Brambles finds US$2.5 billion in plastic crates

Brambles has announced that it has entered into a binding agreement to sell its IFCO reusable plastic containers (RPC) business to Triton and Luxinva (a wholly-owned subsidiary of the Abu Dhabi Investment Authority) for an enterprise value of US$2.51bn. The transaction is subject to customary regulatory approvals and is expected to be completed during the second quarter of calendar year 2019.
Brambles’ chairman Stephen Johns said: “In August 2018, we announced that we would seek to separate IFCO through either a demerger or a sale by way of a dual track process. As well as progressing the demerger option, a robust and competitive sale process generated strong interest. We are pleased today to announce the sale of IFCO which we believe delivers greater value for shareholders, including a significant return of cash proceeds to shareholders.
“The IFCO team has been an important and valued part of the Brambles business, and on behalf of the Board I’d like to thank them for their contribution over the past eight years. The interest shown in IFCO during the separation process is testimony to how highly appreciated the IFCO business is, and we wish Wolfgang Orgeldinger and his team every success in the future,” Mr Johns said.
Brambles’ CEO Graham Chipchase said: “The sale will allow Brambles to focus on our strategic priorities and to pursue continued revenue growth within our core markets, whilst also reviewing additional opportunities in emerging markets, through product and service innovation and use of technology through the supply chain. Our ambition remains to lead the platform pooling industry in customer service, innovation and sustainability.”
In FY18, IFCO generated revenues of US$1,098m, EBITDA of US$248m and Underlying Profit of US$133m1.
Brambles expects to receive approximately US$2.36bn of net cash proceeds from the transaction, after taxes, transaction costs, and balance sheet items, subject to customary closing adjustments.
Return of proceeds to shareholders
Brambles intends to return up to US$1.95bn of proceeds from the transaction to shareholders, through a combination of a pro-rata return of cash of approximately US$300m and an on-market share buy-back of up to US$1.65bn. The balance of the proceeds will be used to repay debt to maintain leverage in line with the Board approved credit policy.
The pro rata return of cash, which will be made to all shareholders, is expected to be approximately 29 Australian cents per share, in line with (and in addition to) Brambles’ annual dividend payout.
 

CHEP Australia CSR efforts recognised

Supply-chain load-equipment company CHEP Australia, part of global supply chain solutions company Brambles Limited, has been ranked in the top five per cent of all suppliers assessed for sustainability by independent, global agency EcoVadis.
CHEP Australia was awarded ‘Gold Level’ for its approach to environmental management, labour and fair business practices and its sustainable procurement of strategic materials.
EcoVadis assesses 35,000 suppliers from 99 countries across 150 business sectors, considering ethical, social environmental risks of its customers’ supplier base. Its methodology is built on international corporate social responsibility (CSR) standards, including the Global Reporting Initiative, the United Nations Global Compact and ISO 26000, covering 150 spend categories and 140 countries.
“Each function in CHEP Australia sets a high standard for responsible business practice, and collectively this makes CHEP a great business,” said Lachlan Feggans, Senior Manager – Sustainability, Asia Pacific at CHEP.
“We are extremely proud to receive this recognition for our efforts in Corporate Social Responsibility. We are a sustainable business and, as the leader in sustainable supply chains, our actions don’t go unnoticed.
“This is all thanks to our share-and-reuse business model, our end-to-end collaboration with key partners and the passion of our employees for making the world a better place.”

Brambles recognised as leader in fighting supply-chain deforestation

Global supply-chain logistics company Brambles, which operates primarily through the CHEP and IFCO brands, has been awarded a position on this year’s Forests A List by global environmental disclosure platform CDP1 – formerly know as the Carbon Disclosure Project.
The Forests A List for 2017 is comprised of six global companies leading actions against deforestation globally – alongside Brambles, L’Oreal, SCA, Tetra Pak, Unilever and UPM-Kymmene Corporation were recognised.
Brambles is among three per cent of companies participating in CDP’s forests program to achieve the Forests A List level, which recognises its sustainable sourcing actions for the last reporting year.
“We are incredibly proud of this recognition from CDP,” said Carmelo Alonso Bernaola, Senior Vice President – Global Supply Chain, Brambles. “Brambles is a sustainable business that is uniquely placed to reduce both wood waste and the use of virgin timber in the world’s supply chains. By sharing and reusing our pooled platforms, our customers have saved 1.4 million trees in the past year alone. This is the circular economy, at a global scale.
“We work in partnership with our suppliers to promote sustainable forestry in our own operations. One of our 2020 Sustainability Goals is to have 100 per cent of the timber we use come from certified sources. We reported in our 2017 Sustainability Review that we have increased the amount of wood procured from certified sources to 99.1 per cent, so we are very close to achieving our goal.”
Paul Dickinson, Executive Chair , CDP, said, “Congratulations to the pioneering companies that made it onto the Forests A List. They are leading the way as we move towards a tipping point that will make environmental action mainstream. Deforestation causes 15 per cent of global greenhouse gas emissions, and 75 per cent of companies say deforestation poses a financial risk to their business. Clearly, this issue is essential for future business resilience.”

