A strong result. All key CHEP (pallets) geographical segments grew. Pricing power enabled rising input costs (lumber inflation, freight/shipping & transport costs) to be passed through to customers.
Margins improved modestly, with ongoing plant efficiencies. BXB also reported a bumper cashflow, with free cashflow of $622m, versus $462m in FY20.
However, much of that was due to delayed pallet capex, as a result of lumber supply issues (80% of the cost of a pallet is the wood). As such, it would seem reasonable to assume, and management makes clear, that the timing benefit associated with the capex will simply reverse over the next half.
On net, a good result, with the buyback set to recommence in September.
BXB remains a generally good quality company, with reasonable growth prospects, and trading at reasonable value, which is an attractive combination in the current environment.
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