BXB Brambles Limited

   By Rhiannon Hoyle 
 

SYDNEY--Logistics company Brambles Ltd. (BXB.AU) said profit growth may fall short of expectations this year because of headwinds facing its North American pallets business.

Sydney-based Brambles said it expects underlying profit growth of roughly 3% in its fiscal first half, the six months through December, and revenue growth of about 5%. That growth is based on so-called constant-currency calculations, whereby its earnings are translated into U.S. dollars at monthly rates from the year-earlier period to eliminate the effects of exchange-rate fluctuations.

Brambles said it now expects its annual results in the year through June to fall short of a company projection for underlying profit growth of 9-11% and revenue growth of 7-9%.

"In our North America pallets business, we experienced some revenue and cost pressures during the back end of the first half...partly due to U.S. retailer destocking which impacted volumes and resulted in increased transport and plant costs associated with higher-than-expected pallet returns," said Chief Executive Tom Gorman.

"In addition, we have continued to see a deferral of potential customer conversions to pooling in North America and pricing pressure across our recycled pallet operations," he said.

Brambles's first-half earnings will also be weighed by a small loss on its HFG joint venture. Mr. Gorman said an impairment review of Brambles's investment in the energy container business is underway.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

January 22, 2017 17:09 ET (22:09 GMT)

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