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Now that the market seems to have woken up to the risks at Brambles (BXB, 210p, A$ 4.96) from a slowdown in world trade, and pricing pressure, I’m happy to close my negative view on Brambles.

We initially warned of the downside risk in the group following a directors share sale (Craig van der Laan de Vries) in late March 2008, when Brambles were trading above 420p.

We reiterated our caution in early June, ahead of what turned out to be a dismal trading update, resulting in the shares falling 14% on the day.

And lastly, last week we highlighted caution ahead of this weeks results, following which the shares fell by 20%.

So, whilst the outlook is likely to continue to deteriorate for Brambles, we feel that the recent share price correction has been indicative of the market now having a better understanding of the risks at Brambles.

Close negative view of Brambles:

March 23rd 2008 with 48% absolute return or 20% return relative to the market,

June 2nd 2008 with 44% absolute return or 16% return relative to the market,

February 10th 2009 with 25% absolute return or 20% return relative to the market.

For all our posts please read https://followthedirectors.co.uk/?s=brambles.

I’ve noticed on my Google calendar that Brambles (BXB, 280p) Interims to December 2008 are due February 19th. Then I look at the recent share price movement, sharply lower over the week, falling by about 10%, and I wonder if the insiders are aware of pending bad news.

Craig van der Laan, Head of CHEP Asia Pacific, caught my eye through his share sales early last year (March 23rd: ‘Brambles directors sale- Economic slowdown starting to hit?‘).

Van der Laan continued to sell through March, May and June, following which we saw dissappointing results in August. Van der Laan has carried on selling, his last transaction was in October when he sold 180,000 shares at 328p (A$ 7.03).  He now owns directly only 15,000 shares (source : London Stock Exchange, Digitallook).

I’m not sure where we stand on the negotiations for the Walmart contract, but can imagine that both volume and price pressures would have continued to impact CHEP.

So put February 19th in your diary for an interesting set of results.

For all our posts on Brambles see here.

Last news update- November 25th Bloomberg: ‘Shares slump in challenging conditions’.

I notice today the big underperformer in Sydney today is Brambles (BXB, A$ 7.45).

Poor results and some spiel about weakening consumer spending in the US, and the fact that they still haven’t resolved the Walmart negotiations (see Bloomberg comment here).

Lets step back to my comments of March 23rd :‘Brambles directors have been buying through 2006 and 2007, at prices between 506p and 557p in 10s and 20s (thousands of shares). The stock peaked in October 2007 at 650p. Then, last week, Craig van der laan de Vries, ‘Group President of CHEP Asia Pacific’ sells almost 20% of his holding, 160,000 shares at 440p, raising £702,000.’

In fact since March 20th Mr de Vries has sold over 700,000 shares in Brambles, realising £3.2m (AUD $6.6m), and leaving him with only 130,000 shares (source digitallook.com).

Since my comments on March 23rd Brambles shares are down 23% in AUD terms, and have underperformed the local market by almost 20% !!

So, shareholders and investors, why didn’t Mr van der Laan de Vries tell us what was going on then. Maybe the board were hoping you wouldn’t find out about the pressure from Walmart, or that the slowdown resulting from a fall in consumer spending would go away.

I can only imagine things continuing to deteriorate for Brambles.

For previous negative comments on Brambles of March 23rd and June 2nd see link here.

On March 23rd (BXB A$9.63) I expressed intrigue that a director of Brambles (BXB, 380p), Craig van der Laan, should be selling. See ‘Brambles directors sale- economic slowdown starting to hit?’.

On April 18th (BXB A$9.03) Brambles shares ‘slump’ by 10% after an admission that the supply agreement with Walmart was under review (see Bloomberg news here).

Today (June 2nd) (BXB A$8.10) Brambles declare that van der Laan (Group President of CHEP Asia Pacific) has been selling more shares. Over 26th and 30th May he sold 255,000 shares (in his wifes name) to reduce his holding even further, to 368,000 shares.

June 24th (BXB A$ ??) – Brambles have a scheduled ‘Trading update’. We should expect to be updated on the ‘Walmart contract’. I wonder if van der Laan has any insight into what Brambles will tell us ?

Brambles Ld (BXB, 424p) has a secondary listing in London, and a primary listing in Sydney. I noticed a director selling £702k of shares, way down from the high, and wonder if this is a result of a slowdown in revenue at the group.

Brambles directors have been buying through 2006 and 2007, at prices between 506p and 557p in 10s and 20s (thousands of shares). The stock peaked in October 2007 at 650p. Then, last week, Craig van der laan de Vries, ‘Group President of CHEP Asia Pacific’ sells almost 20% of his holding, 160,000 shares at 440p, raising £702,000.

What does he know that we don’t know? Hazard a good guess.

Chep pallets

With 83% of Brambles revenues from CHEP, the global ‘bluepallets’ people, with sales split 44% Americas, 43% Europe, and 13% Rest of World, these guys have significant exposure to a slowing economy.

But then there could be 4% of the company coming to market pretty soon (see smh comment here).

The last news release was the interim results on Feb 21st, so don’t expect anything soon. But still I do find this a curious move by a director of the group, and as a result I believe that the risks from here forward lie on the downside.

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