Brambles: management boosts investment, supports customer growth
Reporting season for corporates was a key driver of stock movements for February. Brambles Limited’s (ASX:BXB) global transport business produced a solid profit result for the first half of its financial year, together with an increase to profit guidance for the full year. Noteworthy features were solid margin results for the core CHEP pallet businesses, together with contract wins in the US for JNJ and Mountain Farms. The company’s RPC, or rigid plastic container, business also reported reasonable growth, despite the loss of a key contract for Safeway in the US. At the full-year results in August last year, BXB investors reacted negatively to BXB’s decision to boost CAPEX to support future customer growth. To our eyes, these results and the increased future profit guidance vindicated management’s decision to boost investment and support customer growth, particularly when you factor in the high incremental margins and return on capital BXB achieves by expanding its pallet pool.
View the February 2016 performance reports: