Brambles share price soars 6% on profit and dividend boost

The ASX 200 logistics company beat its revised guidance for FY22.

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Key points

  • Brambles share price leaps higher on open
  • Profits after taxes increases 18% from FY21
  • The board declares a final dividend of 12 US cents per share, partly franked

The Brambles Limited (ASX: BXB) share price flew higher in early trade, up 5.9%.

Brambles shares closed yesterday trading for $11.80 and are trading at $12.50 at the time of writing.

This comes following the release of the supply-chain logistics company's results for the financial year ending 30 June (FY22).

Brambles share price leaps on profit boost

  • Sales revenue of US$5.56 billion, up 9% from FY21
  • Profit after tax of US$593.3 million, up 18% year on year
  • Basic earnings per share 41.9 US cents, 23% higher than FY21
  • Return on capital invested of 17.7%, in line with FY21
  • Final dividend of 12 US cents per share 35% franked; total dividends for FY22 of 22.75 US cents per share, up from 5 US cents per share the previous year

(Note, all year-on-year comparisons are on a constant currency basis.)

What else happened during the year?

The Brambles share price is likely getting an extra boost today from the company beating its revised guidance for FY22. It credited strong Q4 performance, with increased asset compensations, a modest slowing in United States transport inflation, and pricing/mix benefits that exceeded expectations.

Brambles faced headwinds over the year with record levels of input-cost inflation, with its costs increasing across all regions. With the company adjusting its own prices to recover the rising costs, sales revenue increased 9% from the previous year.

Despite constraints in the availability of pallets during the year, volumes remained in line with the previous year.

A US$470 million impact of lumber inflation on new pallet purchases (the average price of new pallets increasing around 40% during the year) offset higher earnings and increased asset compensations. This also contributed to a free cash net outflow of US$218.6 million.

Brambles said it was progressing with its Shaping Our Future transformation program, with a focus on efficiency initiatives and increased data analytics capabilities.

What did management say?

Commenting on the results that are sending the Brambles share price higher today, CEO Graham Chipchase said:

This is an outstanding result for Brambles in the context of a challenging, volatile and uncertain operating environment. Despite significant inflationary pressures and pallet availability constraints, we continued playing a critical role in global supply chains and delivered a strong financial result while progressing our Shaping Our Future transformation program.

We achieved double-digit underlying profit growth on a constant-currency basis, which highlights the resilient and defensive nature of the business.

What's next?

Looking ahead to FY23 (on a constant currency basis) Brambles offered guidance of sales revenue growth between 7% and 10%.

The company forecasts underlying profit growth between 8% and 11%.

It also expects free cash flow after dividends to improve from the FY22 results, but said it will remain a net outflow.

Brambles share price snapshot

The Brambles share price has been a strong performer in 2022, up 16%.

That compares to a year-to-date loss of 7% posted by the S&P/ASX 200 Index (ASX: XJO).

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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