Brambles Limited (BXB) is a supply-chain logistics company operating in more than 60 countries, primarily through the CHEP brand. BXB specializes in the pooling of unit-load equipment and the provision of associated services. BXB is focusing on the outsourced management of reusable pallets, crates and containers.
Brambles’ FY2023 sales growth of 14% was reflective of pricing increases and operating efficiency, despite lower volumes. Volume declined by 2% versus the prior corresponding period with a pallet shortage in the first half, and customers holding less inventory than in the prior year. Underlying profit of USD 1 billion was 19% higher than the PCP on a basis, with improved pricing offsetting cost inflation. We maintain our fair value estimate of $14 per share for Brambles. We forecast underlying profit of about USD 1.18 billion in FY2024, representing 11% growth, which is within the firm’s guidance of 9-12% growth. Longer term growth should be supported by continued pricing improvements and efficiencies to recover missing pallets, which is more economic than making new pallets. But we expect pallet demand to remain flat, with volumes much the same as FY2023 as customers change their behaviour around holding and stockpiling inventory, amid fears of a recession.