|
Brambles Industries showed signs it had halted last year's shock
deterioration in the CHEP Europe pallets business and maintained the swift rate
of improvement in the US, easing fears that earnings for the once sturdy blue
chip had continued downhill.
The company produced a net profit of $248 million in the six months to
December 31, while sales slipped 9 per cent to $4.2 billion, mostly as the
result of asset sales. Earnings from a year ago weren't directly comparable as
the new Brambles was put together only in August 2001 through a $20 billion
industrial services merger with GKN plc.
Brambles declared a 10c-a-share interim dividend, payable April 10.
There were enough positives in the result regarding the troubled CHEP
businesses to bolster trading in the UK. Brambles shares gained almost 7 per
cent in early dealings on the London Stock Exchange to 139 pence.
Brambles shares last changed hands here at $3.81, down 6c.
``It is a firm set of results," said chief executive Sir CK Chow. ``It meets
the expectations we communicated to the market last November. The most
encouraging part of the results is the CHEP USA recovery. It has taken a very
firm grip. It has very strong traction."
CHEP Americas, the business which signalled the start of Brambles's loss of
earnings momentum in late 2001, increased operating profit 33 per cent to $126
million.
Meanwhile, the latest problem, CHEP Europe, suffered a 25 per cent fall in
operating profit to $124 million. Sir CK, as if referring to a patient recently
admitted to intensive care, described CHEP Europe's condition as ``quite stable
and steady".
Investors were relieved there'd been no further erosion in profitability
beyond the guidance given late last year. Finance director David Turner said the
2 1/2 year turnaround program, which will cost $238 million, was still on
schedule to improve profits markedly from 2003-04.
Streamlining CHEP Europe will lead to up to 400 job losses for a saving of
$28 million due to accrue in 2004-05.
There are still, however, 14 million pallets out of 110 million unaccounted
for in Europe.
There were concerns the Cleanaway waste management business had sprung a
leak in Germany, but the performance was no worse than expected.
``From the result it appears obvious the hemorrhaging in CHEP Europe has
stopped and the strong growth for CHEP Americas has continued and accelerated,"
said Salomon Smith Barney's Jason Smith. ``Also, further weakness in Cleanaway
Europe didn't materialise.
``Overall the market should be comfortable with the underlying trends."
|
Print Entire Page
