MELBOURNE, Australia--Packaging and containers supplier Brambles Ltd. (BXB.AU) said it will sell its recycled pallets business in North America, leading it to book a US$243.8 million impairment charge.
The decision to sell the CHEP Recycled business, which supplies and recycles more than 90 million pallets a year in Canada and the U.S., stems from a strategic review that highlighted the operations aren't a core part of Brambles and that they haven't delivered the financial returns needed to generate sustainable shareholder value, Chief Executive Graham Chipchase said Friday.
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The business could be operated with a lower cost structure under new ownership, where its overall returns and growth outlook are more likely to improve, Mr. Chipchase added.
Brambles plans to focus on supply chain logistics based on the providing reusable pallets, crates and containers, and it plans to retain CHEP Recycled facilities that help with the repair and recovery of the company's pooled pallets, the company said.
The company will seek to sell 80 plants and pallet management sites, and about 2,200 employees will transfer to new ownership with a sale. It will hold on to 73 pooled pallet-service centers that are currently managed by CHEP Recycled, with about 1,400 workers remaining with the company, it added.
The non-cash impairment charge will be recognized in the fiscal 2017 accounts.
Brambles picked up its U.S. recycled pallet business as part of the acquisition of IFCO Systems in March 2011, and bought the Canadian recycled whitewood business, Paramount Pallet, in November 2011.
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(END) Dow Jones Newswires
August 10, 2017 20:20 ET (00:20 GMT)