the U.S. for his document storage business Recall and the CHEP Americas pallet unit, where earnings are growing at twice the pace of Europe. He added CHEP contracts with Coca-Cola Co. and PepsiCo Inc. in China and is looking at entering that nation's automotive container market.

The ``positive surprise from CHEP Americas and Recall'' offset ``weaker than expected results in CHEP Europe and CHEP Asia Pacific,'' Citigroup Inc. analyst Tim Smeallie said in a report today. Recall manages and stores data and paper documents.

Operating income from CHEP Americas rose 28 percent to $416.9 million, while earnings at the CHEP Europe unit increased 14 percent to $300.6 million. Recall's operating profit rose 22 percent to $118.5 million

CHEP Americas sales rose 8 percent to $1.43 billion, with new U.S. customers accounting for about one-quarter of the revenue growth. Overall CHEP sales rose to $3.22 billion, from $2.96 billion a year ago.

Market Share

Brambles shares fell 29 cents, or 2.2 percent, to A$13.10 at the 4:10 p.m. close on the Australian stock exchange. The stock has risen 2.1 percent this year, trailing the benchmark S&P/ASX 200 Index's 5.9 percent gain.

CHEP, which counts General Motors Corp. and Procter & Gamble Co. as customers, boosted profit by winning market share and trimming costs through its U.S.-led restructure.

In China, a market Brambles entered about nine months ago, the company signed Coca-Cola and Pepsi as clients and is talking to more retail customers.

Brambles owns 280 million reusable pallets and containers, which it rents to 300,000 companies. The pallets, which cost about $16 each to make, are wooden platforms used to move goods on forklifts.

``We'll dedicate resources to looking at acquisitions in the supply-chain solution space,'' Ihlein said in an interview today. ``Nothing's been identified yet but I'm hopeful we'll find something over the course of the next 12 months.''

Takeover Focus

Brambles today said Asciano Ltd., a ports and rail owner spun off from Toll Holdings Ltd. this year, has lifted its stake in the company to 3.79 percent. Asciano and Toll began acquiring shares in Brambles this month, sparking speculation the company may be a takeover target.

``Everyone's more focused on the corporate action in the coming weeks for this company'' rather than the earnings, said Angus Gluskie, who helps manage the equivalent of about $380 million at White Funds Management in Sydney. ``The result was reassuringly firm, given you've got Asciano and Toll playing around the edges.''

Toll's Chief Executive Officer Paul Little today declined to comment on whether he is considering bidding for Brambles, which has a market value of A$19 billion.

``Brambles is a company that has a lot of upside for us, particularly in Asia where we see an opportunity to integrate the use of pallets into the supply chain,'' Little said on a conference call after Toll announced full-year net income climbed 61 percent.

Buy Back

Brambles plans to buy back as much as a further 10 percent of its stock, it said. The company has spent $3.4 billion on capital management since November 2005.

The buyback isn't part of a defense against any takeover bid, Ihlein said. He also said that Asciano hasn't given any intentions for its stake in Brambles.

Smeallie at Citigroup kept his ``hold'' rating on the stock with a price target of A$13.

``To be more bullish on Brambles, we have to attribute a more than 50 percent chance of a successful takeover at more than A$15.50 per share and/or very bullish growth assumptions,'' he said.

To contact the reporter on this story: Chia-Peck Wong in Sydney on cpwong@bloomberg.net

Last Updated: August 22, 2007 02:17 EDTBrambles Profit Rises 36% on New U.S. Customers (Update3)

By Chia-Peck Wong