Brambles Limited (ASX: BXB) has reported a resilient and strategically significant first-half FY26 result, demonstrating the strength of its global pooling model despite subdued consumer demand across key markets. The Company delivered revenue growth, margin expansion and a strong uplift in free cash flow, while maintaining disciplined capital management and advancing its digital transformation agenda.
Shares in Brambles last traded at $24.38, up 3.75% on the day of the announcement. The stock has gained 24.26% over the past year, outperforming both its sector and the broader ASX 200. With a market capitalisation exceeding $33.1 billion, the Company remains a heavyweight in Australia’s industrial landscape.
Figure 1: The CHEP Pallet Test Track in the factory of Orlando, Florida, USA [Brambles]
Revenue Growth Amid Demand Headwinds
Brambles reported sales revenue of US$3,533.5 million, up 2% at constant currency. Growth reflected disciplined pricing to recover modest cost-to-serve increases, while overall volumes remained flat.
Key drivers included:
- Price realisation of 2%, recovering inflationary pressures
- Net new business growth of 2%, particularly strong in the Americas and Europe
- A 2% decline in like-for-like volumes, reflecting weak consumer demand in the US, Latin America and Europe, alongside inventory optimisation in Australia
CEO Graham Chipchase emphasised the resilience of the performance: “We delivered a resilient first-half result, with strong operating leverage and free cash flow outcomes, despite ongoing demand headwinds in key markets.”
He added that strong new business momentum helped offset softer demand from existing customers..
Margin Expansion Driven by Productivity Gains
Underlying Profit and operating profit reached US$792.0 million, up 7% at constant currency. Excluding approximately US$15 million in one-off restructuring costs, profit increased 9%.
The Group’s Underlying Profit margin expanded by 1.1 percentage points, driven by:
- Supply chain optimisation initiatives
- Procurement and plant network efficiencies
- Overhead cost reductions
- Improved asset control in the Americas
Supply chain productivity alone contributed 80 basis points to margin improvement.
Mr Chipchase noted: “Importantly, we delivered margin expansion in the first half of the year through increasing supply chain efficiencies and overhead productivity improvements.”
Return on Capital Invested improved to 24.3%, up 1.1 percentage points, reflecting profit growth outpacing capital expansion.
Strong Cash Flow and Capital Management
Free Cash Flow before dividends rose to US$481.7 million, up US$52.5 million year-on-year. Higher earnings and lower working capital outflows more than offset increased capital expenditure.
Notably:
- Cash Flow from Operations increased to US$678.5 million
- Net debt to EBITDA improved to 13x, well below the target range
- EBITDA interest cover strengthened to 3x
The Board declared an interim dividend of 23.00 US cents per share, up 21% on the prior year, with a payout ratio of 60.5%.
The Company is progressing its US$400 million FY26 on-market share buy-back, having already purchased US$191 million worth of shares in 1H26.
Figure 2: Infographic showing 1H26 Financial Highlights and Capital Management of Brambles
Operating Environment: Balancing Headwinds and Opportunities
Brambles continued to face a subdued consumer demand environment in the US and Europe. Cost-of-living pressures, labour uncertainty and the US government shutdown weighed on pallet volumes.
However, strong structural drivers supported new business wins:
- Retailer advocacy for pooled pallets
- Increased automation in customer supply chains
- Recognition of quality and efficiency advantages over whitewood pallets
The Company ended 1H26 with approximately 4 million excess pallets in the US, unchanged from FY25, and expects a return to optimal plant stock levels by 1H27.
Strategic Priorities: Building Brambles of the Future
Suggested image placement: Digital transformation / Serialisation+ graphic.
Brambles continues to execute its long-term strategy across four pillars:
1. Effortless Customer Experience
The Company improved service metrics, including a 9-point increase in net promoter score and faster complaint resolution times. Investment in pallet quality and automated inspection systems continued.
2. Illuminated Supply Networks
Digital Customer Solutions expanded across multiple geographies. The Serialisation+ programme advanced significantly in Chile, where approximately 95% of customers adopted the Effortless Service Offer.
Mr Chipchase explained: “In Chile, approximately 95% of customers have now adopted our Effortless Service Offer model… In addition to improving the customer experience, this new model has allowed us to win new business and initiate conversations that leverage our unique insights.”
3. Operational Excellence
Safety performance improved sharply, with LTIFR falling 38% to 0.8. The Plant of the Future programme continues to enhance automation and repair efficiency.
4. Regenerative Supply Networks
Sustainability progress remained on track:
- Scope 1 and 2 emissions down 5%
- Scope 3 emissions down 1%
- 100% sustainably certified timber sourcing maintained
FY26 Outlook Updated
Brambles revised its FY26 guidance:
- Sales revenue growth: 3–4% (previously 3–5%)
- Underlying Profit growth: 8–11% (unchanged)
- Free Cash Flow before dividends: US$950–1,100 million (upgraded from US$850–950 million)
Mr Chipchase commented: “We now anticipate full-year revenue growth of between 3–4%, reflecting our view that the consumer demand environment will remain subdued… Despite this change to our revenue outlook, we have reconfirmed our guidance for Underlying Profit growth of between 8–11%.”
He added that the free cash flow upgrade reflects disciplined capital allocation and moderated pooling capex.
Segment Highlights
CHEP Americas
- Revenue: US$1,957.6 million, up 2%
- Underlying Profit: US$430.6 million, up 13%
Strong 4% net new business growth offset a 3% decline in like-for-like US volumes.
CHEP EMEA
- Revenue: US$1,288.7 million, up 2%
- Profit impacted by higher IPEP expense and audit timing
CHEP Asia-Pacific
- Revenue: US$287.2 million, up 3%
- Inventory optimisation in Australia weighed on volumes
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Investors’ Outlook
Brambles’ 1H26 result reinforces the defensive qualities of its pooling model. Despite cyclical demand softness, the Company delivered:
- Margin expansion
- Strong operating leverage
- Improved returns on capital
- Upgraded free cash flow guidance
The disciplined pricing strategy, accelerating supply chain efficiencies and robust capital management position the Company well for the second half. While revenue expectations have been modestly narrowed, unchanged profit guidance signals confidence in productivity gains and operating leverage.
