In key news on Australian stocks, Brambles Limited (AU:BXB) shares fell by over 5%, as of writing, after the company released its trading update for the third quarter of FY24. The company’s sales revenue from continuing operations grew by 9% at actual FX (forex) rates to $4.87 billion in the first nine months. This growth, however, was lower than the 12% year-over-year growth achieved in the first half of FY24. As a result, investors responded negatively to what otherwise appeared to be a satisfactory update.
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Brambles is a pooling solutions company with the largest collection of reusable pallets, crates, and containers.
Snapshot of Brambles’ Trading Update
At constant currency rates, Brambles’ sales revenue grew by 7%, driven by 8% price growth. However, this growth rate moderated compared to the first half, mostly because of reduced contributions from previous pricing strategies in CHEP Americas and CHEP EMEA, aimed at covering costs.
The company’s volume fell by 1% due to a 1% decline in like-for-like volumes. This decline was attributed to inventory optimization by retailers and manufacturers in Europe and North America, leading to approximately 3 million additional pallet returns during the third quarter.
Despite the small hiccups, overall, the results were in line with the company’s projections.
Brambles has confirmed its full-year guidance for FY24. The company expects its sales revenue growth to be between 6% and 8% at constant currency. Additionally, it forecasts underlying profit growth of 13%-15% at constant currency and anticipates that positive free cash flow before dividends will range between $700 million and $800 million.
Brambles also stated that its dividend payout ratio will remain consistent with its payout policy, set at 45% to 60% of the underlying profit after finance costs and tax.
Is BXB a Good Buy?
According to TipRanks’ consensus forecast, BXB stock has a Moderate Buy rating based on five Buy, two Hold, and two Sell recommendations. The Brambles share price forecast is AU$15.78, which is 6.6% above the current trading level.
