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Brambles Industries (BI.)

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Thursday 15 November, 2001

Brambles Industries

AGM Statement

Brambles Industries PLC
15 November 2001

                         BRAMBLES INDUSTRIES LIMITED

                            ANNUAL GENERAL MEETING

                       TO BE HELD ON 15 NOVEMBER 2001





CHAIRMAN'S ADDRESS



The most significant event of the past year for our Group was the completion
of the merger of Brambles Industries Limited with the support services of GKN
plc. This was overwhelmingly approved by shareholders of Brambles and GKN in
August.



I am pleased to report to shareholders that their strong support and
confidence in the value of this merger has been vindicated. Since August, the
creation of the New Brambles has proceeded quickly and efficiently. The Group
is already a leading global support services organisation. It is one of the
Top 20 companies in the Australian Stock Exchange All Ordinaries Index. It is
also in the FTSE 100 Index of leading industrial companies in the United
Kingdom.



Shareholders will recall that one of the important benefits expected from the
merger was the ability to maximise the growth and performance of CHEP,
Cleanaway and Recall. It was expected that a united ownership of these
businesses and a single senior management team would further strengthen what
was already an impressive range of assets. The recent performance of these
companies suggests that expectation will be met.



I will ask Sir CK to comment briefly on the progress of the merger. At this
point, however, I believe it is appropriate to highlight the Group's
achievements of the past year. I will also comment on events since the
September 11 tragedy in the United States, as I know that shareholders are
interested in understanding how our Group is faring in the wake of the
economic downturn in the United States and other major economies after
September 11.



Looking at the financial results for the year, Brambles Industries Limited
reported a 'headline' profit of just over $347 million. This was broadly in
line with expectations and was earned after an 18 per cent lift in sales
revenue to nearly $6.0 billion.



Earlier in the year, the Board agreed to a $195 million pre-tax writedown of
Brambles' Equipment Rental assets. This was consistent with the Board's
practice of continually monitoring the values of all of the Group's
businesses. The Board also decided to book a $45 million charge in this year's
accounts to reflect the various costs associated with the GKN support services
merger.



Largely as a result of these abnormal items, full year earnings per share fell
from 162 cents to 66.3 cents.



However, the full year dividend was marginally higher at 82 cents, with an
average of 65 per cent franking.



Some shareholders have expressed their views about the Group's dividend policy
and share price performance. I welcome their comments because I believe the
Group can point to a positive performance in both areas.



We pay our dividends out of the surplus cash we generate from our various
businesses. We need to achieve the appropriate balance between providing
shareholder value in the form of dividends and ensuring Brambles long term
growth through the judicious reinvestment of its cash into its key businesses.



As indicated at the Extraordinary General Meeting held in July this year, it
is the intention of the Board to maintain for the current financial year a
dividend equivalent to last year.



For our shareholders in Australia, we will also continue to frank shares to
the maximum extent possible. That ultimately depends, as shareholders know, on
the level of profits generated in Australia and the resultant tax we pay here.



Since the completion of the merger, Brambles stock has outperformed the
Australian All Ordinaries Index and the FTSE 100 Index. That indicates that
the intrinsic strength and value of the stock is being recognised, even in the
midst of significant economic uncertainty.



The transition of Brambles into a company with fewer but bigger businesses
continued throughout the year. The divestment and rationalisation program
contributed net profits of $69.3 million last financial year compared with
$15.1 million previously. Sir CK will discuss the latest developments in this
program.



In general terms, the result for the past financial year was pleasing given
the extraordinary amount of change experienced by Brambles. It is always
difficult for companies to maintain high performance standards and undertake
major mergers at the same time. I believe it is fitting for the Board to note
the commitment and effort of Brambles' management and staff that has enabled
substantial organisational change without any substantial loss of earnings
momentum.



When you consider some of the many achievements of the Group's key businesses
during the past year, the solid foundation for future success is evident.



CHEP's pallet and container pooling businesses continued to grow and in
constant currency terms sales were 13 per cent higher. Growth was particularly
high in the United States as a result in increased services to the suppliers
of major retailers such as Wal Mart and Home Depot.



The launch of the returnable transit packaging pool also increased revenue.
The Group is very enthusiastic about the potential of this market not only in
the United States, but also in Europe.



CHEP revenues grew by seven per cent in Europe in constant currency terms. The
United Kingdom pool had strong growth. There were also encouraging signs in
Europe following the commencement of the previously announced contracts with
Kraft, Nestle and Reckitt Benkiser.



Australia also continued to perform well. It is worth noting that the
Australian pallet pool is now 50 years old - yet still managed growth of
around 14 per cent last year. That indicates the potential of our markets in
the United States and Europe where penetration rates are much lower than in
Australia and the United Kingdom.



