Brambles a shambles on unpalatable market disclosures
18 October 2017
Listed logistics company Brambles (ASX:BXB) which operates the CHEP brand of pallets to help move consumer goods in more than 60 countries, faces the prospect of a shareholder class action following alleged failures to disclose important company information.
Australia’s leading class action firm Maurice Blackburn Lawyers has today opened online registration to shareholders alleged to have suffered significant losses off the back of Brambles’ revised guidance in January and February this year, when the company stated that it would not meet forecast sales and profit growth that it affirmed only weeks earlier. The proposed action is backed by Harbour Litigation Funding Limited, a leading litigation funder with hubs in the UK and Asia Pacific.
In August 2016 Brambles provided bullish guidance, forecasting sales growth of up to nine per cent and profit growth of up to 11 per cent. It reaffirmed that guidance in October when it gave a trading update, and then at its Annual General Meeting in November.
Then in January this year, only 11 weeks after affirming its forecast, Brambles downgraded its guidance; and in February 2017 it provided revised guidance of sales growth of around five per cent and profit growth of zero per cent for FY17.
Analysts expressed surprise at the downgraded forecast, with some questioning how the downgrade could occur so soon after the earlier guidance had been reaffirmed.
The investor reaction was severe, with a substantial dive in the share price of almost 16 per cent upon the first revision, and 10 per cent on the second revision. The trading volumes on both occasions were around five times greater than average volumes over the previous year.
Class action Principal Brooke Dellavedova said that the information was clearly material to the market, and that there is a strong case already that points to the company knowing it would miss its guidance much earlier than it indicated.
“The intensity of the trading was a clear indication that the market was shocked, which is understandable given the strong affirmation of its forecast only weeks before downgrading its guidance,” Ms Dellavedova said.
“When you look into how the logistics company operates, it seems unfathomable that there weren’t earlier triggers to alert the company to the sales and profit changes that were eventually disclosed.
“The laws are clear on disclosure, the market needs to know as soon as the company knows in order for the market to function fairly and efficiently.”
Brambles shareholders that purchased shares between 20 October 2016 and 19 February 2017 can now register their details online to participate in the action to recover some of their losses, at www.mauriceblackburn.com.au/brambles.