Brambles shares tumble after flagging $84m hit on FY26 earnings
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More news: Shares in Brambles plunged in early trade after the logistics company downgraded its FY26 profit and revenue targets, citing a USD60 million ($84 million) earnings hit from a surge in US repair costs.
Shares fell 18.30% to $18.05 at 11:50am AEST.
RBC Capital Markets analyst Owen Birrell holds an “outperform” rating, with a price target of $29.75. He expects the market to take an overly conservative view on the company in FY26 until management can provide clear evidence that cost headwinds have been resolved.
However, he noted that the USD400 million buy-back program was largely positive and aligned with market expectations.
Brambles cuts FY26 guidance as US repair costs bite
The news: Brambles has downgraded its underlying profit growth target to between 3% and 5%, down from a previous estimate of 8% to 11%, primarily driven by an estimated USD60 million ($83 million) earnings impact from repair capacity constraints.
The numbers: The company now expects sales revenue growth of 2% to 3%, down from its previous 3% to 4% estimate. However, free cashflow before dividends guidance narrowed toward the upper end and is now projected to be USD1 billion to USD1.1 billion, up from the prior USD950 million to USD1.1 billion range.
It also announced a USD400 million on-market share buy-back, set to commence during the remainder of FY26 through to FY27.
The context: Brambles stated that the revised guidance was driven by stricter, more consistent repair standards in the US, which created incremental costs to the business through to the first half of FY27.
The company expects a USD60 million earnings impact in FY26 to fund these additional repair, handling, transportation and storage costs.
What they said: “While current challenges will weigh on FY26 and 1H27 financials, they do not change our commitment to our FY28 margin expansion targets,” CEO Graham Chipcase said.
“The additional USD400 million share buy-back to be undertaken reflects our confidence in the underlying strength of our business and its ability to deliver sustained free cashflow generation,” he added.
The sources: ASX, RBC analyst note
