BXB Brambles Limited

   By Rebecca Thurlow 
 

SYDNEY--Logistics company Brambles Ltd. (BXB.AU) slashed its full-year earnings guidance after first half net profit halved on slowing North America pallet sales and a large impairment of oil and gas assets.

The pallet and container provider on Monday reported a net profit of US$146.2 million for the six months through December, down from US$290.9 million a year earlier.

Brambles in October combined its oil and gas business with Hoover Container Solutions to create an independent 50:50 joint venture company Hoover Ferguson Group. Brambles' first half result includes a US$120 million non-cash impairment of the group's investment in the JV.

Underlying profit, a measure of continuing operations which strips out financing costs, tax and one-time items, rose by 3% to US$468.9 million, on a constant currency basis, in line with guidance.

Facing continued headwinds in its North American business, the company said it now expects underlying profit to be flat in fiscal 2017. That was more detailed than its profit warning on Jan. 22, which signaled that it would fall short of an earlier 9-11% growth goal.

Chief Executive Tom Gorman said the performance of the pallets business in North America was disappointing.

"We came into this financial year with good momentum in North America and set our expectations high for continued growth. Unfortunately, a combination of market-driven cost factors, and increased competition have resulted in overall performance well below our expectations," said Mr. Gorman who is retiring from the role Monday to make way for incoming chief executive Graham Chipchase.

Brambles said competitive pressures in the North American pallets business resulted in lower-than-expected customer conversions to pooling and muted price growth. In addition, customer destocking hit volume growth.

The company also said it will pay a first half dividend of 14.5 Australian cents a share, steady with a year earlier.

-Write to Rebecca Thurlow at rebecca.thurlow@wsj.com

(END) Dow Jones Newswires

February 19, 2017 17:33 ET (22:33 GMT)

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