Brambles Limited

Good morning, everyone. I'd like to welcome you to Bramble's full year results presentation for FY24. I'll start this morning by presenting an overview of our performance for the year, provide further details on our newly announced capital management initiatives and our revised investor value proposition. Then I'll touch on the operating environment, update on our transformation programme and outlook for FY25 before handing over to Joaquin for a detailed review of our financials. Beginning on slide three and our highlights for the year, in FY24, our performance was strong across all aspects of the business. The financial results delivered on our investor value proposition were sales revenue growth of 7%, significant operating leverage, and a material improvement in free cash flow generation. Underlying profit growth of 17% and free cash flow before dividends of US$882.8 million were both ahead of our FY24 guidance. This reflected ongoing commercial discipline to recover the cost to serve and structural improvements in asset efficiency during the year. These results underpinned the 30% uplift in total dividends, which increased to 34 US cents per share in FY24 and resulted in a dividend yield of 3%. I'm equally proud of the improvements we've made to our business fundamentals through our transformation program. These achievements strengthen our competitive advantage and value creation potential into the future and include significant improvements to our customer experience in all regions, translating to increases in net promoter scores, the reinforcement of our leading sustainability credentials as we progress towards our FY25 sustainability targets, and a step change in the capital intensity of our business, which has led to the decision to undertake capital management initiatives in FY25. Turning to slide four. Before I talk about the FY24 operating environment and performance, I'd like to go through our newly announced capital management initiatives and our revised investor value proposition over the next two slides. The improvement in the capital intensity of our business is evident in the material increase in our free cash flow generation and the expectation of this continuing into FY25. Combined with the current leverage position of 1.12 times net debt to EBITDA, this improvement has led to the two capital management initiatives we have announced today. The first being to increase the target dividend payout range from 45% to 60% currently to 50% to 70% from FY25. This dividend policy provides flexibility and creates a strong link between the performance of the business over time and annual cash returns to our shareholders. Our second initiative is an on-market share buyback of up to US$500 million in FY25, subject to market conditions. Both of these initiatives are aligned with the capital allocation framework, which now forms part of our investor value proposition outlined on slide five. Most of you will be familiar with the left-hand side of this graphic, which articulates the value creation model of our business. This centres on our circular share and reuse model that leverages our network advantage and expertise to achieve operational and asset efficiencies that in turn generate free cash flow we can use to fund growth and shareholder returns. With the structural increase in free cash flow generation, we have embedded our capital allocation framework into our investor value proposition, which seeks to maximise shareholder value through an active and disciplined approach to allocating capital. Under this framework, we will continue to prioritise reinvestment in the business to fund growth and initiatives that optimise and transform our operations. These investments are expected to consistently deliver annual revenue growth in the mid single digits with operating leverage and strong cash flow generation. When assessing growth options, we will consider both organic and inorganic opportunities. However, given our leading market position in all regions, we expect inorganic growth initiatives to be limited and we will maintain a disciplined approach to evaluating such opportunities. Maintaining a strong balance sheet continues to be a priority and we have set a medium term net debt to EBITDA target of between 1.5 to 2 times. We believe this is a prudent and optimal level of leverage for our business, which also supports our investment grade credit rating. After funding reinvestment in the business and maintaining a strong balance sheet, we will focus on shareholder returns. firstly through sustainable dividends in line with our revised policy, and secondly through the deployment of surplus capital to optimise our capital structure and create incremental shareholder value. This strategy has led to our decision today to undertake an on-market buyback in FY25. By allocating capital in accordance with this framework, we expect to deliver total value for shareholders in excess of 10% per annum while maintaining group ROCE in the high teens. Moving to the next slide and back to the FY24 operating environment. Our FY24 results were delivered in markedly different