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Sydney-headquartered global logistics services company Brambles (ASX: BXB), known for its CHEP brand of pallets, crates and containers, had $1.5 billion shaved off its market capitalisation this morning after downgrading the upper end of sales growth forecasts for FY25.
Despite playing an integral role in global trade, the Brambles share price was relatively unscathed by the uncertainty wrought by US tariff announcements, up 7.5 per cent in the year to date at the close of trading on Thursday last week before the ANZAC Day public holiday.
This means that even though its share price has fallen 5.03 per cent today to $19.83, it is still up since the start of 2025.
In today's announcement, the group downgraded its forecast sales revenue growth band from 4-6 per cent down to 4-5 per cent, due to the impact of macroeconomic uncertainty on consumer demand.
"Current macroeconomic conditions have prompted us to narrow our outlook for FY25 sales revenue growth to the mid-to-low end of our guidance range," says Brambles CEO Graham Chipchase.
"While we expect ongoing price realisation and improved net new business momentum through the balance of the year, like-for-like volumes will be challenged given the weakness in the third quarter and the expected continuation of macroeconomic uncertainty in the fourth quarter."
The revised outlook was released with Brambles' reporting of 1 per cent volume growth year-on-year for the nine months to the end of March, reflecting new business growth as like-for-like volumes were flat.
At the same time Brambles has increased its prices, helping to lift sales revenue growth to 3 per cent with the headline figure hitting US$4.9 billion in sales revenue from continuing operations over the nine months at current foreign exchange rate levels.
Also on a positive note, Brambles' FY25 outlook for free cash flow before dividends has been upgraded by US$50 million, to a range of US$900 million-$1 billion, reflecting lower pooling capital expenditure given softer like-for-like volumes and better asset efficiency.
"Our revenue performance for the first nine months of FY25 demonstrates our commercial discipline and focus on new business wins which underpinned price realisation and volume growth in the period, respectively," says Chipchase.
"Price realisation remained in line with the cost-to-serve, as the recovery of inflation contributed to modest contractual price increases.
"These increases were partially offset by lower contributions from pricing mechanisms linked to improved loss rates and cycle times across retailer and manufacturer supply chains, which are delivering benefits to our customers and improving our operational efficiency."
He says overall volume growth benefited from enhanced sales capabilities, ongoing investment in the customer experience and changes in both whitewood pricing and quality dynamics across the group's major markets.
"During the third quarter, these factors generated ongoing net new business momentum in the US and an improving rate of new customer contract wins in Europe and Latin America, which is expected to increase the rate of net new business volume growth through the balance of the year and into FY26," he says.
"This was tempered by challenges to like-for-like volumes during the third quarter, particularly in the Americas region, where severe winter weather events had wide-ranging impacts on broader supply chains across the US.
"In addition, the geopolitical environment and rapidly evolving tariff situation are weighing on consumer sentiment, with impacts on demand from existing customers emerging in most regions during the last two months of the third quarter."
Chipchase says that against this backdrop, Brambles' priority is to support customers through this period of uncertainty with "service reliability and superior platform quality".
"At the same time, we continue to focus on delivering supply chain productivity savings and asset efficiency benefits to lower our cost-to-serve and increase the value we bring to their supply chains," he says.
Chipchase emphasises the group has reconfirmed its underlying profit guidance, driven by "ongoing supply chain and asset productivity initiatives as well as overhead cost control measures".
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