Earlier today, logistics giant Brambles Limited (ASX: BXB) provided the ASX with an update on the company's performance for the third quarter of FY20.
How has Brambles performed?
Despite the volatility in global operations, Brambles reported sales revenue growth of 6% in the March quarter and in the first 9 months of FY20. The company cited the defensive and resilient nature of its business was reflected in the strong volume growth.
In the update, Brambles noted that the company experienced an unprecedented surge in customer demand for its CHEP pallets since the outbreak of COVID-19. Despite the effects of government lockdowns, Brambles reported minimal impact on its trading performance.
For the first 9 months of FY20, Brambles generated sales revenue from continuing operations of US$3.53 billion and saw strong volume growth across its major markets. Brambles management acknowledged the company's vital role in maintaining domestic and international supply chains.
With 80% of its revenue coming from the consumer staples sector, Brambles noted that the company had seen record levels of pallet demand from its grocery supply chains during March. The company highlighted that revenue from its key markets more than offset any demand-related increases in pallet repair and collection costs.
What is the outlook for Brambles?
This morning, Brambles also provided an update on the company's full-year financial guidance for FY20. The company noted that its strong trading performance for the first 9 months was in-line with its previous guidance for FY20.
However, in order to reflect the economic uncertainty of the COVID-19 pandemic, the company has revised its expectations for FY20. Assuming that trading conditions in the fourth quarter reflect current levels, Brambles expects FY20 sales revenue growth to be between 5% to 7% on a constant FX basis and between 3% to 5% for underlying profit growth.
Brambles also expects a material reduction in fourth quarter revenues and earnings contributions from its automotive and Kegstar businesses. However, the company expects growth in revenue from its CHEP pallets to offset the loss in revenue.
Brambles also noted that it continues to maintain a strong balance sheet, providing the company with access to significant liquidity during uncertain times.
Foolish takeaway
Brambles is a logistics giant, with a reliant and efficient supply chain boasting more than 330 million reusable pallets and crates which are used to transport goods. The company operates in approximately 60 countries around the world through its iconic CHEP brand.
The defensive nature of Brambles and a weaker Australian dollar has the company well poised to continue growing despite the challenging economic conditions. Despite being sold-off earlier in the year, the Brambles share price has bounced more than 25% from its low in mid-March.
Following this morning's announcement, the Brambles share price is trading slightly higher at the time of writing.
