In morning trade the Brambles Limited (ASX: BXB) share price has pushed higher following the release of its third quarter trading update.
At the time of writing the supply chain logistics company's shares are up over 1% to $11.97.
What happened in the third quarter?
According to the release, for the first nine months of FY 2019 the company has achieved sales revenue from continuing operations of US$3,409.0 million. This is an increase of 7% on the prior corresponding period in constant currency or 2% in actual currency due to a stronger U.S. dollar.
Management advised that the top line growth (in constant currency) comprised volume growth of 5% and price realisation of 2%.
The main driver of its growth was the CHEP EMEA business which reported an 8% increase in sales revenue thanks to new business wins and price realisation across the region.
Supporting this growth was the CHEP Americas business with sales revenue of 6%. This was driven by strong price realisation and ongoing expansion with new and existing customers in the US, Canadian and Latin American pallet businesses.
Finally, CHEP Asia-Pacific sales revenue grew 4% thanks to solid like-for-like volume growth and price realisation in the Australian pallets business.
Brambles' CEO, Graham Chipchase, was pleased with the company's performance over the period.
He said: "Volume momentum was strong across all CHEP segments as we continue to convert new customers to our sustainable share-and-reuse solutions. Notwithstanding positive volume growth, we saw a moderate slowdown in the growth of like-for-like volumes during the third quarter, particularly in Europe which is consistent with broader macroeconomic conditions in that region. Price realisation continued during the third quarter and reflects ongoing pricing actions to offset input-cost inflation and cost-to-serve increases, particularly in CHEP Americas."
Outlook.
The company advised that it continues to expect FY 2019 constant currency underlying profit growth to show modest improvement over the prior year due to increased price realisation and the delivery of cost efficiencies largely offset by ongoing global input-cost inflation.
Should you invest?
At 21x trailing earnings I don't see a lot of value in Brambles' shares at current levels.
In light of this, I would stay clear of them and focus on other options such as packaging company Orora Ltd (ASX: ORA) or logistics platform provider WiseTech Global Ltd (ASX: WTC).
