Credit Rating

 

TIDMBXB 
 
RNS Number : 5231E 
Brambles Limited 
22 December 2009 
 

Brambles Limited 
Company Number: 118 896 021 
 
 
 
 
22 December 2009 
 
 
 
 
 
 
CREDIT RATING 
 
 
 
 
Brambles announces that Moody's and Standard and Poor's have today issued a 
credit rating for Brambles. A copy of the releases are enclosed. 
 
 
 
 
For further information please contact: 
 
 
+------------------------------------+----------------------------------+ 
| Investors & Media:                 |                                  | 
+------------------------------------+----------------------------------+ 
| Michael Roberts                    | James Hall                       | 
| Vice President                     | Manager                          | 
| Investor Relations & Corporate     | Investor Relations & Corporate   | 
| Affairs                            | Affairs                          | 
| [phone]                    | [phone]                  | 
| [phone]                    | [phone]                  | 
| [e-mail]       | [e-mail]          | 
|                                    |                                  | 
+------------------------------------+----------------------------------+ 
 
 
Brambles is globally headquartered in Australia 
 
 
 
 
 
 
 
 
Robert Gerrard 
Group Company Secretary 
 
 
 
 
For further information on Brambles and all company announcements, presentations 
and webcasts, please visit the company website www.brambles.com. 
 
 
 
 
Moody's 
Global Credit Research 
Rating Action 
22 DEC 2009 
Rating Action: Brambles Ltd. 
Moody's assigns first-time Baa1/P-2 ratings to Brambles; outlook stable 
 
 
Approximately US$ 3.4 billion in debt securities affected 
 
 
Sydney, December 22, 2009 -- Moody's Investors Service has today assigned a Baa1 
issuer rating and P-2 short-term rating to Brambles Limited. In addition, 
Moody's has assigned Baa1 senior unsecured ratings to Brambles' capital market 
and bank debt. 
This is the first time that Moody's has rated Brambles. The outlook on all 
ratings is stable. 
 
 
"Brambles' Baa1 rating is driven by the company's significant global footprint 
and scale and its strong position within major FMCG "Fast Moving Consumer Goods" 
supply chains," says Ian Lewis, a Moody's VP/Senior Analyst. 
 
 
"These factors support Brambles' strong competitive positions, geographic 
diversity and unique scale," says Lewis, who is also Lead Analyst for the 
company. 
 
 
"Furthermore, its financial profile displays strong Baa rating characteristics, 
Lewis says, adding "Such strength is challenged by the need for ongoing capital 
expenditure to maintain and grow its CHEP pallet business, and this impacts its 
ability to generate positive free cash flow during periods of peak investment" 
 
 
Brambles' major operating business -- CHEP -- constitutes a large and complex 
network of pallets and containers and pallet and container flows that have been 
organically built up over a long period. 
 
 
"As such, systems of similar scale and complexity are difficult to displace once 
established, so providing Brambles with strong market positions and first mover 
advantage," says Lewis. 
 
 
"Critical to the rating is the fact that Brambles' businesses are heavily 
weighted towards the normally stable and more resilient FMCG sector. This means 
that while its core revenues and earnings are not immune from some variability, 
we do not expect them to face material weaknesses through the economic cycle," 
says Lewis. 
 
 
The Baa1 rating is further supported by Brambles' financial profile. Its 
expected level of gearing -- 
Debt/EBITDA of around 2-2.5x, EBIT/Interest of 5-5.5x, and RCF/Debt of around 
20% -- is appropriate for a strong Baa-rated company. 
 
 
Brambles is committed towards maintaining a strong financial profile, and its 
financial policy -- which includes the maintenance of a NetDebt / EBITDA ratio 
of max 1.75x (unadjusted basis) -- is supportive of its Baa1 rating. 
 
 
The P-2 rating considers Brambles' strong credit characteristics -as reflected 
in its Baa1 rating -- and its stable liquidity platform, which is supported by 
its reliable cash flows and manageable debt maturity. 
 
 
In the absence of a material and permanent change in the capital structure of 
Brambles and greater stability in the operating environment, the ratings are 
unlikely to be subject to upward pressure in the next 18-24 months. 
 
