Brambles' sales revenue of US$2,397.6 million increased 7% at constant currency with growth in every region. Volume growth contributed 4% to Group growth and was driven by expansion with new and existing customers across all CHEP pallet businesses. Like-for-like volumes were solid in the Americas and Asia-Pacific regions, while there was a notable slowdown in the European pallet and automotive businesses driven by challenging economic conditions.
Commenting on the 1H20 results, Brambles’ CEO, Graham Chipchase, said: “Despite a range of challenges, we delivered sales and earnings growth across all our segments and materially improved Group cash flow generation in the first half.”
“Our operating environment in the first-half was characterised by increasing macroeconomic uncertainty and ongoing political instability, particularly evident in major European markets. In the US, while transport and lumber inflation continued to moderate, labour and property costs continued to increase.
“In this context, our first-half sales performance reflects the resilient nature of our business as we continue to expand with new and existing customers despite price realisation to recover higher costs in most markets. Sales revenue growth of 7% was particularly strong, and above our guidance range, as the anticipated moderation in like-for-like volumes across our European pallet and automotive businesses was offset by customer contract timing benefits in the US pallet business which are not expected to repeat in the second half of the year.
“Underlying Profit growth of 5% (including the impact of AASB 16) was in line with guidance and included initial benefits from supply chain and asset management initiatives in the Americas region. As anticipated, margins in our US business started to improve with a one percentage point margin increase delivered in the half. This is in line with our stated objective to improve US margins by 2-3 percentage points through a combination of pricing, efficiency gains and cost-out initiatives.
“It was also particularly pleasing to see the effectiveness of pricing and asset management initiatives in Latin America which delivered meaningful cash flow and asset efficiency benefits within the first year of implementation. We remain confident the actions we are taking in the region are on track to deliver further margin and cash flow benefits over the medium term.”