CHEP has a global market leadership position in the United States, Australia
and Europe. The primary markets for CHEP are groceries and fast moving
consumer goods. Our sales volumes remain quite robust and we expect to
continue to grow despite lower economic activity.



Let me now talk about Cleanaway. Cleanaway's sales in Europe rose
significantly. This reflected the full year impact of Waste Management
Deutschland in Germany and the acquisition of Serviceteam in the United
Kingdom.



The Serviceteam acquisition significantly increased Cleanaway's involvement in
municipal contracts in the United Kingdom. Cleanaway's municipal waste
business in the United Kingdom has trebled in size as a result, and the
municipal waste business now contributes around 40 per cent of Cleanaway UK's
revenues. I emphasise this point because the municipal business has
traditionally not been influenced by economic downturns.



In Australia, Cleanaway strengthened its market leadership position with the
acquisition of Waste Master in the Northern Territory. Cleanaway is now
represented in every State and Territory in Australia. The company has also
entered the New Zealand market for the first time.



There are two broad trends that continue to have a positive impact on
Cleanaway. These are increased government regulation in regard to waste
management and disposal; and the progressive change from waste disposal to
increased recycling and recovery. Cleanaway is well positioned in its markets
in the United Kingdom, Germany and Australia.



Brambles is relatively shielded from the difficult hazardous waste market with
a major proportion of its income being generated from collection and treatment
processes. Accordingly, most of Cleanaway's activities have not been impacted
by the economic slowdown. It has a broad mix of municipal, industrial and
business customers and this diversity tends to reduce the impacts of slower
growth.



The other key business we are focussing on is Recall.  It had an excellent
year in terms of growth and progress with its global brand development and
service standardisation. It expanded its business through acquisitions in the
United States, South America, Europe, Asia and Australia.



Recall divides its operations into four segments: Document Management
Services; Integrated Document Solutions; Data Protection Services; and Secure
Destruction Services. Its general growth momentum has been maintained.



There has been no significant change in the Document Management business. Data
Protection has grown as awareness by companies of the need for disaster
recovery capabilities increases. Recall has been actively involved in the
recovery process in New York.



The economic downturn in the United States and other leading economies
following the September 11 tragedy has been well publicised. The widespread
nature of these economic impacts has meant that most major companies have been
affected irrespective of their industry or business location.



The sheer size and importance of the United States economy means that economic
conditions there inevitably affect other nations. It would appear that the
United States may have been heading for an economic slowdown that was
compounded by the events of September 11. As a result, the United States,
Europe, Asia and Australia have all forecast lower economic growth.



For the reasons I have just outlined, Brambles' key businesses have proven to
be resilient compared to many other companies. CHEP, Cleanaway and Recall
provide services that are less sensitive to economic conditions. In the case
of Recall, demand for some services such as Data Protection has actually
increased since September 11.



In summary then, the revenues of Brambles three key businesses continue to
grow despite the economic conditions in their markets.





CHIEF EXECUTIVE OFFICER'S ADDRESS



Brambles has been successful during the past year in achieving two broad
objectives.



First its key businesses continued to grow their revenues, and to strengthen
their market positions.



Brambles has also completed the merger with the Support Services businesses of
GKN on August 7 to create the New Brambles - which is a world leader in
Support Services.



The fact that it could do both without any loss of momentum is a testimony to
the inherent strength and quality of the major businesses within the Group. It
also reflects the capability and commitment of our people. I take this
opportunity to thank the many Brambles men and women who have worked so hard
to make this a reality.



The results of Brambles Industries Limited demonstrate the ability of its
businesses to grow in challenging times.



In the latest financial year all of our key businesses recorded strong revenue
growth that was generated both from organic investments and through selective
acquisitions.



The Industrial Services activities had a mixed year. Europe had satisfactory
sales and profits. However, Australia and the U.S. operations were affected by
a combination of adverse market conditions and internal restructuring. The
management of this part of our businesses has taken speedy action to reduce
costs and to make their operations more efficient at lower activity levels.



Brambles other continuing businesses such as Marine, Specialised Transport and
Eurotainer, increased sales despite difficult market conditions.



Brambles completed a number of planned divestments. These included FMS in
France, Car Transport in Italy, Brambles Equipment Division in Australia, and
Brambles Security International and Ensco in the United States.



The merger of Brambles and GKN's Support Services brought together businesses
to provide a strong platform for future growth. In particular, the merger has
united the ownership of CHEP and Cleanaway.



An indication of this inherent strength is the fact that on a pro forma basis,
the total revenue for the Combined Group was $8.6 billion in 2001. That was 21
per cent higher than the revenue earned in the previous year, on the same
proforma basis.



Pro forma profit before tax, goodwill amortisation and exceptional items was
$912 million.



