Cost Leadership
In the 2012 financial year, and as we begin the 2013 financial year, we are strengthening our efforts in the area of cost leadership. This means delivering a low-cost business model that leverages our global scale and creates sustainable competitive advantage for both Brambles and its customers. Against a backdrop of challenging economic conditions, in particular for our developed Pallets operations, the importance of maximising the efficiency of our operations is placed in sharper focus.
IFCO integration synergies
Brambles acquisition of IFCO Systems, completed in late March 2011, supported the company’s intention to expand its operations in the Reusable Plastic Crates (RPCs) segment and broaden its range of services in the pallets sector in the USA to include pallet management. In addition, there were opportunities to generate efficiencies by optimising the combined networks of the CHEP pallet-pooling and IFCO Pallet Management Services operations in the USA and the IFCO and CHEP RPCs operations in Europe. In the 2012 financial year, Brambles made progress with this plan, delivering the first US$10 million tranche of efficiencies towards a targeted US$40 million of annualised synergies from the IFCO acquisition by the end of the 2014 financial year.
Global Pallets efficiencies
In addition, the October 2011 reorganisation of Brambles Pooling Solutions operations into three new segments – Pallets, RPCs and Containers – is enabling a global approach to the operations and logistics functions of the Pallets business. The program includes introducing best practice for numerous aspects of Brambles’ plant and transport networks globally, such as standardising the types of machines it uses in pallet repair facilities for the elimination of raised nails from repaired pallets. Brambles is on track to deliver a total US$60 million of annualised efficiencies from this global approach to operations and logistics in the Pallets segment, of which the company delivered the first
US$10 million in the 2012 financial year in the Americas region.

Targeted IFCO integration synergies and
Pallets operations and logistics efficiencies
  Annualised saving
US$m) FX June 2011 FY12 FY13 FY14 FY15+
European RPC network optimisation
and rationalisation		 5 5 5 5
CHEP USA and IFCO PMS network optimisation
and logistics efficiencies		 5 15 35 35
IFCO integration 10 20 40 40
Operations and logistics efficiencies
in global pallets business		 10 20 40 60
Total efficiencies 20 40 80 100


Asset efficiency programs
Maximising capital efficiency is an essential aspect of cost leadership. Brambles’ continued to invest in programs to improve asset utilisation during the 2012 financial year, in particular in the more developed parts of its Pallets operations in which the replenishment of its asset pool can be capital intensive. Managing the three key drivers of asset efficiency – what proportion of the pool gets lost from the network, how quickly we can retrieve our assets, and the extent of wear and tear that those assets endure while they are under hire – can therefore have a significant impact on returns. In the CHEP USA business unit in particular, Brambles has made encouraging progress with some initial programs aimed at improving asset control over the long term. For example, CHEP USA has worked with some customers to reduce the number of pallets sent into distribution and retail channels that do not participate fully in the CHEP pooling network. These initiatives can reduce pallet loss and damage and assist CHEP in retrieving pallets more quickly. These programs are in the early stages of development, but it was encouraging to report in the 2012 financial year that the Americas region of the Pallets segment was able to reduce modestly its Irrecoverable Pooling Equipment Provision expense, which covers the estimated cost of lost pallets.