Brambles (BXB) – Resilient result, solid outlook

Brambles is a supply-chain logistics company for the consumer staples, retail, automotive, and general manufacturing sectors, and is best known for its ubiquitous blue CHEP pallets. Brambles was founded in 1875 and is based in Sydney.

Brambles reported FY25 constant-currency earnings before interest and tax (EBIT) in line with market and Ord Minnett expectations, a strong result given falls in like-for-like (LFL) volumes fell that dragged on the revenue line. The global pallet pool operator guided to FY26 earnings growth of 8–11%, ahead of prior market and Ord Minnett expectations of 7% and 8%, respectively, and launched a fresh share buyback of US$400 million ($620 million). Despite the fall in LFL volumes, growth in new business picked up to 3% in the June quarter as customers were won over by the advantages of the pallet-pooling model.

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We expect strong operating leverage in the business will allow Brambles to generate EBIT growth in the double digits even if sales only rebound to the 3–5% growth rate in company guidance. Gearing of 1.1x is outside the lower bound of Brambles’ 1.5–2.0 target range, which implies balance sheet headroom of circa US$2.5 billion, which could support further capital management past the just announced share buyback. We raised our target price on Brambles to $29.40 from $24.90 post the result and reiterate our Buy recommendation.

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