The Brambles Limited (ASX: BXB) share price is up in early day trading after the company released its first-quarter update for FY22.
At the time of writing, shares in the supply chain logistics company are trading for $10.45 – up 2.96%. The S&P/ASX 200 Index (ASX: XJO), meanwhile, is 0.09% lower.
Let's take a closer look at today's announcement.
What did Brambles announce?
- Sales revenue up 9% on the prior corresponding period (pcp) to US$1.3 billion at a constant exchange rate. Broken down by segment – revenue from the Americas is up 9%, Europe, Africa and the Middle East is 8% higher, and Asia-Pacific revenue increased 11%.
- Looking forward, Brambles is expecting revenue growth of between 5% and 7% throughout FY22. The company says a higher base from FY21 will be the reason for slower growth compared to the first quarter.
- Underlying profit growth of 1-2%, including US$50 million of short-term transformation costs. Excluding these short-term transformation costs, underlying profit growth is expected to be between 6% and 7%.
- Dividends should "be in line" with company policy of paying out 45-60% of underlying profits.
What did management say?
Commenting on the update possibly driving the Brambles share price today, CEO Graham Chipchase said:
Our first-quarter sales performance demonstrates the commercial resilience of our business, with pricing and surcharge mechanisms supporting the recovery of increased costs across global supply chains. We continue to operate in a high inflationary environment with pallet availability constraints and ongoing lumber, labour and transport scarcity disrupting supply chains and driving increased costs across our businesses.
Pallet availability remained challenging in the first quarter with industry-wide shortages of new pallet supply across the globe as well as lower levels of pallet returns and longer cycle times in our North American business. This was a contributor to the decline in like-for-like volumes in North America and contributed to the lower rates of new business growth across the Americas and Europe, as we prioritised servicing existing customer demand over new customer wins.
He added:
Despite some moderation in lumber inflation in North America, lumber prices across the group remain above historic levels and pallet prices continue to increase, particularly in Europe and Latin America. We expect inflationary pressures to remain for the balance of FY22.
What else has affected the Brambles share price recently?
As Motley Fool has previously reported, the Brambles share price slid 11% last month after its investor day presentation.
Brambles alluded to "high single-digit" growth in its presentation for revenue and underlying profit in FY22 and FY23. The company sees revenue growth of 5-6% in FY22. Additionally, free cash flow is expected "to be an outflow of US$200 million".
Supply chain logistical issues, which have been exacerbated by the COVID-19 pandemic, may also be worrying investors. The cost of shipping has increased as ports shut down and demand between regions varies markedly.
Brambles share price snapshot
Over the past 12 months, the Brambles share price has decreased by 2%. Year-to-date, Brambles shares are also around 2% lower. Over the past month, it's an even worse 6% decline.
Brambles has a market capitalisation of approximately $15 billion.