Brambles reports FY17 sustainability progress

Global supply-chain logistics company Brambles, which operates primarily through the CHEP and IFCO brands, has published its Sustainability Review for the 2017 Financial Year.
Brambles operates a circular business model, specialising in the sharing and reuse of unit load equipment including more than 590 million pallets, crates and containers. In FY17, customers’ use of CHEP and IFCO platforms saved 1.6 million trees, 2.5 million metric tonnes of CO2 emissions and 1.4 million metric tonnes of solid waste, the report stated. Transport collaboration projects with over 200 customers initiated by Brambles also removed 64.7 million empty truck kilometres from the world’s supply chains.
In FY17, 99.1 per cent of the timber used by CHEP came from certified sources, and Brambles also eliminated plastic waste and raw material costs by recycling 22,600 tonnes of end-of-life plastic materials into new CHEP plastic pallets and IFCO reusable plastic crates. Brambles operations also achieved a 7.8 per cent reduction in carbon emissions per unit and 14.3 per cent of the electricity it consumed came from renewable sources.
“This has been another fantastic year for sustainability at Brambles, in which we have continued our excellent progress towards our 2020 goals,” said Juan Jose Freijo, Head of Global Sustainability, Brambles. “These achievements are only possible thanks to the end-to-end collaboration between our employees and our customers worldwide.
“Our commitment to sustainability is at the very heart of everything we do. Through the successful combination of our circular, ‘share and reuse’ business model, global scale and supply chain expertise, we are able to reduce operating costs and demand for natural resources, both in our own company and across the world’s supply chains.”

Brambles Chairman welcomes Amazon arrival

While Australia’s major retailers and logistics providers contemplate the implications of Amazon’s entry into the local market, Stephen Johns, CEO of Sydney-headquartered global supply-chain company Brambles, expects its arrival to drive opportunities.
“Amazon will be a good thing for us,” said Johns, as reported in The Australian.
“In terms of Brambles our business model is very solid. It won’t be adversely affected and in fact there could be some good opportunities.
“Amazon certainly will be a disruptive force for retailers in this country, but how disruptive remains to be seen.
“As supply chains change and get more sophisticated, that is actually a good thing for Brambles and for our CHEP (Commonwealth Handling Equipment Pool) and IFCO business, which has reusable plastic crates which are used for taking fresh produce from the farms to supermarkets and to their distribution centres, in a similar concept to manufactured goods.”

New General Manager for beverage logistics firm

Asset pooling beverage transport company Kegstar, owned by Brambles Limited, has announced the appointment of a new General Manager Australia & New Zealand, Nick Boots.
Boots brings over 20 years’ experience in the fast-moving consumer goods (FMCG), beer, wine and supply chain industries, having worked for Nestlé, CUB, Fosters Wine Estates, McWilliams Wines Group and Supply Chain Services Australia.
Kegstar owns and manages stainless steel kegs on behalf of its customers – collecting empty kegs and redeploying them to other customers in the pool. Each Kegstar keg is uniquely identified and tracked when the keg moves through the supply chain.
The business launched in December 2012 with 880 kegs, one person and one customer. Global supply chain logistics company Brambles acquired a 30 per cent stake in March 2014 and moved to 100 per cent ownership on 1 December 2015. In Australia and New Zealand, Kegstar now owns in excess of 100,000 kegs that it rents to more than 150 customers each year.
“I am honoured to be working with the amazing team at Kegstar in Australia and New Zealand,” said Boots. “The Kegstar keg pooling model is the ideal format for brewers, cider producers, wineries and spirits producers looking for a keg solution that will take their business to the next level.
“Having worked with world-class brands over the past 20 years, I look forward to tapping into my own experience to ensure we continue to provide outstanding service offerings to our customers, partnering with them as they delight consumers.

Brambles included for second year in the Dow Jones Sustainability World Index

The Dow Jones Sustainability World Index (DJSI) has recognised a Brambles Limited in corporate social responsibility (CSR) for the second consecutive year.

By conducting an analysis of corporate economic, environmental and social performance, issues assessed include corporate governance, risk management, branding, climate change mitigation, supply-chain standards and labor practices.

Brambles recorded a strong performance in the codes of conduct and corporate governance categories, scoring well in climate strategy and environmental policy.

Brambles’ Head of Sustainability, Juan Jose Freijo said, “Brambles is built on principles that are inherently sustainable. We are focused on building a long-term, sustainable business that serves our customers, employees, shareholders and the communities in which we operate.”

317 global companies are included on the DJSI, many of which are identified as leaders in the areas of sustainable economic, environmental and social performance.

Sustainability is becoming increasingly important to the world’s biggest manufacturers and retailers, many of which are drawn to the S&P Global Broad Market Index to find the top 10% for sustainability in each respective industry. 

Brambles sales revenue drops

Pallet maker and logistics company Brambles has reported a two per cent drop in sales revenue in the first quarter, on the back of a stronger US dollar.

The company said sales revenue for the period was US$1,322.1 million.

Constant-currency sales revenue was up 8 per cent. Excluding the contribution of acquisitions made since the start of the prior comparable period, primarily Ferguson Group in September 2014, constant-currency growth was 7 per cent.

