Brambles Profit Falls as Tax Benefit Isn't Repeated
February 17 2019 - 5:12PM
Dow Jones News
By David Winning
SYDNEY--Logistics company Brambles Ltd. (BXB.AU) reported a 27%
fall in half-year profit as it grappled with rising transport and
fuel costs, while a one-off tax benefit a year ago wasn't
repeated.
Brambles reported a net profit of US$319.8 million for the six
months through December, down from US$447.2 million a year earlier
when it benefited from a US$130 million gain tied to a reduction in
the Australian company's net deferred tax liability in the U.S.
Underlying profit, a measure of continuing operations that
strips out financing costs, tax and one-time items, rose by 1% to
US$504.4 million, on a constant currency basis in the half-year
period.
Brambles has been striving to engineer a business turnaround
after its stock was sold off following a rare profit warning and
hefty writedowns in the 2017 fiscal year. While asset sales have
steadied Brambles's share price, management has faced newer
challenges with labor shortages in key markets and higher lumber
costs, partly driven by import tariffs.
On Monday, Brambles said it expected to spin off or sell its
IFCO RPC business that supplies crates for moving fresh produce to
retailers in Europe, Asia and the Americas by the end of 2019. The
proposed transaction, which would follow earlier deals to sell its
North American recycled whitewood pallets business and stake in an
oil-and-gas joint venture with Hoover Container Solutions, was
first announced in August.
Half-year revenue rose by 7% to US$2.86 billion after stripping
out the impact of currency swings, in line with management's
expectation for sales growth of mid-single digits through the
cycle. Brambles has driven growth by converting customers to pooled
solutions and broadening its global footprint.
"In response to sustained levels of elevated cost inflation in
most major markets, our businesses implemented surcharges and
exercised contractual indexation clauses to offset three-quarters
of the inflationary cost increases experienced during the period,"
Chief Executive Graham Chipchase said.
Directors of the company held the interim dividend steady at
14.50 Australian cents a share when compared with a year
earlier.
Brambles said it expects modest growth in underlying profit in
the 2019 fiscal year after stripping out currency swings, as price
rises and efficiency savings cushion the impact of cost
pressures.
-Write to David Winning at david.winning@wsj.com
(END) Dow Jones Newswires
February 17, 2019 16:57 ET (21:57 GMT)
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