The Brambles Limited (ASX: BXB) share price jumped today and finally provided some joy for shareholders, following their first-quarter trading update.
Brambles is a global logistics and pooling solutions company specialising in the provision of reusable pallets, crates, containers and associated logistics services through the CHEP brand.
Brambles traces its history to 1875 when Walter Bramble established a butchery business in Newcastle, the operations of which he gradually expanded into transport and logistics. Brambles first listed in Australia in 1954 and today they help move more goods to more people, in more places than any other organisation on earth. They own 330 million pallets, crates and containers!
Brambles Trading Update
In a statement, Brambles reported sales revenue from continuing operations of US$1.16 billion for the three months through September. This represents a 5% lift on the year-earlier period, using constant foreign-exchange rates.
Commenting on the result, CEO Graham Chipchase said, “Our first-quarter sales performance reflects pricing discipline and ongoing volume momentum despite increasing macroeconomic uncertainty in our major markets“.
Brambles also commented on its financial year 2020 (FY20) guidance, which was provided at their FY19 result, saying it remains unchanged. The guidance is for sales revenue growth to be at the lower end of their mid-single-digit objective and underlying profit to be in line with, or slightly above sales revenue growth, including the impact of the new leasing standard, AASB 16.
Is It Time To Buy Brambles Shares?
This trading update seems to have pleased investors, who were not so pleased following their FY19 result, where the shares were sold down 9% on the day of release. At the time the CEO said that FY19 presented a, “challenging economic an operating environment“.
As highlighted at the start of this article, Brambles has been around for a long time. It’s a solid business and will continue to be around for a lot longer.
The group primarily serves defensive growth sectors like the fast-moving consumer goods (dry food, grocery, and health and personal care), fresh produce and beverage sectors. Further expansion into emerging markets should generate additional earnings growth for many years into the future.
However, macroeconomic conditions don’t seem to be in their favour at the moment, so at this time I’d prefer companies with stronger growth prospects than Brambles. Right now, I think there are better options like the proven businesses in the free report below.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of writing David does not have a financial interest in any of the companies mentioned.