Brambles SWOT & PESTLE Analysis

Strength

1. Global leader in supply chain equipment and solutions: Brambles is the global leader in supply chain equipment and solutions and renowned for its CHEP and IFCO brands. It has an extensive global network in more than 60 countries and has built an expertise in managing reusable unit load equipment. It manages over 500 million pallets, crates and containers. Its unique supply chain insights enable it to take up complex and challenging supply chain projects and provide clients with innovative solutions. Brambles is particularly strong in the defensive consumer staples sector and counts Unilever and PepsiCo amongst its major customers.

2. Strong performance in FY16 with upgrade in FY17 guidance: Brambles delivered strong performance in FY16 with 8% increase in sales revenue and 9% increase in underlying profit to US$993 million. The Return on Capital Invested was at 15.3%. Brambles also delivered a commendable shareholder return of 20% in FY16 compared to 1% for the S&P/ASX200 Accumulation Index and 19% for the S&P/ASX200 Industrials Accumulation Index. The guidance for FY17 has been increased with revenue expected in the range of 7% and 9% and Underlying Profit growth expected in the range of 9% to 11%.

3. Competitive advantage gained via the network effect of Brambles' CHEP pallet operation: The main factor behind the company's moat is the strong competitive advantage gained via the network effect of Brambles' core CHEP pallet operation. A large network facilitates economies of scale and also becomes more valuable to the customers. The collection and delivery of pellets becomes easier and there is more efficiency. The sales revenue contributed by the Pallets segment was about US$4,090 million in FY16.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

1. Demand for imported FMCG and fresh produce products increasing globally with increase in disposable income: Brambles’ derives 80% of its revenues from supply chain operations in FMCG, Fresh Produce and Beverage sectors. With increase in disposable income and changing consumer preferences globally there is an increased demand for imported food products, fresh foods and beverages from foreign locations. Thus there is good potential for business growth in this segment especially in geographies like China, India, Middle East and Africa where Brambles is still not penetrated the market.Brambles’’ with its best in-class supply chain services and solutions has the potential to be one of the leading players in these markets.

Technological

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Legal

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Environmental

1. Brambles sustainability goals mapped to United Nations Sustainable Development (UNSD) goals: Brambles’ sustainability framework focuses on three areas Better Business, Better Planet and Better Communities. These goals are aligned to UNSD goals and focus on value creation and reducing impact of the company’s operations on the environment. Brambles in FY16 have also established a sustainability risks committee which conducts periodic reviews and audits focusing on sustainability risks and issues. One of the focus area of concern which Brambles’ aims to achieve by 2020 is chain-of-custody certification for 100% of wood purchased as per FSC standards for manufacturing and repairing CHEP pallets.