Pooling solutions company Brambles Limited (ASX: BXB) has released its first set of results since separating from its record management division Recall Holdings Ltd (ASX: REC) and has again proven to investors the quality of its business franchise.
The Australian-based global company released a solid set of half-yearly results which showed sales revenues had increased 7% to US$2.69 billion with profit after tax up 11% to US$280 million. Underlying earnings per share increased by 8% to US$0.182.
Return on capital invested was a healthy 15.7%, with the board maintaining a steady dividend of A$0.135 payable on 10 April.
At the divisional level the more mature Pallets Division continued to grow with an overall increase in underlying profit of 10%. The Americas and EMEA regions had the strongest growth of 8% and 15% respectively with organic growth a major contributor; meanwhile the Asia-Pacific region declined 4%, primarily due to the effects of a weakening Australian dollar.
The Reusable Plastic Crate (RPC) Division was the biggest disappointment, suffering a fall of 15% in operating profit. The explanation provided was; one-off costs relating to remuneration of former executives, higher depreciation costs, price and sales mix in the North American business and higher marketing costs.
The smaller Containers Division saw underlying profit surge 137% thanks to a positive contribution from the Pallecon acquisition.
Although CEO Tom Gormon suggested that growth would be more muted in the second half, guidance for full-year revenue growth of 7% and underlying profit of US$930 million to US$965 million (at 30 June 2013 exchange rates) is still impressive given the lacklustre state of many of the economies Brambles is exposed to.
Foolish takeaway
Management has "committed" to reduce overheads within the business by US$100 million between financial years 2015 and 2019. This alone would be a significant boost to the bottom line, let alone the positive outlook for further growth in emerging markets. While on traditional metrics the stock may not look cheap, a quality blue-chip such as Brambles rarely is.
