Brambles generates value through a ‘share and reuse’ model 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, the development of its people and build a more resilient business.
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; exploring the digitisation of supply chains; and providing a resilient foundation during supply chain uncertainties.
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
During the Year, Brambles moved 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.
This Year, the Board declared total dividends (excluding the special dividend declared as part of the capital management programme) of 18.0 US cents per share, with the Australian dollar payment equivalent to 25.92 AU cents per share. This results in a payout ratio for the Year of 53%, which is broadly in line with the prior year payout ratio, including IFCO’s 2019 earnings contribution. FY19 total dividends were 29.0 AU cents per share.
The final dividend for 2020 of 9.0 US cents per share, is in line with the 2020 interim dividend and will be 30% franked. This dividend is payable in Australian dollars 12.54 AU cents per share on 8 October 2020 to shareholders on the Brambles register at 5.00pm on 10 September 2020. The ex-dividend date is 9 September 2020.
Capital Management Programme
At the time of the sale of its IFCO RPC business, Brambles announced that it intended to use the US$2.4 billion net proceeds to fund a A$2.8 billion (US$1.95 billion) capital management programme, through an on‑market share buy-back of up to A$2.4 billion (US$1.65 billion) and a pro-rata return of cash of 29.0 AU cents per share, and to pay down debt.
The on-market share buy-back commenced on 4 June 2019 and to date 91,697,878 ordinary shares have been bought back and cancelled for a total consideration of A$1,049.7 million.
On 22 October 2019, Brambles paid a 29.0 AU cents per share pro‑rata cash return comprising two components: a capital return of 12.0 AU cents per share and a special unfranked dividend of 17.0 AU cents per share. The total cash payment for the pro-rata return was A$453.8 million.
At 30 June 2020, Brambles had completed A$1.5 billion, that is 53% of the A$2.8 billion capital management programme.
On 5 July 2019, Brambles repaid the US$500 million April 2020 144A bond issue using part of the IFCO sales proceeds.
Dividend Reinvestment Plan
Given the on-market share buy-back programme will continue into FY21, the Board has decided to continue to suspend the Dividend Reinvestment Plan.