UPDATE: Brambles Loses ConAgra Pallet Contract

Global logistics firm Brambles Ltd. (BXB.AU) confirmed Monday that its CHEP pallet pooling business has lost another major U.S. customer, packaged foods business ConAgra Foods Inc. (CAG).

In a statement, Brambles said that ConAgra advised its CHEP Americas division late last week that it would transfer most of its volumes to an alternative pallet pooler, which analysts expect to be Orlando-based plastic pallet supplier Intelligent Global Pooling Systems, or iGPS.

Shares in Brambles fell as much as 5.4% Monday to a near 10-month low of A$6.14 before closing at A$6.17, underperforming a wider market that shed 2.8%.

Brambles said the loss of one of CHEP America's 10 largest customers amounted to less than 1% of its annual group sales and would have no impact on its results for the year to June 30, where it has forecast constant currency sales to be broadly in line with the US$4.02 billion it posted in fiscal 2009.

"It is always disappointing to lose business," said Brambles Chief Executive Tom Gorman.

"We are focused on delivering customer needs and strengthening our product offering in CHEP USA through the Better Everyday program, which remains on track."

He said feedback on the customer service and pallet quality program introduced by his predecessor Mike Ihlein last October "continues to be positive" despite the loss of another high profile food company contract and even as a 12-month price freeze for CHEP customers remains in place.

In March 2009, the Quaker Foods, Gatorade and Tropicana units of PepsiCo Co. said they would switch their business exclusively to iGPS' all-plastic pallet pool in preference to using CHEP's wooden pallets. iGPS was not immediately available for comment.

"Brambles expects ConAgra to transition these volumes over the course of the 2011 financial year," the firm added.

-By Bill Lindsay, Dow Jones Newswires; 61-2-8272-4694; bill.lindsay@dowjones.com

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