operating conditions to those experienced over the last few years. This included inventory optimisation across retailer and manufacturer supply chains in Europe and North America, which we now believe to be largely complete. During the year, the overall rate of input cost inflation moderated from the extraordinary highs of the last few years. This was reflected in lumber and fuel deflation in all markets and lower transport costs in the US. the capital cost of new pallets has also fallen 15% on the prior year, although it remains higher than historic levels. While these dynamics saw the rate of price growth moderate from prior year levels, we continue to exercise commercial discipline and took price in the year to recover cost-to-serve increases, largely related to labour inflation, which persisted in all markets. Inventory optimization contributed to more efficient pallet dynamics, primarily due to widespread pallet availability increases across the industry, as retailers and manufacturers reduced pallet balances to near pre-COVID levels in Europe and North America. This led to 12 million pallets returning back to our network in these markets. Combined with our ongoing efforts in asset efficiency, this supported the significant improvement in pallet cycle times and loss rates within customer supply chains in FY24. These more efficient pallet dynamics materially improved our capital efficiency with 15 million fewer new pallet purchases during the year. Importantly, the capital efficiency benefits are materially higher than the increase in operating costs associated with higher pallet returns and recoveries. With improving pallet availability, our business was able to pursue and win new business during the year. However, dual sourcing initiatives by some larger customers offset contributions from new contract wins in the period. while declining whitewood prices delayed the decision to convert to pooling by some prospective customers. In addition to weak macroeconomic conditions and the impact of inventory optimization, these factors limited our volume growth in the year. Turning to the next slide. The progress we've made with transformation has been critical in creating stability and increasing our resilience in this evolving operating landscape. Among our key achievements have been those directly benefiting our customers. These include improving service levels and investing in the quality of our pool to reinforce the fundamentals of our customer value proposition. Delivering on these core elements of our proposition has been a key driver of the improvement to our customer metrics, including Net Promoter Score, which increased materially across all regions. Our teams remain focused on improving the customer experience through faster resolution of customer queries, adding digital capabilities such as real-time delivery notifications to our customer portals, and leveraging our evolving data analytics capability to progressively roll out proactive ordering. Our automation investments are delivering cost savings whilst also improving the efficiency, quality, and safety performance across our operations. Importantly, they have added critical capacity across our network, which enabled us to absorb the high volume of pallet returns from inventory optimization and continue delivering for our customers. Through structural changes made to how we collect, repair and incentivise the efficient use of our assets, we recovered and salvaged an additional 16 million pallets in FY24. This is a substantial improvement on the strong result of 10 million pallets achieved in FY23. These processes and commercial terms are now embedded across the business and crucially underpin our confidence in the structural improvements we have made to asset efficiency and free cash flow generation. As we optimize the performance of our business, we're also reinvesting to shape the brambles of the future through our digital transformation. our data analytics capabilities are now an integral part of our organization, and we continue to test, learn, and adapt our approach to deploying and extracting value from different asset tracking technologies. You will see some of our achievements outlined in the slide, but the key thing I want to highlight is that our digital capabilities have been a critical enabler of our customer, commercial, and asset productivity achievements this year. At our investor day in September, we will take the opportunity to detail the ways in which our digital transformation has improved our business, the value it has created and how it is setting us up for future success. Turning to our transformation scorecard on the next slide, you'll see many of our metrics are complete while others are progressing and remain on track. This has supported the business and been a key driver of our financial and operational success over the last few years. However, adverse operating conditions have impacted the progress on some metrics, and we continue to implement various initiatives to address those shortfalls. In customer, Joaquin will cover our volume performance in more detail, so I'll move straight