By Stuart Condie 
 

SYDNEY--Brambles Ltd. raised the lower end of its fiscal 2021 revenue and earnings guidance ranges after unexpectedly strong demand for consumer staples helped the pallet supplier to lift first-quarter sales revenue by about 6%.

The Australia-listed firm on Tuesday reported sales revenue from continuing operations for the three months through September of US$1.19 billion, up by about 6% when adjusted for the prior corresponding period's two additional days. Stripping out currency changes, it said the increase was about 5%.

Brambles said it now anticipates fiscal 2021 sales revenue growth of 2-4% at constant foreign exchange rates, compared with the 0%-4% range provided at August's annual result and reiterated at October's annual meeting of shareholders. It expects improved underlying profit margins, including a one percentage-point increase in U.S. margins.

It expects underlying profit growth of between 3% and 5%, compared with a previous 0-5% range. It said free cash flow should be sufficient to fund dividends and core business capital expenditure despite increased investments to support new core business opportunities.

Brambles Chief Executive Graham Chipchase said first-quarter demand in grocery supply chains had been strong despite variability in categories such as beverages, cleaning products and home improvement.

He said demand had remained elevated in early October as customers and retailers increased inventory levels across the U.S. in preparation for the holiday season and potential lockdown measures to contain a second wave of Covid-19 infections.

"We have noted some moderation in U.S. issue volumes during the second half of October and we expect this variability to continue across our businesses for the remainder of fiscal 2021," Mr. Chipchase said in a filing to the Australian Securities Exchange.

Mr. Chipchase said activity levels in its automotive and Kegstar beverage unit improved on the fourth quarter of fiscal 2020, but remained down on the year-earlier period. He said Brambles anticipated a progressive recovery in the units over the next 12-18 months.

 

Write to Stuart Condie at stuart.condie@wsj.com

 

(END) Dow Jones Newswires

November 02, 2020 18:19 ET (23:19 GMT)

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