Sales revenue from continuing operations was US$5,596.6 million, up 6% at constant-currency, driven by strong volume growth across the North American, European and Latin American pallets businesses and IFCO RPCs globally. Pricing contributed one percentage point to annual revenue growth, reflecting price realisation in US pallets, emerging markets and IFCO North America.

Underlying Profit of US$996.7 million was in line with prior year at constant-currency and driven by strong sales contributions to profit in CHEP EMEA and IFCO, coupled with cost reductions and increased asset compensations in CHEP Asia-Pacific.

Underlying Profit growth was impacted by a two percentage point reduction in profit associated with RPC and automotive contract losses in CHEP Australia announced to the market in 2016. In addition to this, accelerating inflationary cost pressures in mature markets and direct cost challenges in CHEP Americas also impacted Underlying Profit growth.

Input cost inflation accelerated during FY18, with particularly strong increases in labour, lumber and transport rates in the US and Europe. Resulting cost increases were partially offset by productivity gains and inflation-related pricing actions primarily undertaken in the second half of the Year.

In addition to inflationary cost pressures, CHEP Americas was impacted by the following cost challenges:

• Inefficiencies due to network capacity constraints and higher costs relating to changes in customer and retailer behaviour in US pallets;

• Additional costs associated with the progressive conversion of the Canadian pallet pool from stringer to block pallets; and

• Increased depreciation charges across the Group; and

• Increased costs in the high growth Latin American pallets business.

Operating profit from continuing operations of US$986.0 million increased 22% at constant-currency, reflecting a US$175.4 million reduction in Significant Item charges which was partly driven by the recognition of the US$120.0 million non-cash impairment of the HFG joint venture investment in FY17. The balance of the reduction was largely driven by a US$55.4 million decrease in FY18 Significant Item charges relating to restructuring costs and completion of the One Better projects.

Profit after tax from continuing operations was US$773.5 million, up 67% at constant-currency, driven by the higher operating profit and a one-off, non-cash benefit to income tax expense of US$127.9 million. This benefit resulted from a reduction in the Group’s net deferred tax liabilities following the US tax reform, which included a decrease in the federal income tax rate from 35% to 21%, effective 1 January 2018.

The Group's effective tax rate for FY18 on Underlying Profit decreased to 26.5% from 28.8% in FY17, reflecting the lower US tax rate and a change in the geographic mix of profits.

Net finance costs of US$104.8 million increased by US$6.1 million, driven by increased debt and interest rates in emerging markets and higher interest rates in North America.

Basic earnings per share was US47.0 cents, up 292% at constant-currency, reflecting the increase in profit after tax.

Average Capital Invested of US$6,172.7 million increased 5% or US$296.5 million at constant-currency, largely driven by higher growth-related capital expenditure during the Year. Pooling capital expenditure of US$1,092.5 million increased US$105.3 million at constant-currency (up US$140.5 million at actual FX), reflecting:

• A US$54 million increase in investments to support volume growth;

• Increased pallet unit costs of US$21 million primarily due to lumber inflation;

• Investments of US$31 million to support new market entry; and

• Increased pallet purchases of US$15 million to support the conversion of customers to block pallets in Canada.

These increases were partly offset by asset efficiency gains of US$16 million in CHEP North America and IFCO Europe.

Non-pooling capital expenditure of US$100.0 million increased by US$26.6 million at constant-currency (up US$28.5 million at actual FX), reflecting higher investment in supply chain programmes including plant automation across the Group.

Return on Capital Invested was 16.1%, down 0.9 percentage points at constant-currency, with 0.4 percentage points of the decline due to the RPC and automotive contract losses in CHEP Australia. The balance of the decline was largely due to lower margins in the CHEP Americas region. Group returns remain strong and well in excess of the cost of capital.