to product quality. Here, the defects per million pallets improved by 10% against the FY20 baseline, but this remains 3% behind target. There are plans in place to improve controls in a number of plants to deliver the appropriate pallet quality to customers. Despite the benefits from pallet durability initiatives, pallets have spent an extended period in the supply chain, leading to higher damage rates in FY24. As a result, we've been challenged on our target to reduce the pallet damage ratio by 75 basis points year on year through FY25. However, we expect ongoing durability initiatives and improving cycle times to support efforts to reduce damage rate. Finally, looking at business excellence, we've continued to make progress towards our target of at least 40% of women in management roles. with female representation now at 37.5%. This represents a six-point improvement since FY21. However, we are tracking below target and have strategies in place to hire, retain and engage female employees to progress towards achieving our target. The next slide outlines the pathways to achieve our FY25 target of reducing uncompensated pallet losses by 30% and implementing automated repair processes across our service centres. Starting with uncompensated pallet losses, you can see the significant improvement achieved this year, which is also the first reduction in uncompensated losses since FY16. This improvement was driven by greater pallet availability, leading to lower unauthorised reuse and loss rates, as well as asset efficiency initiatives that increased collections and shortened cycle times. Notwithstanding these improvements, we are currently tracking below the target, but our strong exit rate in the second half of FY24 and continued benefits from asset productivity initiatives underpin our expectation of achieving this target by the end of FY25. Moving to automation, our FY25 target for automated repair installations across the network was revised from 70 to 50 sites in FY23, following a site-by-site return assessment and exercising capital allocation discipline. We implemented eight automated repair processes in FY24 and expect to implement 36 by the end of FY25. However, we continue to invest in other efficiency and supply chain initiatives to compensate for the returns not generated from the sites where automated repair process is no longer being pursued. Moving to slide 10, which outlines some of our sustainability achievements for the year. During FY24, we made considerable progress against our FY25 sustainability targets, moving ever closer towards our ambitious regenerative vision. We are proud to operate a circular business that supports the reduction of emissions in thousands of customer supply chains across the world. In FY24, working with our customers and partners, we collectively removed 1.9 megatons of CO2 emissions. Decarbonizing our own supply chain also remains a core focus for our low carbon operations. Across our entire value chain, representing scope 1, 2 and 3 emissions, we have achieved a 7.9% reduction in greenhouse gas emissions against FY23 and a 15% reduction on our FY20 baseline. We continue to track ahead of the glide path to deliver our 2030 science-based target and 2040 net-zero target. Our strong safety culture was demonstrated again in FY24 as we reduced our injury frequency rate by nearly 24%, marking our fifth continuous year of reduction. Through our community initiatives, we have contributed a total value of US$9.4 million back to the communities where we operate. This includes volunteering leave for employees, financial donation and in-kind support, including through our support of food bank organisations, which facilitated meals for 20.6 million people facing food insecurity in FY24. It is a huge credit to our sustainability programme and the employees who work to support it that we have continued to be recognised for our efforts and strengthen our leadership in sustainability. This year, we advanced to number two in Corporate Night's Global 100 list and were ranked fourth in Time Magazine's inaugural list of the world's most sustainable companies. Moving to slide 11 and our FY25 outlook. For the year ahead, we expect sales revenue growth of between 4% and 6% at constant currency. Our expectation for underlying profit growth is between 8% to 11% at constant currency. Both these figures sit firmly within our investor value proposition. Free cash flow before dividends is expected to be between $750 and $850 million, supporting the increased dividend payout range and on-market share buyback I outlined earlier. I would now like to hand over to Joaquin to run you through the financials, as well as provide further information on the considerations that underpin our FY25 outlook.

