BRAMBLES TUMBLES AFTER REDUCING GUIDANCE

BRAMBLES TUMBLES AFTER REDUCING GUIDANCE

BRAMBLES (ASX: BXB) will miss its first-half guidance due to cost pressures at its North America business.

The company is trading down 14.86 per cent at 11.32am (AEDT) at $10.45 per share in response to this guidance announcement this morning.

The company is expecting first-half constant-currency sales revenue growth of around 5 per cent and underlying profit growth of around 3 per cent for the half year to 31 December.

This is well down on previous guidance of 7-9 per cent revenue growth and 9-11 per cent underlying profit growth.

Brambles' CEO, Tom Gorman (pictured), says the cost pressures in North America came at the end of the first half.

"These pressures were partly due to US retailer destocking which impacted volumes and resulted in increased transport and plant costs associated with higher-than-expected pallet returns," he says in this morning's statement.

"In addition, we have continued to see a deferral of potential customer conversions to pooling in North America and pricing pressure across our recycled pallet operations."

Brambles completed the purchase of Hoover Ferguson Group (HFG) in October 2016, and it is already looking at a write-down on the asset.

"Our first-half result also includes a small loss arising from our investment in the HFG joint venture, which continues to operate in challenging market conditions," says Gorman.

"Due to its recent financial performance an impairment review of our investment in HFG is underway."

Brambles will provide updated full-year guidance as part of its half year result announcement on 20 February 2017.

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