Today, Brambles operates in an increasingly competitive environment characterised by ongoing macroeconomic uncertainty and a customer base navigating the challenges of a rapidly evolving retail landscape and changing consumer behaviour. In this context, our priority as a company is to build upon the strength of our business model and competitive advantage to position Brambles as a partner of choice for our customers, as we help them build the supply chains of the future.

2017 Performance

Brambles delivered constant-currency sales revenue growth of 6% and Underlying Profit broadly in line with the prior year. Return On Capital Invested (ROCI) decreased 2.3 percentage points to 17.0% and Cash Flow from Operations increased by US$72.7 million.

Our FY17 performance was driven by solid revenue growth across most of our businesses, with notable contributions from our global IFCO RPC businesses and pallets businesses in Europe and Latin America. Our Underlying Profit performance was impacted by challenges in our US pallets business, which faced competitive and direct costs pressures. We are taking steps to address these challenges and it was good to see new business wins in the US pallets business during the second half of the year. A full analysis of our financial results is on pages 12 to 16 in the Operating & Financial Review.

Organisational Realignment

In February, I announced a realignment of Brambles’ global organisational structure and a new executive leadership team. This included a flattening of the structure to allow me to be closer to the businesses and to achieve greater consistency of approach across the Group. The executive team, outlined on pages 20 to 21, also reflects a better balance between the operating and functional leaders of our business. Following the divestment of Aerospace and formation of the HFG joint venture, Containers is no longer a separate operating segment under the new structure.

People, Safety & Sustainability

Thanks to the professionalism of our people and deeply embedded safety culture, the Brambles Injury Frequency Rate has continued to improve and I am pleased to report no fatalities occurred in our operations during the year.

During FY17, we made good progress towards our 2020 sustainability goals. The value of our inherently sustainable business model continues to be recognised by our customers and investors, who choose to partner with and invest in Brambles to make a sustainable difference in their supply chains and businesses. Details can be found on pages 4 and 5 in the Operating & Financial Review.

Strategy and Priorities

We will continue to build on Brambles’ supply chain solutions strategy with a clear focus on the core drivers of value for our customers, shareholders and employees. The five core drivers are:

• Growing and strengthening our network advantage that we derive from the integral role we play in our customers’ supply chains. We are committed to strengthening our industry-leading position and optimising our network by investing in platform quality and differentiated, value‑enhancing customer solutions;
• Delivering operational and organisational efficiencies to reduce cost and improve productivity, by leveraging our global scale and implementing global best practice in areas such as procurement, plant automation and transport optimisation;
• Driving disciplined capital allocation and improved cash flow generation by focusing our investment on core businesses and innovation, and delivering asset efficiencies. We will also seek to generate the cash needed to fully fund both dividends and reinvestment in the business;
• Innovating to create new value by investing in technology that enhances our customer offering, product quality and efficiency. This includes increasing our investment in BXB Digital, a business established in 2016, to accelerate digital innovation in the areas of smart assets and data analytics; and
• Developing world-class talent by empowering our people with individual skills and capabilities, building a leadership pipeline and fostering a safe, inclusive and diverse organisation.

Outlook

By focusing on our strategic priorities, Brambles will continue to deliver sustainable growth at returns well in excess of the cost of capital. Through the cycle, we expect constant-currency sales revenue growth in the mid-single digits and Underlying Profit growth to exceed sales revenue growth. To ensure we strike the right balance between growth and returns, ROCI is expected to remain in the mid‑teens. We will also focus on generating sufficient cash to fully fund dividends and reinvestment for growth, innovation, and the development of our people.

Graham Chipchase
Chief Executive Officer