Thanks, Graeme, and good morning, everyone. Before diving into the detail of our FY24 financial results, I wanted to touch on the key drivers of the year-on-year performance, which will be reoccurring themes as we move through the slides. As Graeme mentioned, we continue to focus on commercial discipline and aligning our pricing with the cost to serve. With ongoing cost to serve increases in FY24, we delivered a new price realisation of 3%, which was consistent throughout the year and continued in the fourth quarter. Importantly, this alignment includes all the work we have done to link pricing to asset productivity in order to incentivise the efficient use of our assets across customer supply chains. This link, combined with other asset productivity initiatives and the improvement in overall market conditions, has led to a $105 million or a 37% decrease in our IPEP expense in FY24. which reflects the progress we made in reducing uncompensated pallet losses and in increasing asset compensations. Linked to this is the 10-point improvement in the pulling capex to sales ratio to 13% in FY24, in line with our guidance. Our ongoing commercial discipline combined with improvements in asset efficiency contributed to the 1.8 percentage point increase in growth profit margins this year and the 385 million increase in free cash flow before dividends. As Graeme outlined, the structural improvements we have made to the business delivered total value creation for shareholders of over 10%. Turning to slide 14 and an overview of our full year results. I will outline our sales and underlying profit performance in more detail shortly, but wanted to take the opportunity on this slide to highlight the key things to know about our profit after tax and EPS performance. Profit after tax from continuing operations increased 17% in line with operating profit and included an 11% increase in net financing costs, which reflects the full-year impact of the eight-year €500 million green bond issued in March 2023 and higher discount rates on lease renewals and extensions. The effective tax rate of 30.5% increased from 30.1% in FY23, mainly due to the full-year impact of the UK tax rate increase from 1 April 2023. Profit after tax included a non-cash hyperinflation charge of $8.4 million, which relates to our operations in Turkey, Argentina and Zimbabwe. This charge reflects a revised approach to accounting for hyperinflation following an annual review of our accounting policies and to align with market practices. The FY23 comparatives have been restated accordingly. Appendix 3 provides specific details about our revised approach, but at a high level, the inflationary impacts on non-monetary net assets, which was previously recognised in the P&L, will now be recognised in equity on our balance sheet, along with the FX impacts on all net assets. The inflationary impacts on monetary net assets and P&L items will continue being recognised in the P&L, and this is what the $8.4 million charge relates to. Looking at group revenue growth in more detail on slide 15. Group sales revenue increased 7% driven by price realisation. This included a four percentage point rollover contribution from prior year pricing actions and in-year price realisation of 3%. Current year pricing included mixed impacts associated with the link between customer pricing and asset efficiency metrics. With the improvements in asset efficiency, we have seen lower contributions from pricing mechanisms linked to cycle times and loss rates in customer supply chains where these metrics improved. Like-for-like volumes in the period were flat and included a one-point adverse impact linked to inventory optimisation in North America and Europe. Excluding the impact of inventory optimisation, like-for-like volumes increased 1%, as growth from existing customers in Australia and US pallets businesses more than offset lower pallet volumes in Europe due to softening consumer demand. Net new business growth in the period was also flat, as the contribution from new contract wins in most markets was offset by the factors Graeme outlined earlier. Pleasingly, we saw an improvement in fourth quarter volumes as we cycled through the impacts of inventory optimisation, dual sourcing having moderated in the second half, and whitewood prices stabilising with some very early signs of increases in certain markets. These factors inform our expectation of positive volume growth in FY25. Turning to slide 16 and group underlying profit, which increased 17% in the year. As you can see, the sales contribution to profit of $403 million combined with the material reduction in IPEP offset cost increases associated with inflation, higher pallet return rates and investments in transformation initiatives. North American surcharge income decreased $38 million in line with moderating market prices for lumber, fuel and transport in this region. Combined plant and transport costs increased by $163 million and included inflationary impacts of approximately $65 million, primarily due to rising labour costs, which were partly offset by deflation in lumber, fuel and US transport costs. The balance of the plant and transport cost increase related to investment in both pallet quality and customer experience initiatives, as well as repair, handling, storage and transport costs linked to inventory optimisation. These cost increases were partly offset by automation and operational efficiencies. Depreciation increased $46 million, largely driven by the impact