Leading logistics company Brambles Limited (ASX: BXB) has kicked off the week by reporting a solid set of interim results for the half year ended December 31, 2014.
There are two angles worth reviewing Brambles performance from: Actual results and Constant foreign exchange (FX) results. The reason it is good to look at both is that in the first instance it allows an investor to see how much revenue and profit was actually made, while in the second instance an investor can analyse the underlying business performance without the "noise" or effect of what the FX rates did.
Actual FX results
- Brambles reported revenues of US$2.8 billion which represented a 5% increase
- Underlying profit came in at US$485 million which equated to a 6% increase
Constant FX results
While the dollar values reported for the current half don't change, the prior corresponding period for comparison do, thereby allowing for a clearer understanding of the business performance.
- On this basis, revenue increased 8% and underlying profit jumped 10%.
- Given the headwinds facing Brambles in many of its core markets as a result of difficult consumer and manufacturing environments these results highlight the defensive earnings growth this blue-chip business is capable of achieving.
Here are a few of the key drivers for the business in the recent half:
- The group's global pallet operations produced organic growth, modest pricing growth and ongoing new business wins
- Strong growth rates were achieved in reusable produce crates and intermediate bulk containers
- Underlying return on invested capital (ROIC) added 0.3% to 16%.
Outlook:
Management has maintained guidance to expect constant current revenue growth of 8% to 9% and an underlying profit of between US$1.055 billion and US$1.085 billion based on FX rates as at the 30 June 2014 and year-on-year growth in underlying ROIC.
The interim dividend was increased by half of one cent to AU14 cents, which bodes well for an increase in the final dividend as well.
