BXBCD Brambles Ltd

   By David Winning 
 

SYDNEY--Logistics company Brambles Ltd. (BXB.AU) said an overhaul of U.S. tax laws helped drive a tripling in half-year profit, as it reported further progress in turning around its North American pallets business.

Brambles reported a net profit of US$447.2 million for the six months through December, up from US$146.2 million a year earlier. The result was boosted by a one-off benefit of US$130.1 million tied to a reduction in the company's net deferred tax liability in the U.S.

Underlying profit, a measure of continuing operations that strips out financing costs, tax and one-time items, rose by 1% to US$493.7 million, on a constant currency basis in the half-year period.

Chief Executive Graham Chipchase has aggressively pushed for changes at the company after the stock sold off following a rare profit warning and hefty writedowns in the previous fiscal year.

Brambles recently completed the sale of its North American recycled whitewood pallets business to Colorado-based private equity firm Grey Mountain Partners in a deal valued at US$115 million including debt. The CHEP Recycled unit, which operates in the U.S. and Canada, supplies and recycles over 90 million pallets annually.

Brambles said momentum in its remaining U.S. pallets business had been positive in the past two quarters, although it continued to face cost headwinds. At the same time, consumer goods companies are pressing for discounts from suppliers like Brambles as they fight to protect margins in the face of an onslaught by e-commerce and other new competitors.

Management's response has included investment in digital businesses and innovation in supply chains. Mr. Chipchase has previously cited an example in South Africa where digitized devices were placed in banana crates so a customer could monitor environmental factors such as air flow to gauge their impact on fruit quality.

Half-year revenue rose by 5% to US$2.75 billion after stripping out the impact of currency swings, in line with management's expectation for sales growth of mid-single digits through the cycle. Brambles has been driving growth by converting customers to pooled solutions and broadening its global footprint.

"I was pleased to see a strengthening of the top line in North America with volume growth returning to historic levels," Mr. Chipchase said. "We saw an expansion with both new and existing customers, notably in the beverage and grocery sectors."

Directors of the company held the interim dividend steady at 14.50 Australian cents a share when compared with a year earlier.

-Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

February 18, 2018 17:01 ET (22:01 GMT)

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