 
However, the ratings could experience downward pressure if the company 
experiences an erosion in its revenues and earnings, and its competitive 
position, or any other difficulty within the operating environment, such that 
Debt/EBITDA is likely to rise and remain above 2.75x, and/or EBIT/Interest falls 
below 4.0-4.5x on a sustained basis. 
 
 
Brambles' ratings were assigned by evaluating factors we believe are relevant to 
the credit profile of the issuer, such as i) the business risk and competitive 
position of the company versus others within its industry, ii) the capital 
structure and financial risk of the company, iii) the projected performance of 
the company over the near to intermediate term, and iv) management's track 
record and tolerance for risk. These attributes were compared against other 
issuers both within and outside of Brambles' core industry and Brambles' ratings 
are believed to be comparable to those of other issuers of similar credit risk. 
 
 
Brambles Limited is the global leader in pallet and container pooling supply 
chain solutions through CHEP. Brambles also provides secure and effective 
information storage and destruction services through Recall. Brambles is listed 
on the Australian Stock Exchange and currently has a secondary listing on the 
London Stock Exchange. As at 30 June 2009, it had total assets of US$ 5.1 
billion and underlying profit of US$ 0.9 billion. 
 
 
Sydney 
Ian Lewis 
Vice President - Senior Analyst 
Corporate Finance Group 
Moody's Investors Service Pty Ltd 
JOURNALISTS: (612) 9270-8102 
SUBSCRIBERS: (612) 9270-8100 
Sydney 
Terry Fanous 
Senior Vice President 
Corporate Finance Group 
Moody's Investors Service Pty Ltd 
JOURNALISTS: (612) 9270-8102 
SUBSCRIBERS: (612) 9270-8100 
 
 
CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S (MIS) CURRENT OPINIONS OF 
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EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. 
 
 
c Copyright 2009, Moody's Investors Service, Inc. and/or its licensors including 
Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved. 
 
 
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Standard and Poor's 
 
 
Brambles Ltd. Assigned 'BBB+' Corporate Credit Rating; Outlook Stable 
 
 
Melbourne, Dec. 22, 2009-Standard & Poor's Ratings Services said today that it 
had assigned its 'BBB+' corporate credit rating to Australian-based Brambles 
Ltd. We also assigned a stable rating outlook. 
 
 
The rating on Brambles reflects our opinion of the company's leading global 
position in pallet and container pooling services; solid logistic management 
capability and asset utilization; good geographic and customer diversity; and 
sound operating margins and stable cash flow, despite difficult economic 
conditions. Offsetting these strengths is Brambles' sizable ongoing 
capital-expenditure requirements, particularly in the CHEP business; changing 
customer preferences to alternative pallet products; the company's expansion 
into developing markets such as China and India, which introduces execution 
risk; and its capital returns, which rely on effective management of pallet 
logistics and pallet-repair processes. 
 
 
"The stable rating outlook reflects the underlying strength of the CHEP 
business, which underpins Brambles' overall business prospects and capacity to 
maintain financial metrics at a level supportive of the 'BBB+' rating," Standard 
& Poor's credit analyst Craig Parker said. 
 
 
The rating could be raised if we felt that the business returns were suitably 
robust to weather a prolonged decline in activity levels within the developed 
economies; the execution risks in the company's emerging markets diminished; and 
management adopted more conservative financial targets. The rating could come 
under pressure if CHEP's market position erodes; Brambles' expansion into the 
targeted emerging economies falters; and financial metrics were outside our 
expectations. 
 
 
 
 
About Standard & Poor's 
Standard & Poor's, a subsidiary of The McGraw-Hill Companies (NYSE:MHP), is the 
world's foremost provider of independent credit ratings, indices, risk 
evaluation, investment research and data. With offices in 23 countries and 
markets, Standard & Poor's is an essential part of the world's financial 
infrastructure and has played a leading role for nearly 150 years in providing 
investors with the independent benchmarks they need to feel more confident about 
their investment and financial decisions. For more information, visit 
http://www.standardandpoors.com 
 
 
Media Contact: 
Sharon Beach, Melbourne, (61) 3 9631 2152, [e-mail] 
 
 
Credit Analysts: 
Craig Parker, Corporate Ratings, [e-mail] 
Andrew Palmer, Corporate Ratings, [e-mail] 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
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