Brambles sinks after full-year profit rise


Chow admitted there is still work to be done after the meger but said Brambles is more confident it can sustain growth

SYDNEY, Australia -- Business-services conglomerate Brambles Group said Wednesday net profit rose 58 percent to A$545 million ($300 million), after a series of asset sales.

The report is sending the company's stock south in Sydney, down 8.50 percent at A$7.65 shortly after noon.

The earnings are Brambles' first full-year figures since its A$19 billion merger with British comany GKN's industrial-services division (full story).

Sydney-based Brambles said it has focused its post-merger efforts on improving operating efficiency and profitability at its CHEP pallet business.

Its CHEP arm is the largest pallet-leasing company in the world. Brambles said that business starting boosting profits again in the fourth quarter.

Pallet business sees American growth

That business posted net profit of A$582 million before one-time gains. The company said it expects that business to grow, mainly in the Americas.

Australia, the Asia Pacific and South Africa will provide support, with the Europe pallet business growing more gradually, the company stated.

Brambles has sold more than A$1 billion in assets since its merger with GKN, to focus on its core businesses of CHEP, Recall document management and Cleanaway waste management.

"Brambles is now a much more focused group with quality growth businesses" CEO Sir C.K. Chow said in a release.

He acknowledged there is "much work to be done," but said the company is increasingly confident it can produce sustainable growth, barring an adverse turn in the economic climate.

Profit growth targeted for next year

Brambles had already pledged that earnings would start growing from 2002/03, with this a consolidation year after the sales.

Analysts were closely watching the pace of a recovery at CHEP, which makes up more than half the group's profit. That unit has moved to make its pallet pools turn around more efficiently.

A new contract with Wal-Mart Stores Inc., the largest retailer in the world, boosted CHEP's results.

The company has also attempted to revamp pallet performance in Europe but says those efforts will take longer to bear fruit.

Brambles said its waste-management business Cleanaway saw full-year earnings rise 11 percent, while document business Recall boosted profit 18 percent.

Its Industrial Services profit jumped 35 percent after restructuring in Australia.

Brambles stock is listed in both Sydney and London.

Reuters contributed to this report.