Shares in Brambles soared after announcing plans to offload its information management subsidiary Recall.
The logistics group intends to use the proceeds to reduce debt and invest more than half a billion US dollars in its pallets operations.
It has flagged plans to sell Recall through a private sale some time in 2011/12, but the timing has been left open, given the current volatility on global financial markets.
Investors cheered the news, sending Brambles stock up 4.37 per cent, or 29 cents, to $6.93, the highest close since July 27.
The company was the best-performing stock on the S&P/ASX50.
Brambles said the planned $US550 million ($A526.52 million) capital investment in its reusable plastic crate (RPC), containers and emerging markets pallets businesses would take place over the next two financial years.
“All three of these opportunities offer long-term returns of 20 per cent-plus on capital invested for organic growth,” chief executive Tom Gorman told media and analysts during the full year results presentation on Wednesday.
“This is in line with our existing pallet pooling operations today.”
While Recall reported strong results for 2010/11 – posting double-digit sales and underlying profit growth – Mr Gorman said the move would allow the company to focus completely on pallet pooling and create value for shareholders.
The decision to sell Recall came as Brambles reported net profit of $US475.3 million for the 12 months to June 30, 2011, up six per cent from the prior corresponding period on actual exchange rates and broadly in line with consensus forecasts.
Revenue rose 13 per cent to $US4.67 billion on actual exchange rates, Brambles said in a statement.
“Despite the economic trading conditions remaining challenging, we continued to deliver a profitable growth for our shareholders,” Mr Gorman said.
Morningstar analyst Peter Rae said the result was underpinned by new business wins, expansion into new markets and the contribution of the recently acquired IFCO business.
“While the economic outlook in BXB’s (Brambles’) core geographies remains weak, BXB should experience strong growth next year,” Mr Rae said in a research note.
He said the Recall sale could fetch between $1.5 billion and $2 billion.
In terms of the outlook, Brambles said underlying profit for 2011/12 was forecast to print between $US1.04 billion to $US1.1 billion, based on exchange rates at June 30, 2011.
Brambles said 2010/11 underlying profit was $US857 million.
The board declared a final dividend of 13 cents per share, fully franked.
