Brambles generates value through a virtuous circle that leverages its scale, density and expertise to achieve superior operational efficiencies.
These efficiencies in turn generate cash flow that can either be returned to shareholders or reinvested in the business to fund growth, innovation and development of its people.
Long-Term Value Creation and Sustainable Shareholder Returns
Brambles shares the efficiencies generated by its scale, density and expertise with its customers, providing a compelling value proposition compared to alternatives. By providing customers with supply chain solutions in approximately 60 countries, Brambles offers shareholders exposure to geographically diversified earning streams, primarily from the global consumer staples sector.
The supply chains served by Brambles also provide a broad range of growth opportunities including: increasing penetration of core equipment-pooling products and services in existing markets; diversifying the range of products and services; entering new and adjacent parts of existing supply chains; and exploring the digitisation of supply chains.
Within this context, Brambles is committed to striking the right balance between growing its business and delivering sustainable shareholder returns over the long term. By focusing on its core drivers of value, Brambles expects to deliver:
Sustainable growth at returns well in excess of the cost of capital
- Sales revenue growth2 in the mid-single digits;
- Underlying Profit growth2 in excess of sales revenue growth through the cycle; and
- Strong Return on Capital Invested.
Cash generation to fund growth, innovation and shareholder returns
- Free Cash Flow sufficient to fully fund capital expenditure and dividends.
Dividend Policy and Payment
The Board has declared a final dividend for 2019 of 14.5 AU cents per share, in line with the previous interim and final dividends. The 2019 final dividend will be 30% franked and is payable on 10 October 2019 to shareholders on the Brambles register at 5.00pm on 12 September 2019. The ex‑dividend date is 11 September 2019.
Total dividends for the Year were 29.0 AU cents per share, in line with the prior year. Brambles paid a 65% franked 2019 interim dividend of 14.5 AU cents per share on 11 April 2019.
Following the sale of its IFCO RPC business, the Brambles Board has reviewed Brambles’ current progressive dividend policy. Under this policy, the Group seeks to maintain or increase dividends per share each year, in Australian cents, subject to its financial performance and cash requirements. From the FY20 interim dividend, Brambles will move to a payout ratio based dividend policy, targeting a payout ratio of 45-60% of Underlying Profit after finance costs and tax, subject to Brambles’ cash requirements, with the dividend per share declared in US cents and converted and paid in Australian cents.
Capital Management Programme
On 25 February 2019, Brambles announced that it intended to use the proceeds from the sale of its IFCO RPC business to fund an on-market share buy‑back of up to US$1.65 billion, a pro-rata return of cash of 29.0 AU cents per share and to pay down debt.
Completion of the sale of IFCO RPC was announced on 3 June 2019 and the on-market share buy-back commenced on 4 June 2019. Between that date and 21 June 2019, when it was paused for Brambles’ scheduled trading blackout period, 6,039,299 ordinary shares were bought back and cancelled for a total consideration of US$54.1 million. The on-market buy-back is scheduled to recommence on 22 August 2019.
The pro-rata cash return compromises two components: a capital return of 12 AU cents per share which is subject to shareholder approval, which Brambles will seek at its 2019 AGM on 10 October 2019, and a special dividend of 17 AU cents per share.
On 5 July 2019, Brambles repaid the US$500 million April 2020 144A bond issue using the IFCO RPC sales proceeds.
Dividend Reinvestment Plan
Given the on-market share buy-back programme will continue into FY20, the Brambles’ Board has decided to suspend the Dividend Reinvestment Plan.