of pallet price inflation on the value of assets added to the pool over the preceding 12 months. Other cost increases of $48 million reflect overhead wage inflation and headcount increases to support growth and the delivery of overall transformation benefits. These costs were partly offset by higher asset compensations. Lastly, shaping our future transformation costs increased $21 million as higher ongoing corporate transformation costs, including investments in digital, asset productivity and customer service initiatives, were offset by a $23 million reduction in short-term transformation costs, which concluded in the prior year. Turning to asset efficiency on slide 17 and the significant improvement in our pooling cap extra sales ratio, which reduced 10 points in the year, driven by 15 million fewer pallet purchases, lumber deflation and the impact of higher revenue in the year. The 15 million reduction in the number of pallet purchases resulted in a $436 million decrease in pooling capital expenditure. Pleasingly, 8 million fewer pallet purchases in the year reflected a step change in the capital intensity of our business as we recovered more pallets through asset efficiency initiatives. The balance relates to the benefit of utilising 7 of the 12 million pallets returned through inventory optimisation. The residual 5 million pallets remain in storage in North America and are expected to deliver capital expenditure benefits in FY25. The impact of lumber deflation reduced our capital expenditure in the year by approximately $150 million. Inventory optimisation reduced the pooling capex to sales ratio by two points. Excluding this benefit, the FY24 pooling capital expenditure was approximately 15%. Turning to free cash flow, we delivered $883 million of free cash flow before dividends, an increase of $385 million on the prior year. The key driver of this increase was the $523 million reduction in cash capital expenditure outlined earlier. The combined movements in working capital and other cash flow items decreased $199 million and included the reversal of FY23 timing benefits of $90 million, with the balance of the decrease primarily due to movements in deferred revenue and non-cash adjustments, mainly relating to asset disposals. Cash flow from discontinued operations declined $37 million on the prior year comparative, which benefited from the $41.5 million final settlement from First Reserve. The $108 million increase in financing costs and tax was largely driven by additional tax payments due to increased profit and higher Australian tax instalments. Moving to slide 19. As noted earlier, a number of one-off items impacted free cash flow. Invention optimisation resulted in CAPEX benefits of $160 million relating to approximately 7 million pallets which were utilised in the period to support business demands. This benefit was partly offset by the reversal of FY23 timing benefits of approximately $90 million. Adjusting for these items, normalised FY24 free cash flow before dividends was $813 million. Turning to slide 20 and our segment performance, starting with the results for CHEP Americas. The Americas segment delivered sales revenue growth of 6%, reflecting both in-year pricing and rollover contributions of pricing actions taken in FY23. Volumes were flat as growth in Canada and Latin America was offset by the impact of inventory optimisation on like-for-like volumes in the US. Underlying profit increased 23% and margin increased 2.6 percentage points. Profit growth reflected pricing and commercial initiatives, operational efficiencies and asset efficiency benefits driving lower IPEP. This was partly offset by additional costs associated with higher pallet returns, including additional storage costs, lower surcharge income and increased investments in asset productivity and other transformation initiatives. Return on capital invested improved 3.1 percentage points, driven by increased earnings, partly offset by a 5% increase in average invested capital, which reflects the addition of higher price pallets to the pool compared to the value of assets written off. Turning to the revenue profile of the US pallets business on slide 21. Sales revenue for the US pallet business increased 7%, reflecting price realisation with a three percentage point contribution from in-year pricing actions and rollover contributions from prior year, delivering four percentage points of growth. Like-for-like volumes in the period were flat due to inventory optimisation. Excluding this impact, like-for-like volumes increased 1%, reflecting growth in produce, beverage and protein sectors. Briefly covering historical like-for-like volumes. FY22 and FY23 included the impact of pallet availability challenges, while FY21 benefited from COVID-19 related demand increases. Net new business volumes in the period were flat as modest customer wins, largely small and medium enterprises, were offset by some volume loss due to dual sourcing, primarily in half one, whitewood price deflation delaying pooling conversions and rollover impacts of prior year losses. In line with my comments on quarter four group