By Stuart Condie

SYDNEY--Global pallet giant Brambles raised its dividend and flagged the potential for further improved shareholder returns after improved asset efficiency and new business wins helped lift first-half profit by 8%.

The Australia-listed company, which reports in U.S. dollars, on Thursday posted an underlying profit for the six months through December of $717.9 million.

The rise was supported by efficiency gains that helped lift free cashflow before dividends by 38% to $429.2 million. Brambles raised its annual guidance for free cash flow before dividends to between $850 million and $950 million, from $750 million-$850 million.

With an unchanged payout policy of 50-70% of underlying profit, that should lead to higher dividends for shareholders at the end of the fiscal year.

"Combined with our sales and profit guidance, which was reconfirmed today, achieving our FY25 outlook will see us deliver every component of our investor value proposition," Chief Executive Graham Chipchase said.

Brambles' underlying profit was up 10% on the prior year once currency moves were stripped out, in line with its reiterated guidance for a 8-11% increase over the full fiscal year.

Brambles also maintained its annual sales revenue guidance of 4-6% growth after first-half sales revenue from continuing operations rose by 4% to $3.37 million, also on a constant-currency basis.

On a statutory basis, Brambles reported a net profit of $446.2 million, up 11% on year at constant FX rates. It raised its dividend to 19 cents, from 15 cents a year earlier.

The average analyst forecast ahead of the result was for a net profit of $445.6 million from revenue of $3.439 billion, according to data compiled by Visible Alpha.

Brambles, which leases rather than sells its blue-painted CHEP pallets to customers, has been investing heavily in technology to help improve the speed with which its pallets circulate in supply chains. That means they can be repaired and re-leased more quickly.

On Thursday, it said its tech investments saved it from purchasing about 1 million new pallets in the December half, reducing its pooling capital-expenditure as a proportion of sales revenue.

"We are encouraged by the value our enhanced digital capabilities have enabled across our organisation and continue to progress our digital transformation," Chipchase said. The improved cashflow outlook was a direct result of the lower capex, he added.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

February 19, 2025 17:10 ET (22:10 GMT)

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