Brambles potential class action
Shareholders in listed company Brambles Limited (BXB) can now register online to participate in a potential class action to recover losses alleged to have been suffered after Brambles’ share price slumped, on the back of its announcement on 23 January 2017 that it would be unable to meet its sales and profits forecasts.
On 18 August 2016, Brambles published its Annual Report and gave guidance regarding sales growth of 7% to 9% and profit growth of 9% to 11%.
Brambles repeated this guidance on 20 October 2016 when it published its trading update for the first quarter of 2017, and again on 16 November 2016 at its AGM.
On 23 January 2017 Brambles informed the market that it no longer expected to meet its earlier guidance, and it now expected sales growth of 5% and profit growth of 3% for the first half of FY17; and sales and profit growth for FY17 to be below the guidance previously provided.
On 20 February 2017 Brambles published its results for the first half of FY17, providing revised guidance of sales growth around 5% and profit growth of 0%.
The market reacted strongly, with price drops of almost 16% on 23 January 2017 (with a trading volume of 19.3 million) and 10% on 20 February 2017 (with a trading volume of 21.7 million, around five times greater than the average volume over the previous 12 months).
Companies are required to have a reasonable basis for their guidance and must notify the ASX as soon as they have or ought to have information which would cast doubt on prior guidance. Our investigations raise serious questions as to whether Brambles had a reasonable basis for its initial guidance and whether it should have notified the ASX sooner that it was likely to miss that guidance.
If Brambles lacked a reasonable basis for its guidance, investors may have paid an inflated price for Brambles shares, and they may be able to recover their losses through this potential class action.
Shareholders that purchased Brambles shares between 20 October 2016 and 19 February 2017 can now register their details to participate.
Institutional investors can request a funding pack by emailing email@example.com