“Our constant-currency trading performance for the first quarter reflects a solid run rate, consistent with our previously stated guidance for FY16 sales revenue and Underlying Profit growth of between 6% and 8%, at constant currency,” Brambles’ CEO Tom Gorman said in a statement.

“The largest contributors to growth were new business wins in the Pallets operations worldwide and continued strong conversions with new and existing retailers in Europe in RPCs.”

Image: The Age

Toll up 18 per cent, eyes Asia for expansion

 
Paul Little continues to defy worsening market conditions, bringing in a much-improved earnings result for Toll and declaring his intention to aggressively expand the company’s forwarding activities in Asia.
 
Toll Holdings has announced an EBIT for the group, before acquisition amortisation charges and investment write-downs relating to Brambles and Virgin Blue, of $266.4 million compared to $226.4 million in the previous corresponding period, an increase of 18%.
 
Toll managing director, Paul Little said “this is a strong result, given that the company managed to maintain margins and achieve revenue growth entering into a period of slowing economic activity.”
 
Revenue for the six months was $3.5 billion, an increase of 30% over the previous period of $2.7 billion for continuing operations. Revenue growth included $533 million relating to new acquisitions, principally relating to the BALtrans acquisition which was completed in April, 2008.
 
The company achieved solid ongoing organic revenue and EBIT growth. This was largely driven by continued trends in market share gains and the benefit of past acquisitions. The underlying revenue growth in Australia was $79 million or 4 %, and 7.8% in Toll Asia. While the lower organic growth rate in Australia reflected a slow-down in economic activity the benefits of prior acquisitions improved overall revenue growth.
 
Asian EBIT margins at 11% continued to exceed Australian margins, however, new revenue growth outside of the higher-yielding defence and resources sectors resulted in some overall dilution.
 
TGF recorded an improved EBIT margin of 3.4% as business development and integration activities are being implemented.
 
Profit after tax for the six months to 31 December, 2008 from continuing businesses before investment write-downs for Brambles and Virgin Blue and final Virgin Blue demerger costs was $176.9 million, an 11.5% increase over the previous corresponding period of $158.8 million.
 
EBIT margins continued to be resilient with margins in the Australian business being maintained at 8.0%.
 
The company has a strong balance sheet with a net debt position of $715 million at 31 December 2008. An intense focus on cost and working capital management has delivered a strong cashflow result.
 
During the past six months the company successfully refinanced and increased its Singapore-based syndicated debt facility and extended the maturity out to November 2011. In addition, the Reset Preference Shares were converted to equity in November 2008.
 
The company currently has a gearing ratio of 21% and interest cover exceeding 19 times. The company has maintained high levels of cash balances and committed undrawn facilities in  order to ensure that growth opportunities can be pursued actively.
 
Earnings per share, fully diluted from continuing operations, was 28.2 cents per share pre-acquisition amortisation charges, investment write-downs and one-off costs. This represents a 10% increase on a continuing business basis, compared to 25.8 cents per share in the previous corresponding period.
 
Directors have declared an ordinary share interim dividend of 11.5 cents per share payable fully-franked and the dividend payout ratio is consistent with prior periods.
 
Mr Paul Little said that “although freight volumes will be impacted by slowing economic growth and conditions will be challenging, the company is very well positioned to cope with any economic slowdown. The diversity of the Toll business, combined with a high variable cost base is expected to soften the impact of any global economic downturn. Increases in market share achieved during the past six months are expected to continue as customers seek to outsource their non-core supply chain activities.
 
“The company is very well positioned to maintain strong results and take advantage of opportunities as they occur.
 
“For the remainder of the 2009 financial year allowing for reduced activity levels, but at the same time benefiting from the strength of the Toll integrated model, we consider that results of continuing operations in the second half of the financial year to June 2009 will exceed those of the previous corresponding period, subject to no further material deterioration in key markets of the group,” he said.
 

Asciano shares in freefall

Australia’s biggest port and rail operator Asciano Group Ltd said it cannot explain the recent fall in its stock price of almost 20 per cent, and is still expecting earning for this financial year.
 
“Asciano is not aware of any information concerning it which, if know, could be an explanation for recent trading in securities in Asicano,” the company said in a statement.
 
While Asciano securities sank 65 cent to $2.72 representing a 19.29 per cent fall, the company said earnings guidance for the year to June 30 this year has stated its EBITA excluding significant items of between $650 million to $660 million.
 
“Asciano continues to expect earnings for the financial year to June 30, 2008 to be within this range,” it said.

The company is expected to announce several significant items, including a writedown in the carrying value of Asciano’s rail subsidiary Pacific National export grain haulage assets, and demerger and establishment costs, the AAP reported.

 
A realised loss of about $100 million on the sale of its stake in pallets provider Brambles Ltd is also expected to be a significant item.
 
The company said it had advised the market of a number of growth initiatives, such as proposed entry into the Queensland coal haulage market and expansion of its Fisherman Islands container terminal in Brisbane.
 
“Asciano is aware of recent media speculation regarding the potential for Asciano to raise additional equity,” it said.
 
“No decision has been made in respect of any preferred funding option.”

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