The Brambles Limited (ASX: BXB) share price is up more than 6% after giving a trading update for the FY21 first quarter.
First quarter trading update
Brambles reported that its revenue from continuing operations for the first quarter which is a 6% increase, in actual currency compared to the corresponding period.
At constant currency rates, sales revenue went up 5% compared to last year. which was helped by volume growth and a price increase of 3%.
CHEP Americas revenue rose 7%, CHEP EMEA revenue went up 2% and CHEP Asia-Pacific revenue grew 2%.
As a result, Brambles said it was tightening its guidance towards the upper end of the range.
Brambles said that sales revenue growth is projected to be between 2% to 4% at constant currency exchange rates, with improved underlying profit margins including a 1% increase in US margins.
Underlying profit growth is expected to be between 3% to 5% at constant currency exchange rates.
Free cashflow is expected to fund dividends and the core business capital expenditure despite increased investments to support new business opportunities.
The dividend payout ratio is going to be between 45% to 60% with the share buy-back programme to continue as long as it has the capital for it.
Summary thoughts
Brambles is a solid industrial business, and it’s good that it’s continuing to grow despite COVID-19. However, I’m not sure how much long term growth potential there is for Brambles. If I were looking for other ‘industrial’ ASX growth shares (which aren’t technology) to buy then I’d consider something like Brickworks Limited (ASX: BKW), A2 Milk Company Ltd (ASX: A2M) or Service Stream Limited
(ASX: SSM).
