Brambles Faces Inflation and Demand Risks Despite Strong FY25 Profit Growth

Strong Financial Performance Amid Challenging Environment

Brambles Limited, a global leader in supply chain logistics, has reported a solid financial performance for the full year ended 30 June 2025. The company achieved a 10% increase in underlying profit, reaching US$1.37 billion, supported by 3% sales revenue growth to US$6.67 billion. This growth was underpinned by a combination of net new business wins, price realisation aligned with cost-to-serve, and sustained asset efficiency improvements.

Despite a complex macroeconomic backdrop marked by inflationary pressures in labour and freight, and softening consumer demand in key markets, Brambles managed to deliver operating leverage and free cash flow outperformance, with free cash flow before dividends rising by US$212 million to US$1.1 billion.

Capital Management and Shareholder Returns

Following the completion of a US$403 million share buy-back in FY25, Brambles has announced a further US$400 million on-market buy-back program for FY26. This move reflects the company’s confidence in its cash flow generation and commitment to returning value to shareholders. The dividend payout ratio remains targeted between 50% and 70% of underlying profit, with dividends expected to be approximately 30% franked.

Digital Transformation and Sustainability Drive Future Growth

Brambles continues to advance its ‘Shaping Our Future’ transformation program, with significant investments in digital initiatives such as Serialisation+, which is operationally tested in North America and the UK and fully rolled out in Chile. These smart asset technologies are enhancing asset tracking, reducing losses, and improving customer experience.

The company also met its ambitious 2025 sustainability targets, achieving a 17% reduction in carbon emissions against a FY20 baseline and maintaining 100% sustainably sourced timber. Brambles was recognised as the 4th most sustainable company globally by an independent analysis and ranked 3rd in TIME’s list of the world’s most sustainable companies.

Outlook and Strategic Priorities for FY26

Looking ahead, Brambles targets mid single-digit sales revenue growth and high single-digit underlying profit growth for FY26, supported by continued operating leverage and productivity initiatives. Free cash flow before dividends is expected between US$850 million and US$950 million, with capital expenditure rising to support growth and digital transformation, including a significant increase in digital capex to approximately US$90 million.

The company plans to maintain disciplined capital management while navigating macroeconomic uncertainties such as consumer demand fluctuations, input cost inflation, and foreign exchange volatility. Notably, Brambles will discontinue quarterly sales trading updates in FY26, signaling a shift toward longer-term performance focus.

Regional Performance Highlights

Brambles’ regional segments showed mixed but generally positive trends. CHEP Americas delivered 4% sales growth and margin expansion despite excess pallet stock challenges in the US. CHEP EMEA reported a 2% sales increase with margin improvement driven by supply chain efficiencies. CHEP Asia-Pacific saw 3% sales growth, with volumes normalising in Australia and New Zealand.

Overall, asset efficiency initiatives reduced the pooling capital expenditure to sales ratio to 12.3%, reflecting structural improvements in capital intensity. The company’s balance sheet remains strong, with net debt stable at US$2.57 billion, undrawn committed facilities of US$1.6 billion, and investment-grade credit ratings maintained.