Cash Flow Reconciliation

Cash Flow from Operations of US$892.4 million increased US$300.9 million as increased EBITDA, strong working capital management and higher asset compensations were partially offset by increased cash capital expenditure to fund growth. Cash Flow from Operations also included proceeds of US$150.0 million from the repayment of the HFG joint venture loan. Key movements during the Year included:

• An increase in capital expenditure (cash basis) of US$75.5 million. This was below the increase in capital expenditure on an accruals basis of US$169.0 million driven by extended terms with major suppliers;
• An increase in proceeds from the sale of PP&E of US$30.7 million driven by higher collection of asset compensations; and
• Improved working capital management across the Group resulting in a US$87.5 million increase in cash flow, which included approximately US$30.0 million of timing benefits.

Free Cash Flow after dividends was US$202.4 million as Cash Flow from Operations fully funded both capital expenditure and dividend cash payments of US$352.0 million relating to the final FY17 and interim 1H18 dividends.

Sales revenue

Pallets' sales revenue of US$2,142.1 million increased 5% at constant-currency, reflecting strong volume growth across the region and increased pricing in US pallets.

US pallets' sales revenue of US$1,580.5 million increased 4%, reflecting strong volume growth and positive price contributions despite ongoing competitive intensity and inflationary pressures.

Growth was driven by expansion with new and existing customers and comprised:

• Solid pricing growth of 1%. Effective price, which includes lumber and labour inflation-related surcharges recognised as an offset to costs, increased 2% in the second half of the Year;
• Like-for-like volume growth of 1% primarily driven by customers in the grocery and beverage sectors; and
• Net new business growth of 2% including both wins in the Year and the rollover impact of contracts won during the prior year.

Canada pallets' sales revenue was US$263.4 million, up 5% at constant-currency, reflecting volume growth and price/mix benefits.

Latin America pallets' sales revenue of US$298.2 million, up 10% at constant-currency, reflects strong volume growth and price realisation in the region.

Containers' sales revenue was US$53.2 million, up 11% at constant-currency, largely driven by new Intermediate Bulk Container (IBC) and automotive contracts won in FY17 and FY18.

Profit

Underlying Profit of US$350.6 million declined 12% at constant-currency due to lower contributions from the US and Canadian pallet businesses.

At constant-currency, volume, price and mix contributions to profit of US$52 million were more than offset by:

• Net transport cost increases of US$46 million, largely reflecting higher costs in US pallets due to third-party transport inflation, additional relocations in response to changing customer and retailer behaviour and capacity constraints. The migration to block pallets in Canada also contributed to increased transport moves in FY18;
• Net plant cost increases of US$23 million, reflecting higher operating costs in Canada associated with the migration to block pallets, and increased repair and handling costs in US pallets resulting from changing customer and retailer behaviour, cost inflation and higher investment in pallet quality; and
• IPEP increases of US$15 million, reflecting volume growth, and increased costs in Latin America and Canada.

Return on Capital Invested

Return on Capital Invested of 16.5% decreased 3.8 percentage points at constant-currency due to lower profitability throughout the region.

Sales revenue

Pallets' sales revenue of US$1,551.8 million, increased 6% at constant-currency, reflecting strong volume growth across the region and price increases in the Africa, India and Middle East pallets business.

Europe pallets' sales revenue of US$1,369.7 million, increased 6% at constant-currency and comprised:

• Broadly flat price in the region as indexation offset strategic pricing initiatives;
• Like-for-like volume growth of 1%, reflecting solid growth throughout the region with a particularly strong contribution from Central & Eastern Europe; and
• Net new business growth of 5% driven by the rollover impact from contracts won in FY17 and strong contributions from contracts won in FY18, particularly in Southern Europe and Central & Eastern Europe.

Within Europe pallets:

• Southern Europe (comprising Iberia, Italy, Turkey and Greece) pallets' sales revenue was US$406.4 million, up 7% at constant-currency;
• Central & Eastern Europe (including Germany, Poland and the Nordics) pallets' sales revenue was US$339.5 million, up 12% in constant-currency;
• Northern Europe (comprising UK and Ireland) pallets' sales revenue was US$330.9 million, up 3% at constant-currency; and
• Western Europe (comprising France and Benelux) pallets' sales revenue was US$292.9 million, up 4% at constant-currency.

