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Core Portfolio Stock - Brambles


Brambles is a supply-chain logistics company operating in more than 50 countries, primarily through the CHEP and IFCO brands. The Group specialises in the pooling of unit-load equipment and associated services, focusing on the outsourced management of pallets, crates and containers. Whilst supply chain logistics is not the most glamorous of sectors, profits don’t discriminate on that basis.

CHEP is regarded as the world leader in pallet and container pooling services. Their product range includes pallets, containers, and Reusable Plastic Containers (RPCs), provided to a range of industries including, but not limited to, Aerospace, AutomotiveChemicalConsumer GoodsFresh Food, and Manufacturing, operating in over 50 countries.

IFCO SYSTEMS is an international logistics service provider with more than 45 locations worldwide. IFCO SYSTEMS operates a pool of more than 165 million Reusable Plastic Containers (RPCs) globally, which are used primarily to transport fresh produce from producers to retailers. IFCO Systems also provide RPC management services, where their core competency is the efficient management of over 165 million RCPs globally. Core markets include Europe, Asia-Pacific, the United States, emerging markets and more recently Chile, providing productive, flexible, cost efficient and state of the art product distribution solutions. IFCO Systems’ experience in the RPC management business is their competitive advantage, moving up to 4.3 million RPCs in 39 countries daily.

Brambles released their 2015 third quarter results with revenue growth in RCP pallets pleasing in comparison to slower growth in the pallets operating segment. Reported sales revenue of US$4,044 million for the nine months to the end of March 2015 was up 8% in constant currency on the prior corresponding period. Brambles has maintained its guidance for the 2015 financial year for underlying profit between US$1,055 million and US$1,085 million (at 30 June 2014 foreign exchange rates); and a year-on-year increase in Return on Capital Invested, prior to acquisition impacts.

Sales growth for FY15 H1 in the containers segment was primarily driven by acquisitions of Ferguson, Transpac and Airworld. Acquisitions added 169% of revenues to Oil and Gas, and 21% to Aerospace. Overall underlying profit has increased by 61% to $US31m due to acquisitions.

On the 20th of May Brambles announced that they completed the acquisition of Renta Pack S.A. Chile’s leading provider of reusable plastic crate (RPC) pooling services, for an enterprise value of 38 billion Chilean pesos, US$63m. Rentapack has four service centres in Chile and approximately 230 employees. The business serves major retailers Cencosud, Montserrat, Tottus, Unimarc and Walmart, as well as approximately 800 fresh produce growers. Key management will remain with the business, with forecast sales revenue of 11.7 billion pesos (US$19.4 million) and EBITDA of 5.2 billion pesos (US$8.6 million) for the 2015 calendar year.


Plant costs continue to reflect the anticipated increased pallet damage that is resulting from improved asset utilisation, and third-party freight costs are subject to heightened inflation as a result of regulatory changes and driver shortages.

Ferguson is an oil and gas based container servicing business, contributing to the 4% of overall operating profits the container segment provides to Bramble. The company provides 8,500 containers to the offshore oil and gas sector. Established more than 35 years ago, the Group has been servicing the global oil and gas industry from its bases in the UK, Norway, Australia, Singapore and UAE and from partner bases around the world. The Group's product portfolio contains various types of offshore transportation containers, tanks, baskets and associated lifting equipment. The company operates a web-enabled comprehensive container management system, which allows for the tracking of all containers, tanks, baskets etc., throughout the global rental fleet.

Although the oil and gas industry is experiencing a difficult period with oil and gas prices having decline significantly in the previous 12 months, according to Brambles management over 70% of sales revenue is generated from mature, producing assets and less than 5% of revenue is concentrated with one customer. Accordingly, Ferguson has a wide customer base and we expect sustained revenues from producing assets.

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