Brambles Earnings: Strong Result and Rosy Outlook; Raising our Fair Value by 16% to AUD 22

Wide-moat-rated Brambles' fiscal 2024 result is strong. From revenue growth of about 7%, as expected, underlying EBIT grew by 17% to USD 1.26 billion, ahead of our USD 1.21 billion forecast. Growth reflects impressive productivity and asset utilization gains, and free cash flow was consequently buoyant. Guidance for fiscal 2025 is similarly strong. Brambles expects to increase net profit by 8% to 11% from revenue growth of about 5%. Higher margins and greater capital efficiency underpin management’s decision to repurchase up to USD 500 million of shares, or about 3% of the shares outstanding. Robust free cash flow also supports the higher target payout ratio of 50%-70%, up from 45%-60% last year.