Africa, India and Middle East pallets' sales revenue was US$182.1 million, up 7% at constant-currency, reflecting strong price and volume growth in the region.

RPC and Containers contributed US$273.3 million to sales revenue, up 18% at constant-currency, largely due to strong growth in the Automotive and Kegstar businesses.

Profit

Underlying Profit was US$454.8 million, up 9% at constant-currency despite transport and lumber inflation.

In constant-currency terms, volume, price and mix contributions to profit of US$78 million were partly offset by:

• Net transport cost increases of US$8 million, reflecting higher fuel prices, supply constraints in the European third-party freight market and inflationary cost increases in CHEP Africa, India & Middle East, which were partly offset by supply chain efficiencies;
• Net plant cost increases of US$4 million due to lumber and labour cost inflation, which were partly offset by supply chain efficiencies;
• Depreciation cost increases of US$12 million due to higher investment in the pool to support strong volume growth in both FY17 and FY18; and
• Other indirect cost increases of US$18 million primarily due to higher overheads to support growth throughout the segment including First-Mile and Last-Mile Solutions, expansion into new markets including Russia and India, and growth in the Automotive and Kegstar businesses.

Return on Capital Invested

Return on Capital Invested was 24.6%, down 0.2 percentage points at constant-currency, largely reflecting the impact on Average Capital Invested of increased unit pallet prices in Europe due to lumber inflation and investments in new markets, including Automotive and Kegstar.

Sales revenue

Sales revenue in CHEP Asia-Pacific was US$475.1 million, down 4% at constant-currency, largely due to the RPC and automotive contract losses in Australia announced to the market in 2016. Excluding the impact of these contract losses, sales growth in constant-currency was 3%.

Pallets' sales revenue was US$354.4 million, up 4% at constant-currency, driven by modest pricing gains and like-for-like volume growth in Australia and New Zealand.

RPC and Containers contributed US$120.7 million to sales revenue, down 23% at constant-currency, reflecting the US$35.4 million loss of sales revenue relating to a large Australian RPC contract and the wind-down of the automotive industry in Australia as well as the slow-down in the automotive sector in China.

Profit

Underlying Profit was US$111.7 million, a decrease of 3% at constant-currency, reflecting the US$21.6 million Underlying Profit impact of the RPC and automotive contract losses, partly offset by higher asset compensations and overhead cost reductions.

Return on Capital Invested

Return on Capital Invested of 25.5% declined 0.5 percentage points at constant-currency, primarily due to the Underlying Profit impact of the contract losses in CHEP Australia.

Sales revenue

Sales revenue in IFCO RPCs was US$1,101.1 million, up 8% at constant-currency. The increase reflected strong volume growth as well as pricing and product mix benefits in North America. Regional contributions were as follows:

• Europe sales revenue was US$790.0 million, up 9% at constant-currency, driven by strong volume growth with most retailers;
• North America sales revenue was US$228.6 million, up 2% at constant-currency, primarily due to pricing and product mix benefits. Overall volume declined by 4% as the business exited unprofitable contracts; and
• Other regions' (comprising South America and Asia) sales revenue was US$82.5 million, up 12% at constantcurrency, reflecting volume growth and product and pricing mix benefits in South America.

Profit

Underlying Profit of US$136.5 million, increased 10% at constant-currency, reflecting the strong sales contribution to profit, partly offset by increased depreciation costs in North America and Europe.

Return on Capital Invested

Return on Capital Invested was 8.2%, up 0.7 percentage points at constant-currency, reflecting Underlying Profit growth and modest increases in Average Capital Invested as the business leveraged capital investments made in FY16 and FY17.