It was a big day for Brambles Limited (ASX: BXB) yesterday.
The supply chain and logistics company fended off shareholder backlash at its AGM, announced its first quarter trading update, and dealt with a potential class action.
Law firm Maurice Blackburn is calling on Brambles shareholders to join the class action which would seek to prove that Brambles effectively misled the market.
The potential action centres on the claim that in August 2016 Brambles gave guidance regarding sales growth of 7% to 9% and profit growth of 9% to 11%.
Brambles repeated this guidance on 20 October 2016 when it published its trading update for the first quarter of 2017, and again on 16 November 2016 at its AGM, according to the law firm.
Then, in January 2017, Brambles said it no longer expected to meet its earlier guidance but expected sales growth of 5% and profit growth of 3% for the first half of FY17 and sales and profit growth for FY17 to be below the guidance previously provided.
In February 2017, Brambles published its results for the first half of FY17, providing revised guidance of sales growth around 5% and profit growth of 0%, according to Maurice Blackburn.
"The market reacted strongly, with price drops of almost 16% on 23 January 2017 (with a trading volume of 19.3 million) and 10% on 20 February 2017 (with a trading volume of 21.7 million, around five times greater than the average volume over the previous 12 months)," the law firm stated.
"Companies are required to have a reasonable basis for their guidance and must notify the ASX as soon as they have or ought to have information which would cast doubt on prior guidance."
Maurice Blackburn claims its investigations "raise serious questions as to whether Brambles had a reasonable basis for its initial guidance and whether it should have notified the ASX sooner" that it was likely it would miss those targets.
If Brambles lacked a reasonable basis for its guidance, investors (who purchased Brambles shares between 20 October 2016 and 19 February 2017) may have paid an inflated price for Brambles shares, and they may be able to recover their losses through this potential class action, according to Maurice Blackburn.
Brambles said it's aware of the potential case against it and said it intends to fight any action.
"Brambles has not received any formal communication nor has it been served with any proceeding and so is not able to comment further," Brambles stated.
"However, Brambles strongly believes that it has at all times complied with its continuous disclosure and other regulatory obligations.
"Brambles therefore intends to vigorously defend any action if filed."
Brambles now joins a list of companies, including the Commonwealth Bank of Australia (ASX: CBA), Woolworths Limited (ASX: WOW), Crown Resorts Limited (ASX:CWN), Bellamy's Australia Ltd (ASX: BAL) and Aveo Group (ASX: AOG), facing class actions or potential class actions by Maurice Blackburn.
Brambles CEO Graham Chipchase and Chairman Stephen Johns also had to fend off attacks from investors who voiced numerous concerns, one centring on executive pay, at the company's AGM.
But Brambles did have some good news. The company announced its first quarter sales for FY18 had increased 6%, prompting its share price to gain 0.76% and close at $9.33.
