Brambles Reports 6% Revenue Growth Despite US Repair Constraints

Resilient Earnings Growth Amid US Repair Challenges

Brambles Limited (ASX:BXB) delivered a solid FY26 financial performance, with sales revenue rising 6% to US$7.04 billion, driven equally by price realisation and volume growth. However, a convergence of factors triggered repair capacity constraints in parts of its US service centre network during the fourth quarter, limiting pallet availability and customer onboarding.

The US repair bottleneck weighed on Underlying Profit by approximately US$90 million, a figure that exceeded prior expectations by around US$30 million due to accelerated customer service investments and increased uncompensated pallet losses. Despite this headwind, Brambles’ operating profit grew 9% to US$1.49 billion, with an 11% increase in Underlying Profit excluding the US disruption.

Brambles responded swiftly by expanding repair capacity through additional shifts, subcontractor transitions, and purchasing 1.3 million new pallets in 4Q26, with plans for an additional ~2 million pallets in 1H27. These actions have improved service levels materially since mid-April 2026, and the company expects to resolve repair constraints by the end of the first half of FY27.

Dividend Increase and Capital Management

The Board declared a final dividend of 23.15 US cents per share, a 16% increase over the prior year, bringing total dividends to 46.15 US cents per share, representing a 64% payout ratio. The dividend is 20% franked and payable on 8 October 2026, with a record date of 10 September 2026.

Capital management remains disciplined with US$509 million of on-market share buy-backs completed in FY26 and a further US$400 million programme underway, reflecting confidence in Brambles’ cash flow generation and balance sheet strength. Net debt rose modestly to US$2.93 billion, well within the company’s financial covenant limits, supported by strong Free Cash Flow before dividends of US$1.05 billion.

Strategic Priorities and Sustainability Progress

Brambles is advancing its “Brambles of the Future” strategy, focusing on effortless customer experience, illuminated supply networks, operational excellence, and regenerative supply networks. Despite the US challenges, the company improved key customer metrics outside the US, including a 1-point increase in Net Promoter Score and a 5-point improvement in collection in full on time.

The Serialisation+ programme, piloted in Chile, has eliminated pallet declarations and physical audits, significantly reducing administrative burdens and enhancing customer satisfaction. The company plans to decide on a potential North American rollout in the third quarter of FY27.

On sustainability, Brambles exceeded its 2030 science-based targets trajectories for Scope 1 and 2 greenhouse gas emissions, achieving a 5% reduction year-on-year and a 36% reduction since the 2020 baseline. Scope 3 emissions rose slightly due to higher pallet relocations and purchases in the US but remain on track for a 17% reduction by 2030. The company maintained 100% sustainably certified timber sourcing and initiated reforestation of approximately 10,000 hectares in South Africa through a partnership with WildTrust.

Outlook and Operational Resilience

For FY27, Brambles expects sales revenue growth of 2–4% and Underlying Profit growth of 2–6% at constant currency, with Free Cash Flow before dividends forecast between US$800 million and US$950 million. The company anticipates a mid-to-high single-digit profit decline in 1H27 due to ongoing US repair constraints, offset by low double-digit growth in 2H27, setting a strong foundation for FY28.

Brambles is investing in long-term resilience of its US network, targeting a 20% increase in repair capacity by FY28 through new service centres, expanded repair benches, and automation initiatives under the Service Centre of the Future programme. These investments are expected to be funded within existing capital expenditure guidance of US$200–300 million per annum, excluding Serialisation+.

Despite inflationary pressures, Brambles sustained productivity improvements and cost management initiatives across regions, partially offsetting input cost inflation and higher pallet damage rates. The company’s Return on Capital Invested improved by 0.4 percentage points to 22.6%, underscoring operational efficiency gains.

Legal and Governance Developments

Brambles continues to appeal a partial Federal Court judgment in a class action related to its FY17 profit guidance. The financial impact remains uncertain as the appeal process unfolds, with insurance arrangements in place. The Board remains confident in the company’s strategic direction and governance framework, supported by a diverse and experienced leadership team.

Executive remuneration has been reviewed, with changes effective FY27 to better align incentives with long-term value creation, including a new Total Value Creation measure for Long-Term Incentives that combines earnings per share growth and dividend yield, replacing the previous sales growth and ROCI matrix.

Sustainability Reporting and Climate Strategy

Brambles published its FY26 Sustainability Report aligned with the Australian Sustainability Reporting Standard AASB S2, detailing governance, risk management, and climate-related disclosures. The company’s climate transition plan aims for net-zero greenhouse gas emissions by 2040, with interim targets for 2030, focusing on decarbonisation of operations and supply chains, including investments in renewable energy, fleet electrification, and supplier engagement.

Complementing this, Brambles’ climate adaptation plan addresses physical risks from severe weather and raw material supply vulnerabilities, with 100% of insured locations assessed for climate-related hazards and ongoing initiatives to diversify timber sourcing and enhance asset durability.

Brambles’ circular business model remains a competitive advantage, delivering lower carbon intensity compared to single-use alternatives and supporting customer sustainability objectives. The company continues to integrate climate considerations into financial planning, capital allocation, and executive remuneration.