TWO law firms have announced a proposed class action against ASX-listed supply chain logistics company Brambles, which provides reusable pallets, crates and containers.
Slater and Gordon and IMF Bentham said in a joint statment the proposed class action would be open to investors who had a loss after acquiring shares in Brambles between 18 August 2016 and 17 February 2017.
Brambles noted the announcement of the proposed class action, but said it had not received any formal communication, nor had it been served with any proceeding.
“Brambles strongly believes that it has at all times complied with its continuous disclosure and other regulatory obligations,” a statement from the company read.
“Brambles therefore intends to vigorously defend any action if filed.”
Slater and Gordon senior associate Andrew Paull said investors lost millions after Brambles revised its profit guidance in January and February 2017.
“Brambles had been enjoying a steady rate of growth for a number of years, but in FY16 its revenue and earnings grew at double the historical rate,” he said.
“This growth occurred after Brambles allowed a large number of its pallets to be used to transport goods to companies outside its regular distribution channels.
Mr Paull said Brambles could charge a premium for this, which increased revenue, but they also lost visibility over the whereabouts of their pallets, which increased collection and repair costs.
He went on to say the costs associated with the company’s exceptional FY 16 growth “cannibalised” the company’s FY17 growth.
“This is not the kind of case where a company has failed to foresee risks that would negatively impact future growth,” Mr Paull said.
“Brambles was telling the market that its FY16 sales growth of 8% and profit growth of 9% was the ‘new normal’ and could be expected into the future.
“We are alleging Brambles knew its increased costs would make future growth at the FY16 rate impossible and they failed to account for that in their FY17 forecast.
“The company has provided a variety of inconsistent reasons for its surprise guidance miscalculation but, in our view, these excuses just don’t stack up.”