Brambles shares slide after day 1 of its investor presentation. Here are the details.
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Shares in the logistics company are now changing hands at $10.88 each, an 11% drop from the market open.
Let’s investigate further.
What’s up with the Brambles share price today?
In the first of two investor briefing days, Brambles executives were to give a run-through of the company’s strategic and financial overview. They were also addressing factors such as digitisation and sustainability.
However, investors appear to have been chasing more from Brambles, as evidenced by the market’s reaction to its share price afterwards.
For instance, there is little mention from the company’s CEO or CFO about specific numbers in terms of guidance and projections throughout the presentation.
Instead, both executives alluded to “high single-digit” growth in revenue and underlying profit in FY22 and FY23. Alas, Brambles sees revenue growth of 5-6% in FY22, whereas free cash flow (FCF) is expected “to be an outflow of US$200 million”.
Brambles points out the strong FCF result in its FY21 earnings actually came from “timing benefits” of US$215 million in FY21. The benefits were associated with a payment. These timing benefits will be reversed in FY22 at the FCF level, according to the presentation.
What’s more, underlying profit growth is forecast at around 1-2% in FY22 — hardly exciting numbers.
There were several other investment highlights during day 1 of Brambles’ investor briefing.
Yet it appears investors are more focused on financial aspects which, some may argue, were rather lacking.
When factoring current growth forecasts into global supply chains and logistics markets – which have suffered significant bottlenecks in 2021 due to COVID-19 – it is understandable investors may be seeking a more visible growth vision from Brambles.
Brambles share price snapshot
The Brambles share price has had a choppy year to date, posting a return of only 3%. This extends its gain over the last 12 months to 3% also.
Both of these results have lagged the S&P/ASX 200 Index (ASX: XJO)’s climb of around 25% over the past year.
Should you invest $1,000 in Brambles right now?
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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.