Brambles (ASX:BXB) delivered another solid financial result for the year ending June 30th. Investors enthusiastically responded, driving Brambles shares up by more than 9% at one point on Wednesday, reaching a new 52-week high.
However, the real highlight for shareholders was the substantial increase in dividends. Brambles promised a higher payout ratio for this financial year and hinted at another significant share buyback.
The company’s shares reached a record high of $17.51, though they retreated slightly later in the afternoon. Nevertheless, they still closed more than 8% higher.
The global logistics group exceeded its full-year guidance, raised its dividend, and announced a US$500 million share buyback for the new financial year.
Brambles reported underlying net profit after tax of US$780 million, surpassing market estimates by 4.6% and growing 9% from the previous year. Revenue increased by 7% to US$6.55 billion, aligning with forecasts and outperforming the prior year by 8%. Underlying EBIT reached a record high of US$1.26 billion, up 18% from the previous year.
Brambles declared a total dividend of 34 cents per share, a 30% increase from the previous year, with a final dividend of 19 US cents per share.
Additionally, Brambles announced two capital management initiatives: a higher future dividend payout ratio range (from 45-60% to 50-70%) and a share buyback of up to US$1 billion in FY25 (subject to market conditions).
The company’s guidance for FY25 includes revenue growth of 4-6% and underlying profit growth of 8-11%, exceeding market expectations by 3.9% and 7.4%, respectively.
Brambles attributed its revenue growth to price increases, including current-year price realization and the effects of actions taken in the previous year to address higher inflation and other cost pressures.
The company noted that the operating environment in FY24 was characterized by inventory optimization in retail and manufacturer supply chains, weak consumer demand, and easing inflationary pressures. While input-cost inflation moderated from previous highs, Brambles continued to face higher labour rates and transport costs in some regions. These pressures were partially offset by lower transport rates in North America and deflation in fuel and lumber.