Another of the benefits from the merger was the creation of a unified
management structure for the Combined Group.



I am pleased to report that the integration process has gone well. We have
quickly and successfully created a single senior management team for the New
Brambles.



We started with the advantage of having the senior executives of our key
businesses continue in their roles. We have also added a number of experienced
and accomplished professionals to the senior team.



The integration of the CHEP and Cleanaway's operations in Australia, New
Zealand and Asia Pacific, as well as CHEP South Africa, with their respective
global organizations happened immediately after the merger in a seamless
manner. There is a sense of excitement amongst our people about the enhanced
business prospects and career opportunities that will emerge from being part
of a considerably larger global company.



By successfully integrating our key businesses under a unified management
team, we have been able to move relatively quickly to the next stage in the
building of the New Brambles.



One of the key tasks in this next stage will be the further development of our
business strategies.



We will be focusing on the growth of our three key businesses - CHEP,
Cleanaway and Recall. Last year, these three businesses accounted for nearly
80 per cent of the Combined Group's profit.



CHEP accounts for over 50 per cent of the New Group's profit. It is a unique
franchise that combines market leadership, high growth and profitability.



Not only is there substantial growth potential in the pallet pool markets in
the United States and Europe, there are exciting opportunities provided by new
products such as returnable plastic crates designed for perishable goods. That
is why we have made a strategic decision to press ahead with the launch of
RTPs in the United States, Europe and Australia at the same time



The growth prospects of Cleanaway are also highly promising. Increasing
environmental awareness throughout the world is leading to a growth in the
demand for recycling and recovery services as well as the traditional waste
collection and disposals



Cleanaway is a clear market leader in Australia and strengthened its position
last year. It is one of the top three waste management companies in the United
Kingdom and has a significant market position in Germany. The acquisition of
Serviceteam in the United Kingdom has substantially enhanced the scope and
potential of Cleanaway's operations there.



Given its growth potential and strategic importance, we now show Recall as a
separate business segment and report on its results. At constant exchange
rates, the company grew revenue 45 per cent and profits by 77 per cent last
year. Much of its growth came from the 14 acquisitions it completed. Recall is
now one of the world's leading information management companies, with strong
growth potential.



The strategy for the New Brambles is to build on the inherent strength of
these leading Support Services businesses. We also intend to pursue a range of
options in regard to our other businesses. These include Industrial Services,
Interlake, Meineke, Marine, TCR and Eurotainer. Collectively, and after the
completion of defined divestments, they would contribute about 15 per cent of
Group profit. However, they all have strong and often unique market positions
that return profits and generate cash. Our approach will be to 'challenge'
their management to be the best performer of their industry sector.



Divestments



Now let me say a word about our divestment program. Today we announced that
agreement has been reached with VTG Lehnkering, a subsidiary of Preussag, for
them to acquire Group CAIB, our European rail wagon rental business. The sale
is conditional on the usual approval of the relevant competition authorities.
After completion of this transaction, aggregate proceeds from divestments
within this program will be close to one billion Australian dollars. The
process for the sale of our equipment rental businesses in the U.S., Australia
and Germany is underway. Under current economic conditions, their divestments
are not without challenges and are likely to take some time.



Summary



In summary, your Company has made a good start to this transition year.





CHAIRMAN'S CURRENT TRADING UPDATE



As I noted earlier, this is very much a year of transition for Brambles and we
remain confident about the Group's prospects despite the current uncertain
economic environment.



The events of September 11 have changed the world in many ways. The global
economic activities, particularly in the U.S. and Europe, have slowed down,
with a greater degree of uncertainty about their outlook.



For Brambles the current financial year started well, with our major
businesses trading to plan. As might be expected, however, September was a
weak month. Whilst Cleanaway and Recall continue to grow and so far have not
been affected by the economic downturn, CHEP's revenue growth since September
has slowed, which has led to some pressure on CHEP's profit performance. Some
of our other smaller businesses such as Interlake, Equipment Rental and Heavy
Contracting have been more significantly affected by the reduction of
activities in their sectors.



As a consequence, in the four months to the end of October, Group revenues
from continuing businesses were ahead of last year but trading profit
excluding exceptional items, at constant exchange rates, was a little behind.



CHEP, Cleanaway and Recall are fundamentally strong businesses with
significant potential for growth. Although it is difficult to predict
accurately how the world economy will develop in the months ahead, the
inherent strength of these businesses together with the financial robustness
of the Group places Brambles in a good position from which to make progress.







For further information, contact:

London
Media              Richard Mountain, Financial Dynamics     +44 (0) 20 7831 3113
Investor and Other Sue Scholes, Head of Investor Relations  +44 (0) 20 7659 6012

Sydney
All Enquiries      Ron Burke
                   Group General Manager Corporate Affairs  +61 2 9256 5255