After a series of disappointments Brambles shareholders are hoping that a lift in sales will be the first step in a turnaround that will position the company as another great Australian growth story. For the last decade Brambles has been battling to make its international pallet operation deliver the sales and profit growth that it was capable of. Management made many mistakes along the way.

Because Brambles is dual listed it is forced to report results some months ahead of its full years results. These results, which cover a period of ten months show sales growth rise of 13 per cent in US dollars. This translates to a gain of 6 per cent in constant currency terms and is in line with the interim report.

Analysts are expecting those sales increases to translate to an earnings per share rise from 39 cents to somewhere in the vicinity of 45 cents.

But now that the stock is priced at around $9, growth will have to continue at a strong clip and earnings per share will need to lift by around or above 10 per cent a year. Once you receive a high growth classification any reversal is hammered, in this case because Brambles has disappointed the market so many times before.

Accordingly the stock was hit hard when Wal-Mart said it was looking at a different pallet supply arrangement. Brambles having opened up the pallet market is now going to encounter more competition in the US but it is in a very powerful position and while long term margins may be affected it will take time. When the market came to understand this the stock recovered.

Now that Brambles has achieved its dominance of the global industry its challenge is to further improve its delivery – particularly in the US where clearly Wal-Mart went looking for a better service. And Wal-Mart winces at the high profit margins Brambles is achieving – it is not used to that from suppliers.

But these are the challenges that all companies with a global presence face.