Announcement of Periodic Review: Moody’s announces completion of a periodic review of ratings of Brambles Limited
Global Credit Research – 21 Jul 2020
Sydney, July 21, 2020 — Moody’s Investors Service (“Moody’s”) has completed a periodic review of the ratings of Brambles Limited and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody’s reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody’s practice has been to issue a press release following each periodic review to announce its completion.
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This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Key rating considerations are summarized below.
Bramble Limited’s Baa1 credit profile reflects (1) the company’s substantial competitive advantage in being the only global pallet pooling business; (2) high barriers to entry from the significant capital investment required to replicate its system and (3) reduced volatility due to stable fast-moving consumer goods forming majority of the company’s revenue (4) a history of maintaining debt/EBITDA near the up-driver.
The high ongoing need for capital investment to replenish and grow the pallet pool and the practice of paying out a substantial portion of its earnings as dividends has historically resulted in negligible free cash flow, despite the strong retained cash flow. With the current focus on improving cash flow and change in dividend payout ratio, we expect free cash flow to improve from fiscal 2020.
This document summarizes Moody’s view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.
The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
This announcement applies only to EU rated and EU endorsed ratings. Non EU rated and non EU endorsed ratings may be referenced above to the extent necessary, if they are part of the same analytical unit.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Ian Chitterer VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service Pty. Ltd. Level 10 1 O'Connell Street Sydney NSW 2000 Australia JOURNALISTS: 61 2 9270 8141 Client Service: 852 3551 3077 Patrick Winsbury Associate Managing Director Corporate Finance Group JOURNALISTS: 61 2 9270 8141 Client Service: 852 3551 3077 Releasing Office: Moody's Investors Service Pty. Ltd. Level 10 1 O'Connell Street Sydney NSW 2000 Australia JOURNALISTS: 61 2 9270 8141 Client Service: 852 3551 3077
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