Brambles Limited has revised down its FY26 guidance amid short-term repair capacity constraints in parts of its US subcontracted service centre network. The company now expects sales revenue growth of 2-3% and underlying profit growth of 3-5%, both at constant foreign exchange rates, down from previous guidance of 3-4% and 8-11% respectively. The revision reflects an estimated US$60 million earnings impact, primarily stemming from repair capacity constraints that emerged during April 2026.
The underlying challenge reflects a shift in customer requirements. As customers automate their supply chains and handling systems, they require pallets of consistently higher quality to perform reliably in these systems. Brambles has been progressively lifting its repair quality standards to meet this demand, but the combination of this quality focus, subcontractor turnover, labour availability challenges and higher than anticipated customer demand has created operational stress. The company’s repair network, particularly in the Central and Northeastern regions of the US, has struggled to keep pace.
To resolve these constraints, which Brambles expects will persist until the end of the first half of 2027, the company is taking multiple actions. It plans to purchase approximately 2 million new pallets in the fourth quarter of 2026, with further purchases expected in the first half of 2027. Brambles is also increasing pallet relocations between regions, adding repair capacity, and strengthening quality audits across its repair network. These investments underscore the company’s commitment to customer service but will weigh on near-term profitability.
Notably, Brambles has announced a new US$400 million on-market share buy-back to commence following its current programme, to be conducted during the remainder of FY26 and across FY27. This signals confidence in sustained free cash flow generation and balance sheet strength, with guidance for free cash flow before dividends now expected to be between US$1,000-1,100 million at the upper end of the original range. Crucially, the company has reconfirmed its FY28 target to increase margins by approximately 3 percentage points or more versus the FY24 baseline at actual foreign exchange rates, suggesting management believes these capacity constraints are temporary and controllable.
Investors should closely monitor progress toward resolving these capacity constraints ahead of the company’s FY26 full-year results on 20 August 2026. This announcement has been classified as price sensitive and is a material announcement by the ASX.
View the full ASX announcement (PDF)
About Brambles Limited (ASX: BXB)
Brambles Limited is a supply chain logistics company that operates under the CHEP brand across approximately 60 countries. The company provides reusable pallets and containers, along with logistics platforms to transport goods across supply chains for consumer staples, retail, automotive, and general manufacturing industries. Headquartered in Sydney, Australia, it operates through three geographical segments: CHEP Americas, CHEP EMEA, and CHEP Asia-Pacific.
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