Brambles shares: what’s the outlook as Q1 sales revenue hits $1.16B?

Morning price action

Brambles (ASX: BXB) – the A$17 billion large-cap, today provided the market with its FY20 first quarter trading update.

The market responded with decisive bullishness to the Q1 update, bidding the Brambles share price some 3.27% higher in the first hour of trade, to as high as A$11.37 per share.

Brambles Q1 results at a glance

Brambles saw modest top-line growth during the first quarter of 2020, with the company reporting particularly good growth in its CHEP Americas segment.

From continuing operations Brambles reported revenue figures of $1,159 million – a favourable increase on the prior corresponding quarter’s $1,139 million. At constant FX rates this represent a 5% increase, while on actual FX rates it is a more mild 2% increase.

As noted above, the CHEP Americas segment was the best performing for the group during Q1, seeing its sales revenue increase 7%, at constant FX rates.

This, as pointed out by the company, reflected ‘higher price realisation across the region, particularly in Latin America, rollover benefits from US pallet contracts won in the prior year and solid like-for-like volume growth in the US and Latin America.’

In comparison, CHEP EMEA and CHEP Asia-Pacific sales revenue came in slightly lower, increasing 4% and 2%, respectively, at constant FX rates.

Speaking of these results, Brambles’s CEO, Graham Chipchase commented that, ‘our first-quarter sales performance reflects pricing discipline and ongoing volume momentum despite increasing macroeconomic uncertainty in our major markets.’

FY20 guidance remains unchanged

Pleasantly, Brambles also took today’s Q1 trading update to reiterate the company’s FY20 guidance, with Mr Chipchase noting that the prior guidance outlined during the Brambles’s FY19 results remains unaltered.

Specifically, it was pointed out that:

‘On a constant-FX basis, we continue to expect sales revenue growth to be at the lower end of our 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.’

Brambles share price: analyst expectations

According to Bloomberg Data, analysts currently have 1 buy recommendation, 8 hold recommendations and 2 sell recommendations on Brambles. Such views have evidently not stopped investors running Brambles higher today.

Year-to-date, the Brambles (ASX: BXB) share price has now risen a little more than 12%; lagging the ASX 200 only somewhat.

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