This year was also one of transition and renewal, during which we welcomed our new CEO and CFO, took strategic actions in relation to our Oil and Gas, Aerospace and CHEP Recycled businesses and refocused our strategy on the core drivers of value.

Operating Challenges and Withdrawal of the FY19 Targets

We entered FY17 with confidence following a successful FY16 where we had achieved strong growth. Unfortunately, the unexpected challenges in our largest business, US pallets, which emerged in the final months of the 2016 calendar year, led to the lowering of the Company’s FY17 guidance in February 2017.

The impact of these challenges on the Group’s projections for FY18 and FY19, coupled with the need for financial flexibility to allow our businesses to meet the evolving needs of customers and maintain our network advantage, were the principal reasons for the Board’s decision to withdraw the FY19 financial targets (originally announced to the market in December 2013). This decision also recognised the reality of the changing operating conditions and increasingly competitive landscape in our major markets.

While our FY17 performance was disappointing, the underlying strength of all of our businesses, including US pallets, remains intact.

Strategy

Looking forward, Brambles is committed to leveraging its global scale and industry-leading expertise as we collaborate with customers to build the supply chains of the future. We seek to deliver growth and operational excellence in our core pallet, RPC and container pooling businesses through a focus on the core drivers of value, which include: strengthening our network advantage; delivering operational and organisational efficiencies; driving disciplined capital allocation and improved cash generation; and developing our people.

We are also committed to investing in innovation and technology to explore the opportunities to support customers more closely. These include developing innovative solutions for omni-channel retail and e-commerce supply chains as well as exploring the role of technology in delivering customer insights and driving operational efficiencies.

Corporate Actions

We undertook a number of strategic actions during the year with the formation of the Hoover Ferguson Group joint venture in October 2016 and the divestment of our Aerospace business in November 2016. Furthermore, in line with the Group’s strategy of focusing on our core pallet, RPC and container pooling businesses, we announced our intention to divest our North America whitewood pallet business, CHEP Recycled in August 2017.

Management

In keeping with the succession plan announced in August 2016, Graham Chipchase joined Brambles on 1 January 2017 before taking over as CEO from Tom Gorman on 20 February 2017.

Nessa O’Sullivan joined Brambles in October 2016 and formally succeeded Zlatko Todorcevski as Brambles’ CFO on 17 November 2016. Both Graham and Nessa bring with them considerable leadership credentials and experience in publicly‑listed companies.

Although I have already previously acknowledged both Tom and Zlatko’s contribution to the success of Brambles, I would once again like to thank them for their many years of service to the Group.

In February this year we announced an organisational realignment and the opening of a new corporate office in London in July 2017 to position the CEO, CFO and other senior executives closer to the majority of Brambles’ operations and customers. Importantly, Brambles remains an Australian company listed on the ASX with the corporate Head Office in Sydney.

With the Board’s support, our new management team is committed to delivering long-term value for our shareholders, customers and employees by addressing our short-term challenges and building on Brambles’ strong competitive position.

Board

Reflecting the CEO and CFO transitional arrangements, Graham Chipchase and Nessa O’Sullivan were appointed to the Board as Executive Directors on 20 February 2017 and 24 April 2017, respectively.

This year, we announced Christine Cross’ decision to retire as a Non-Executive Director from Brambles’ Board effective 31 August 2017. Christine’s decision reflects her desire to minimise her travel commitments and focus on her European directorships and consultancy business. The Board thanks Christine for her valuable contribution to Brambles over the past three and a half years.

On behalf of all shareholders, I thank all of our employees for their dedication and hard work and look forward to their continuing contribution to the long-term success of our company.

Stephen Johns
Chairman