By Stuart Condie
SYDNEY--Global pallet supplier Brambles cut its annual revenue and profit guidance after it struggled to keep up with some U.S. customers' demands for higher-quality repairs.
Australia-listed Brambles, which leases out pallets under the CHEP brand, on Monday said some customers needed pallets to be repaired to a consistently high standard so that they could be handled by automated systems.
That has strained some subcontracted service centers in the northeast and central U.S. just as demand was rising by more than anticipated. Capacity constraints emerged from subcontractor turnover, a tight labor market and the extra time required to repair pallets, Brambles added.
"These constraints are limiting Brambles' ability to fully service higher-than-expected customer demand in affected locations and materially increasing costs in the short term," Brambles said.
In response, Brambles said it was increasing pallet relocations, adding repair capacity and purchasing new pallets, including about 2 million in the June quarter at the cost of about $60 million.
It expects to purchase more pallets in the first half of its 2027 fiscal year, which starts July 1.
With pallets taking longer to be put back into circulation, Brambles said it now expects annual sales revenue to grow by between 2% and 3%, compared with previous guidance for 3-4% growth.
Brambles expects underlying profit to grow by between 3% and 5%, down from 8-11% previously. It raised the lower end of its free cash flow guidance by $50 million, flagging a $1.0 billion-$1.1 billion range.
The constraints should be resolved by the end of December, Brambles added.
Brambles, which reconfirmed an unchanged fiscal 2028 margin target, announced a new $400 million on-market share buyback to commence on completion of its existing buyback. It has purchased stock worth $370 million under its current $400 million program.
Write to Stuart Condie at stuart.condie@wsj.com
(END) Dow Jones Newswires
May 17, 2026 19:08 ET (23:08 GMT)
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