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the company you thought you knew

  1. singas

    2,961 Posts.

    Smithbarneys view......
    Company Update
    CK bows out
    † The appointment of David Turner (current CFO) to replace CK Chow as CEO, is likely to receive a mixed reaction in our view. Some may believe he's too tainted with the company's poor performance over the last two years, while others may be reassured it's someone they know and has had a long connection (10 yrs) with its core business.

    † Our biggest fear surrounding the often-speculated departure of Chow has been the irresistible prospect the replacement may have to make further write downs to restructure the business.

    † While this could NEVER be ruled out (just look at Brambles track record), we believe it will be hard for Turner to justify further write-downs as he has been at the frontline of those already taken.

    † The ongoing challenge for Turner will be to turn solid revenue growth into strong cash flow and sustainable profit growth. Time will tell if he turns out to be the John Howard of Australian politics, given Turner had already announced he would depart in late 2004.

    † We continue to believe that the restructuring programs being introduced are the right ones, that the improvement in systems and accountability is promising and that by 2005, Brambles should be the company you thought you owned (and paid up for) in 2001/2002.

    † Encouragingly, the company reconfirmed its outlook guidance for FY04 and that no new reorganization is currently planned and that the initiatives to improve CHEP Europe remain on track. We maintain our HOLD, Medium Risk rating and our $5.26 target price.



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