Brambles

Letter from the Chairman
Stephen Johns

Sales Revenue2

US$5,596.6m

Up 6% at constant-currency

The way the world makes, moves and sells goods is being transformed. By connecting the global supply chain, Brambles contributes to a more sustainable future.

The fast moving consumer goods sector and retail landscape are changing. The rise of omni-channel retail, e-commerce and hard discounters, coupled with changing consumer demand, are putting pressure on manufacturers and retailers. Businesses are increasingly expected to meet this demand more efficiently and sustainably.

At Brambles, our pallets, crates and containers form the invisible backbone of the global supply chain. This strong logistics platform, which centres on our inherently sustainable ‘share and reuse’ business model, uniquely positions us to support our customers and solve shared challenges in this evolving landscape.

As a company, we are committed to delivering sustainable value to our customers, shareholders and employees over the long term. We seek to partner with customers to deliver innovative, value-added solutions that meet their evolving needs. For employees, we seek to be an employer of choice that fosters and develops talent through exciting career opportunities in over 60 countries. For shareholders, we seek to deliver sustainable growth with attractive returns.

Underlying Profit2

US$996.7m

In line with prior year

FY18 in Review

Following the challenges of FY17, in FY18 we refocused on the core drivers of value and further streamlined our portfolio to optimise the growth and return potential of Brambles over the long term.

Despite inflationary pressures and robust competition in our major markets, management’s resolute focus on executing against our strategic priorities delivered strong revenue growth and significant improvements in cash flow generation during the Year. While Underlying Profit growth this Year did not meet our longer-term expectations, our teams have identified, and commenced implementing, numerous initiatives which we expect to deliver operating efficiencies and improve profitability over the medium term, particularly in our US pallets business.

Total Dividends

29.0 AU cents per share

Final dividend of 14.5 AU cents per share (30% franked)

Separation of IFCO

Following a strategic review of Brambles’ portfolio, we have determined to pursue a separation of our IFCO RPC business through a demerger with IFCO becoming a separately listed company. We will also pursue a dual-track process whereby an outright sale of the business will be investigated. It is the Board’s determination that a separation of IFCO from Brambles will optimise shareholder outcomes and better position both businesses to pursue a broad range of growth and value-creating opportunities.

Following the proposed separation, Brambles will remain the clear global leader in platform pooling - a highly attractive industry with significant scope for sustained growth, substantial benefits from established scale and highly attractive returns. Brambles will be positioned to continue generating strong revenue growth in its core markets, while also focusing on additional opportunities in emerging markets, first and last mile solutions and BXB Digital’s investment in technology and innovation through the supply chain.

IFCO is a strong business and the global leader in RPC pooling with a large addressable market, strong financial profile and clear opportunities to capitalise on growth prospects in the sector. IFCO has benefited from substantial investments made under Brambles’ ownership and is well positioned for its future as an independent company with a singular focus.

Other Portfolio Actions

During the Year we further consolidated our portfolio by divesting our CHEP Recycled business and our 50% interest in the Hoover Ferguson Group (HFG) Oil & Gas containers joint venture.

The proceeds of these divestments are being used to fund growth and operational investments, such as plant automation, in businesses that generate attractive shareholder returns in the medium to long term.

Board Renewal

In light of my intention to step down as Chairman at the end of my current term, the Nominations Committee has formed a Sub-Committee, chaired by Tony Froggatt, to conduct the process to appoint my successor. As part of that process, George El-Zoghbi was appointed to the Nominations Committee on 26 June 2018 and an external professional search firm has been appointed. The Sub-Committee is on track to select a successor and facilitate a smooth transition well in advance of my retirement in 2020.

As part of the ongoing Board renewal process, Elizabeth Fagan joined the Brambles Board as a Non-Executive Director on 1 June 2018. Ms. Fagan, who has filled a vacancy created by the retirement of Christine Cross in August 2017, has extensive knowledge and experience in the international retail sector developed over a 30-year career. For the past 12 years, she has worked in senior executive positions at Boots UK & Ireland where she is currently Managing Director. On 1 September 2018, she will step down from this role and become the Non-Executive Chairman of Boots UK & Ireland. Given the importance of the retail sector to Brambles, Ms. Fagan is an ideal addition to the Brambles Board.

In addition, Carolyn Kay will be retiring from the Board at this Year’s AGM in October. Ms. Kay has served as a Non-Executive Director for 12 years and, on behalf of the Board, I thank her for her valuable contribution to Brambles.

On behalf of the Board, I would like to thank our management team and staff for their efforts and ongoing commitment during the Year. Brambles remains a resilient business with an exciting future. As we enter FY19, we are well positioned to continue to work towards achieving our strategic priorities and focus on delivering sustainable value for our customers, shareholders and employees over the long term.

Stephen Johns
Chairman

2 Continuing operations