Brambles rises on strong growth in Americas unit despite global turmoil


Higher prices and volume growth from its operations in the Americas, combined with new contract wins in Europe have propelled logistics giant Brambles to a strong first quarter.

The ASX-listed business released a trading update on Thursday which revealed a 5 per cent jump in sales revenue to $US1.16 billion ($1.72 billion) for the quarter on a constant currency basis.

Brambles has won new contracts in Europe and reported a strong quarterly update.

Brambles has won new contracts in Europe and reported a strong quarterly update.Credit:Reuters

The company's Americas division, which includes the United States, Canada and Latin America was again a financial engine room. In the Americas, sales revenue rose 7 per cent to $US602 million on a constant currency basis.

"Our first-quarter sales performance reflects pricing discipline and ongoing volume momentum despite increasing macroeconomic uncertainty in our major markets," said Brambles chief executive Graham Chipchase.

"We continue to make good progress with our US automation and procurement programs and we remain on track to deliver an annual one percentage point of US margin improvement in each of financial year 2020, 2021 and 2022," he said.

Brambles is a major supplier of pallets to businesses in 60 countries across the globe. It operates a "pooling" system of hundreds of millions of pallets that are used to transport a range of goods including fresh produce, beverages and a vast range of consumer goods.

Investors welcomed the quarterly update, pushing shares in Brambles up almost 4 per cent to $11.42 at 12.20pm on Thursday.

The company's stock price has been soft in recent weeks, after it released a cautious outlook for the new financial year when it released its annual results last month.

In a note to clients in response to the update Citi analysts said Brambles price increases were lasting, and that this should help drive operating leverage in the company's US pallets business.

"Today's trading update demonstrates top-line strength remains, despite a soft global macro outlook. Our data indicates that inflation headwinds are fading in the US, which should be supportive for CHEP Americas underlying EBIT (earnings before interest and tax) margins," they wrote.