volume performance, US volumes for the fourth quarter increased 1% with modest organic growth and net new business wins. Turning to the EMEA region on slide 22. Chip EMEA delivered sales revenue growth of 7%, driven by price growth of 7%, as volumes remained in line with FY23, reflecting inventory optimisation and softening consumer demand in the European pallet business. Underlying profit increased 15%, with margins improving by 1.8 percentage points. This was primarily driven by sales flow through to profit, transport and automation efficiencies and higher pallet compensations, which offset increases associated with labour inflation, costs associated with higher pallet return rates and additional investments to support asset productivity and transformation initiatives. ROSI in their period improved 3.1 percentage points, reflecting the strong profit growth and improved capital efficiency, including the benefit of image optimisation and asset productivity improvements, driving fewer pallet purchases. CHEP APAC delivered sales revenue growth of 9%, including price growth of 6%, driven by both current and prior year pricing actions, and volume growth of 3%, mainly with existing customers in Australia, driven by improved pallet circulation in FY24. Underlying profit increased 5% on a strong prior year comparative, which included one-off insurance proceeds of $8 million. Excluding prior year one-offs, underlying profit growth of 10%, reflected sales growth and higher pallet compensations, partly offset by costs associated with improved pallet circulation in Australia and inflation. ROSI decreased 0.9 percentage points, or when excluding one-offs, ROSI increased 0.6 points on the prior year. Profit growth in the period adjusted for the one-off proceeds more than offset the 8% increase in ACI, which included the impact of pallet purchases in FY23 and FY24 to service customer demand, and higher lease costs including new property leases taken out in the period. I will now take you through the corporate segment on slide 24. Overall costs in the corporate segment increased $29 million, largely due to a $21 million increase in shaping our future spend. The increase includes an additional $32 million investment to support the digital transformation, largely relating to additional headcount in asset digitisation and data analytics. Investments in other transformation activities increased $11 million, mainly relating to customer experience initiatives and transformation delivery. These increases were offset by a $23 million reduction in short-term transformation costs, which concluded in FY23. Other corporate costs increased $8 million, reflecting labour-related cost increases, including wage inflation. Turning now to our group guidance for FY25. We expect sales revenue growth between 4% and 6%, with a balanced contribution from both price and volume. Underlying profit growth of 8% to 11% includes expansion in the EMEA, APAC and group profit margins. America's margins are expected to remain in line with FY24 as we continue to invest in customer and other transformation initiatives. At a group level, benefits from supply chain initiatives are expected to be partly offset by incremental spend relating to customer experience and quality initiatives. Surcharge income is expected to be broadly in line with FY24 levels, and we expect to see further improvements on the IPEP expense, reflecting continued improvements in asset efficiency. However, the benefit of lower pallet losses is expected to be partly offset by higher unit costs of pallets written off. Shaping our future spend in FY25 is expected to increase to approximately $150 million, which includes approximately $110 million relating to digital spend to support data analytics capabilities and the smart asset strategy. Moving to slide 26. In FY25, we expect to deliver $750 to $850 million in free cash flow before dividends, with pooling capex to sales of approximately 13% to 15%, which includes the benefit of utilising 5 million pallets currently in storage in North America at the end of FY24. Non-pulling capital expenditure is expected to increase $130 million, which includes an additional $70 million relating to incremental digital investments, as well as additional supply chain investments relating to automation, pallet durability and network optimisation. FY25 ROSI is expected to improve by approximately one percentage point from FY24 levels. In summary, we are pleased with our performance this year, which reflects fundamental improvements across all aspects of our business. We exit FY24 with improved momentum in key areas of the business that provide us confidence in our FY25 outlook. The structural improvements we have made to free cash flow generation combined with our strong financial position has led to us announcing capital management initiatives in FY25. These initiatives are aligned with our active approach to shareholder value creation, which underpins our investor value proposition. I will now hand over to the operator for Q&A.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Andre from here with UBS. Please go ahead.