Shares in global logistics company Brambles have slipped after it reported a 27 per cent dip in first half profit to $US319.8 million ($A448.26 million) on higher fuel, transport and Brexit-proofing costs, and the absence of a $US103 million tax benefit from a year ago.
The company also confirmed on Monday it expects to spin off its IFCO reusable plastic container business during 2019, as previously announced in August, though the process is not finalised.
Reuters had reported buyout group Triton had trumped bids from EQT, Pamplona, PAI and Brookfield for the business that provides boxes used to transport fruit, vegetables, meat and bread.
Brambles’ revenue from continuing operations in the six months to December 31 lifted 3.2 per cent to $US2.86 billion, while underlying profit was one per cent higher to $US504.4 million.
Operating expenses rose on higher transport, fuel, and Brexit-related costs to a total $US2.43 billion.
The Sydney and London-headquartered company said while the Bexit outcome remained uncertain, it had formed a taskforce to minimise the impact on customers, with US$11 million earmarked for Brexit-related retailer stocking.
The company said it was also bracing for potential reduced access to pallet and timber supply, changes in customer demand patterns, labour shortages and potential mandatory heat treatment of its pallets.
Shares in Brambles were trading 3.11 per cent lower on the ASX at 1345 AEDT, buying $A10.89 from $A9.63 a year ago, but down from a 12-year high of $A13.45 in August 2016.
Brambles’ chief executive Graham Chipchase said the company had delivered despite ongoing cost pressures and increasingly challenging macro-economic conditions across its major markets.
“Volume growth across the Group was strong at five per cent and is a testament to the inherent benefits of our share and reuse business model across the entire supply chain,” he said.
“Notwithstanding strong rates of new customer conversions in most markets, we noted a moderation in like-for-like volume growth during the second quarter, particularly in western and southern Europe where economic conditions were most challenging during the period.”
The board has declared an interim dividend of 14.5 Australian cents per share, 65 per cent franked, up from 30 per cent franked for both the 2018 interim and final dividends.
BRAMBLES HY PROFIT DIPS ON RISING COSTS
* Net profit down 27pct to $US319.8 million ($A448.26 million)
* Revenue from continuing operations up 3.2pct to $US2.86bn ($A4bn)
* Interim dividend 14.5 Australian cents, 65pct franked, up from 30pct franked a year ago.
Originally published as Brambles profit dips 27% as costs spike