Brambles Industries PLC
26 February 2003
BRAMBLES REPORTS 2002/03 INTERIM RESULT
Brambles Industries today reported a profit before tax and before goodwill
amortisation and exceptional items of £142million - £97million after tax - for
the six months ended 31 December 2002.
Comparable operating profits (before interest, tax, goodwill amortisation and
exceptional items) from continuing businesses were £182million compared with
£170million last year, an increase of 7%. The prior year included a one-off
charge of £31million related to the harmonisation of accounting policies at
CHEP. At constant prior year exchange rates and excluding the one-off charge,
comparable operating profit was 7% lower than last year, and was in line with
management expectations after the trading update provided to the market in
Revenue from continuing businesses at £1.45billion was 3% above the same period
last year, or 6% higher on a constant currency basis.
Operating cash flow continued to improve as Group capex decreased by 20%, with
CHEP's capex 17% lower.
As previously advised, a decline in overall comparable operating profits in CHEP
Europe on the previous year had an impact on the result. This was because of:
investment in SAP; increased service centre and transport activity and the
impact of a £4million one-off cost associated with a number of fires in service
centres in the early part of the period under review.
Comparable operating profits from CHEP Americas were up 33% to £43million with
the USA growing at 44% on a constant currency basis, before last year's one-off
charge. This growth was driven in part by the effective execution of the
performance improvement programme.
Brambles Chief Executive Officer, Sir CK Chow, said:
'We are encouraged by the strong performance improvement in CHEP USA as we
continue to gain benefits from the implementation of the performance improvement
programme to reduce costs and improve efficiency.
In CHEP Europe, measures to improve operational efficiency and asset
productivity are progressively being put in place.
The new pan-European management structure is now in place, reflecting more
appropriately the acceleration of cross-border trading and the related
increase in pan-European pallet movements and requirements of European
customers. The organisation is being streamlined and there is renewed focus
on improving service quality, reducing cost and improving the return on
capital invested,' he said.
Streamlining the organisational structure in CHEP Europe will result in a net
reduction of 300-400 positions from the European indirect workforce, and is
expected to result in annualised savings of £10million in 2004/05. A study is
also underway to develop the optimal service centre network for the pan-European
business. A review of product and service offerings, to simplify customer
administration and billings, improve service quality and align services and
pricing more closely with customer needs, has also commenced. These elements of
the restructuring programme will incur an operating exceptional cost of
The second part of the CHEP Europe restructuring plan is a programme to improve
the efficiency of the pallet pool as, from 1999, the size of the European pallet
pool grew disproportionately to the growth in revenue. This resulted in an
estimated excess of up to 14 million pallets in the pool. It is worth
emphasising that this is an issue relating to the under utilisation of our
assets. An accelerated programme is being put in place to audit, collect, and
repair pallets at customer locations as well as the redistribution of pallets
within CHEP's service network to meet customer demands. The cost of this part
of the programme is estimated to be £45million, to be shown as an operating
exceptional item as incurred over the next 30 months.
Cleanaway continued to grow revenue and performed steadily in a challenging
Recall expanded via both acquisitive and organic growth, resulting in both
revenue and comparable operating profits improving by 17% for the half.
Improvement in the Brambles Industrial Services division was driven by a strong
performance in Australia, offset partly by weaker performance in the Steel
Services activities in the Northern Hemisphere. Regional Businesses' comparable
operating profits were lower with weaker performance from Interlake due to
adverse market conditions in the USA.
'With the work that has been done to streamline and refocus the Group's asset
portfolio, CHEP, Cleanaway and Recall now represent 90% of Group profit.
Brambles Industrial Services has been successfully restructured and is now
performing soundly, and Brambles Marine in Australia and Heavy Contracting in
Europe were divested in the first half,' Sir CK said.
Basic earnings per share after goodwill amortisation and exceptional items
increased to 5.3 pence, compared to 0.9 pence for the prior year on a pro forma
basis, and 2.0 pence after eliminating the one-off charge from the prior year
Before goodwill amortisation and exceptional items, earnings per share was 5.7
pence compared with 6.0 pence in the prior year.
An interim dividend of 3.757 pence (10 cents) per share will be paid on 10 April
2003 to holders of Brambles shares at the close of business on 21 March 2003.
This dividend will be fully franked for shareholders of Brambles Industries
For further information, contact:
Investor Sue Scholes, Head of Investor Relations +44 (0) 20 7659 6012
Media Richard Mountain, Financial Dynamics +44 (0) 20 7269 7291
Investor Edna Carew, Group Manager Communications +61 (0) 2 9256 5204
Richard Manson, Group Planning & Analysis Manager +61 (0) 2 9256 5234
Media Jeannette McLoughlin, Group General Manager, Corporate +61 (0) 2 9256 5255
Communications Mobile +61 (0) 401 990 425
An analyst briefing will be held in London at 9am on 26 February. This will be
webcast and available with the slides on our website www.brambles.com.
This release has been prepared under UKGAAP. Brambles Industries accounts
prepared under Australian GAAP are being lodged at the Australian Stock Exchange
simultaneously with this release and are available on our website.
Throughout this release, all references to comparable operating profits are to '
operating profit before exceptional items and goodwill amortisation' which is a
helpful measure of the underlying trend in earnings for the Group's businesses.
Measures of business performance have been calculated in constant currency (at
previous half year's average exchange rates).
Notes to editors
Brambles is a leading global support services provider with operations in 40
countries across Europe, the Americas and Asia Pacific. With full year 2002
turnover of approximately £3 billion, comparable operating profit of more than
£400million and assets of £3.7billion, it employs some 31,000 personnel
worldwide. Its key global businesses are CHEP, CLEANAWAY and RECALL.
• CHEP is the world's pioneer and leader in the provision of
pallet pooling services. CHEP pallets facilitate the efficient operation of
supply chains for most of the developed world's leading international FMCG
(fast-moving consumer goods) companies. These companies require the fast
availability of high quality pallets and other types of standard loading
equipment and transit packaging wherever they operate. CHEP meets this need
through its global reach and scale, combined with its proven logistics and
supply chain management capability and its established pallet pools and
infrastructure in more than 30 countries.
• CLEANAWAY is a leader in the collection, sorting,
recycling, transfer and disposal of waste, particularly in UK, Germany and
Australia. Through Cleanaway in Germany, it is one of the largest paper
recycling and trading businesses in Europe.
• RECALL is a global business managing physical and digital
documents through their entire life cycle.
Brambles also has a number of other global and regional businesses, such as
Industrial Services, Meineke Car Care Center and Interlake Material Handling.
Brambles Industries is globally headquartered in Australia
This information is provided by RNS
The company news service from the London Stock Exchange
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