Pallet and container manufacturer Brambles has suffered on the stock exchange after it announced a flat profit projection in FY17 as a result of poor sales in the United States market.
Brambles said its Pallets North America business had been impacted by lower sales revenue growth and direct cost challenges.
Increased supply competition has lowered the price point in the US market.
This has resulted in lower net new business growth in the pooled pallet businesses, and lower revenue in the recycled pallet operations, Brambles said.
The company told the ASX this week it expected full-year sales and revenue to stay in line with the first half, resulting in flat underlying profit.
Brambles’ share price closed at $9.28 on Tuesday evening, after closing at $10.51 prior to the announcement.
The decline added to a price drop in January, when Brambles signalled the result in a pre-emptive statement.
After closing at $12.28 a share on January 20, Brambles closed at $10.34 on the next day of trading.
Brambles boss Tom Gorman stayed positive.
“While performance in the first half was below our expectations, our team delivered revenue growth in every operating segment and underlying profit growth across the group, with the exception of our Pallets North America business,” Gorman said.
“Our portfolio of pallets businesses outside North America continued to perform well.”
He described the North American figures as “disappointing”.
“We came into this financial year with good momentum in North America and set our expectations high for continued growth,” Gorman said.
“Unfortunately, a combination of market-driven cost factors, and increased competition have resulted in overall performance well below our expectations.”