2006-08-23 Brambles profit jumps on pallets

Brambles Industries Ltd., the world's top pallet supplier, reported a 29 percent rise in annual profit on strong performance by the U.S. arm of its CHEP pallet-leasing unit, and its shares rose 5 percent as it said it expected another good year.

The Anglo-Australian group, which leases 200 million pallets for shifting goods around the globe, did not provide a specific forecast, but said it expected robust growth at CHEP Americas and improved margins in its CHEP Europe business.

"Despite higher oil prices and some uncertainty around the world, our businesses are performing very well and we expect to have another good year," chief executive David Turner said in a statement.

Brambles said profit from continuing operations for the year ended June 30 rose to $771.3 million from $599.8 million a year ago. Sales rose 8 percent to $3.52 billion.

Brambles' CHEP Americas business racked up a 59 percent gain in operating profit to $325 million on a 12 percent sales gain.

"The company has delivered strong profits and the stock also got a boost from robust outlook. The company appears to be in a better shape to perform after the recent asset sales," said David Wong, head of equities at IAG Asset Management.

Shares jumped 5 percent to a three-month high of A$11.38 in Wednesday morning trading.
Targeting China

Brambles also said it plans to launch a pallet-leasing business in China.

"The Chinese opportunity is really early. We are putting a management team on the ground, we've got the top four or five people in place and we are talking to customers," Turner told a media briefing.

Brambles has generated $3.6 billion from selling its waste management business and material handling and logistics unit as part of a restructure announced late last year.

The restructure was aimed at increasing focus on on its profitable CHEP division and data management division Recall, which made up 54 percent of sales in fiscal 2005.

When Brambles announced the sales program it said at least $2.1 billion of surplus capital would be used for share buybacks. So far, it has bought back $645 million in shares.

As part of the revamp, Brambles is creating a new holding company for CHEP and Recall, which will have a primary listing on the Australian Stock Exchange and a secondary listing on the London Stock Exchange. Brambles said it expects to complete dual-listed companies structure by early December.