Brambles (ASX: BXB) Guides to FY27 Growth as US Repair Costs Bite

Brambles reported higher full-year earnings and forecast further growth, despite repair-capacity constraints disrupting its US pallet network.

Sales revenue reached US$7.04 billion for the year ended June 30, 2026. That represented 2% growth at constant currency and 6% at actual exchange rates.

Underlying profit rose 4% at constant currency to US$1.49 billion. The underlying margin increased 0.6 percentage points at actual rates to 21.2%.

Profit after tax from continuing operations was US$948.5 million, up 5% at constant currency. Basic earnings per share from continuing operations increased 6% to 69.9 US cents.

Cash Returns Remain Substantial

Free cash flow before dividends was US$1.05 billion, down US$47 million from FY25. Brambles attributed the reduction partly to higher capital investment and tax payments.

The company declared total FY26 dividends of 46.15 US cents per share, up 16%. The payout ratio was 64%, with dividends 20% franked.

Combined dividends and on-market buybacks returned about US$1.2 billion during the year. For FY27, Brambles plans another on-market buyback of up to US$400 million.

US Bottleneck Cuts Earnings

US repair-capacity constraints reduced FY26 underlying profit by about US$90 million. They also cut sales revenue by approximately US$45 million.

The disruption reflected labour shortages, subcontractor changes and additional quality requirements. Higher customer demand also intensified pressure during the fourth quarter.

Brambles purchased 1.3 million new pallets during that quarter. It expects to buy about two million more during the first half of FY27.

The company said it has recorded no missed customer orders since June 2026. However, FY27 underlying profit faces a further year-on-year impact of US$35 million to US$55 million.

Brambles expects the constraints to be resolved by the end of the first half. Efficiencies and pricing should recover incremental structural costs from the second half.

Why the US Recovery Carries Weight

The US and Canada generated 45.2% of FY26 group revenue. Fast-moving consumer goods represented 55% of group sales, linking pallet demand closely to consumer supply chains.

Brambles is expanding US repair capacity by about 20% against the FY26 baseline by FY28. The plan includes eight new service centres and more repair benches.

This expansion is expected to cost about US$25 million. Brambles will fund it within existing medium-term non-pooling capital expenditure estimates.

FY27 Outlook

Brambles forecast constant-currency sales growth of 2% to 4% for FY27. Underlying profit is expected to increase 2% to 6%.

Management expects a mid-to-high single-digit profit decline in the first half. Low double-digit growth is forecast for the second half as US costs ease.

Free cash flow before dividends is projected at US$800 million to US$950 million. The dividend payout target remains 50% to 70% of underlying profit after finance costs and tax.

Guidance depends on consumer demand, inflation, labour availability, transport costs, lumber prices, supply-chain efficiency and currency movements.