Australia’s leading class actions law firm, Maurice Blackburn Lawyers, has today filed a class action against listed supply-chain logistics company Brambles (ASX: BXB), with the company facing a series of allegations relating to continuous disclosure failures that led to two significant share price plunges for shareholders.
Brambles operate the CHEP and IFCO brands of pallets that help move consumer goods in more than 60 countries. The claim has been filed in the Federal Court and is being backed by Harbour Litigation Funding, a leading litigation funder with hubs in the UK and Asia Pacific.
Maurice Blackburn Class Actions Principal Andrew Watson said the claim alleges that Brambles repeatedly failed to disclose important company information regarding the poor performance of its American pallets business, which ultimately slashed the company’s FY17 revenue and profit guidance, leading to significant losses for investors.
“Brambles very confidently outlined an ambitious guidance to its investors in August 2016 that projected sales growth of up to nine per cent and profit growth of up to 11 per cent for FY17,” Mr Watson said.
“Those projections were again endorsed in October 2016 when Brambles published a statement to the market reaffirming its guidance forecasts, as well as in November 2016 at the company’s Annual General Meeting.
“Our claim centres around Brambles’ reusable pooled pallets business, where pallets are pooled and reused amongst the company’s international customer base, delivering a higher margin for Brambles than if cheaper wood pallets were purchased by its customers brand new.
“Brambles’ American pallets business was crucial to the success of Brambles’ pooled pallets model, with its North American operations forming the most significant part of the company’s reusable pallets business.
“Our investigations show that from as early as October 2016 Brambles was on notice that its pooled pallets business in America was facing significant challenges from customer destocking and competitive pressures, which indicates that the company knew or ought to have known that it would fall short of its guidance forecasts much earlier than it revealed.
“As the claim makes clear, Brambles had systems in place that enabled its senior executives and officers to receive regular updates about the performance of its business and the activities of customers.
“Yet despite this, senior executives repeatedly assured investors its FY17 guidance would be met, before dropping a bombshell just eleven weeks after its AGM that this guidance could no longer be affirmed.
“Brambles then provided a revised guidance in February 2017 of sales growth of around five per cent and profit growth of zero per cent for FY17, with both announcements leading to significant share price plunges of almost 16 per cent for the first revision and almost 10 per cent for the second revision.
“In our view there were ample opportunities for Brambles’ senior executives to have revised the company’s FY17 guidance much earlier than January or February 2017, yet the company repeatedly failed to do so, resulting in a significant breach of its continuous disclosure obligations that led to substantial losses for investors,” he said.
Brambles shareholders that purchased shares between 20 October 2016 and 19 February 2017 can register their details online to participate in the class action to recover some of their losses at www.mauriceblackburn.com.au/brambles.