Which ASX 200 stock is surging after declaring a record dividend?

The ASX 200 stock reported full-year results today, including a record final dividend.

This ASX 200 stock is doing more than its share of the heavy lifting today.

The S&P/ASX 200 Index (ASX: XJO) is up a very strong 1.4% in afternoon trade but this company is rocketing 6.2%.

The ASX 200 stock in question is Brambles Ltd (ASX: BXB).

The Brambles share price closed yesterday at $14.15. At the time of writing, shares are changing hands for $15.03 apiece.

This comes following the release of the supply-chain logistics company's full-year results for the financial year ending 30 June (FY23).

Here are the highlights.

(*Note, all year on year comparisons are on a constant currency basis and all figures quoted below are in US dollars.)

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today

Image source: Getty Images

Brambles share price leaps on profit boost

  • Sales revenue of $6.1 billion, up 14% from FY22
  • Profit after tax of $703 million, up 24% year on year
  • Basic earnings per share 50.7 US cents, 26% higher than FY22
  • Return on capital invested of 18.5%, up 0.8%
  • A record final dividend of 14.0 US cents per share, 35% franked, up from 12 US cents per share the prior year

What else happened with the ASX 200 stock during the year?

The Brambles share price is charging higher on the back of an all-time high final dividend.

That brings the total dividends for FY23 to 26.25 US cents per share, up from 22.75 US cents per share last year. That equates to an improved payout ratio of 55%, up from 53% in FY22.

Management said this reflects the company's strong balance sheet and liquidity position as well as the return to positive free cash flow generation over the year.

The 14% boost in sales revenue for the ASX 200 stock was attributed to price growth and commercial discipline to recover the company's operating and capital cost-to-serve increases in all its operating regions.

Pallet supply issues and weaker consumer demand saw volumes fall 2% in 1H23.

The 19% profit boost that's likely helping lift the Brambles share price today was driven by contributions from pricing actions, which helped offset input-cost inflation and other cost-to-serve increases.

What did management say?

Commenting on the results sending the ASX 200 stock soaring today, Brambles CEO Graham Chipchase said:

We kept our customers' goods moving through supply chains while delivering another year of outstanding financial and operational outcomes and investing for the future. This was despite persistent inflationary pressures and slowing consumer demand…

The transformation program has improved the performance and resilience of our business, setting the foundation to enhance our customer value proposition and our commercial business model by better aligning pricing with the cost-to-serve and increasing both operational and asset efficiency.

On the sustainability front, Chipchase added, "We made meaningful progress towards our FY25 sustainability target of enabling the sustainable growth of two trees for every tree we require for our timber pallets by FY25."

What's next for the ASX 200 stock?

Looking to what could impact the ASX 200 stock in the year ahead, Brambles forecasts FY24 sales revenue growth in the range of 6% to 8%, at constant FX rates.

The Brambles share price could also be getting a boost today from the expected 9% to 12% FY24 increase in underlying profit.

The company is forecasting free cash flow before dividends of between $450 million and $550 million.

Brambles share price snapshot

It's been a good year for the Brambles share price.

The ASX 200 stock is up 25% in 2023 and up 19% over 12 months.

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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