Earnings

Reporting Season August 2020

CMC Markets

Reporting Season

31-08-2020

US tech-driven payments company Sezzle Inc (SZL) opens trading 12.5% lower after posting a net loss the year of $8.2 million, down from $4.8m loss one year earlier. Earnings also fell further into the red with a loss of $6.1 million reported, down from $4.3m the year prior, despite sales up for the year, with underlying merchant sales growing to $307.4 million ($70.2m FY19). Sales were buoyed by a record July month of $71.8million, as the buy-now-pay-later ecommerce sector saw significant support from the stay-at-home economy driven by COVID-19 restrictions.

Cooper Energy (COE) saw losses slip further into negative territory for FY20, reporting statutory net loss after tax of $86.0 million, down from $12.1m loss the year prior. The gas production company points to the impact of COVID-19 on energy demand and prices, as well as significant one-off item such as a $76 million impairment to asset. Stripping out one-off items, underlying loss was reported at $6.6 million, down from underlying profit of $13.3m one-year earlier. Gas sales revenue were up 22% for the year and cash flow from operations reported up over 130% to $48.1 million.

IOOF Holdings (IFL) starts the week in a trading halt, announcing it will be acquiring NAB’s MLC Wealth unit for A$1.44 billion, off the back of releasing their FY20 reports this morning. Reported net profit figures for the year of $148.4 million, up from $33.4m in FY19 and beating analysts’ forecasts by 12%. Underlying net profits fell 35%, with revenues for the year boosted 10% higher. A final dividend of 11.5 Aussie cents was announced by directors.

Matthew Chapman, Stockbroking Alpha Team

28-08-2020

Boral Ltd (BLD) repots a significant net loss for the year of A$1.14 billion, with the result dragged down by a large impairment of North American and Australian assets. Stripping out one-off items, the company’s net profits slid to A$177.3m compared to A$418.7m one year earlier. The building material supplier pointed to construction in key markets stalling as major economies moved toward recession territory, however signals positive profit margin recovery in FY21. Company directors decided not to pay a final dividend, with the interim dividend of 9.5 cents per share representing 63% of full year earnings.

Australian entertainment and media company Village Roadshow (VRL) realised a A$117 million net loss for FY20, with income from continued operations slumping 21%, as the coronavirus pandemic sparked heightened restrictions on the company’s key revenue generating locations. QLD theme park restrictions currently reserved to cap at 50% capacity, with cinemas in Victoria closed down after fresh coronavirus outbreaks hit the state. The company is currently operating on a negative cash balance and expects this trend to continue over several months, however assumes favourable trading from November onward at their theme park locations.

Harvey Norman (HVN) moves 4% higher on trading through the open, reporting a 19% lift in net profits for the year, as demand for furniture, appliances, and consumer electronics swung higher during the COVID-19 pandemic. Australian franchisee sales soared, up 40.9% for same-store sales in July and 35% in August as Australian stores remained open during national lockdowns in April and May. Earnings beat consensus forecasts, up 22.9%, with a final dividend of 18 cents per share announced. 

Monday:  IOOF Holdings, Sezzle, Cooper Energy 

Matthew Chapman, Stockbroking Alpha Team

27-08-2020

Tech-driven payments solution darling Afterpay (APT) opens trading up 3.5% off strong performance results, reporting net loss for the year was cut by 54% to A$19.8 million, revenues spiking 97% for the 12-month period off the back of increased customer numbers to 9.9m from 4.6m in the prior year, stating their balance sheet strength could support self-sustaining high growth in underlying assets. FY21 expansion is key, with select Asian and European markets in focus to leverage early mover advantage in an ever increasingly competitive sector.

Woolworths Group (WOW) took a 56% hit to net profits for the full year, despite an uptick in revenue of 6%. The coronavirus pandemic injected consumer sales in the form of panic-buying, however also brought higher operating costs. A final dividend of 48 cents per share was announced, full year dividend declining by almost 8% at 94 cents. Given uncertainty of further break-outs of the virus, FY21 guidance was not provided.

Ramsay Health Care (RHC) reported a 48% decline in net profit for the 12 months through June, as the coronavirus pandemic forced the suspension of elective surgery to free up capacity. Revenue fell by 2.2% in Australia, earnings slumping 23%. U.K revenue slipped 4.9% lower, however continental Europe saw a 14% increase in revenue figures. Management signalled no final dividend would be paid back in April, and have remained consistent with this outlook through August reporting.

Nine Entertainment Co (NEC) traded 6% lower on market open, after suffering A$590.0 million net loss for the full year, A$701.9 million adding the largest component to this figure in one-off items such as non-cash impairments and a goodwill write-down on their free-to-air TV business. Revenue fell 7.3% when removing accounting changes, forecasting free-to-air revenues to fall 15% on continued weakness in advertising markets. A final dividend of 2 cents per share was announced.

On the back of a partnership announcement with Ebay one day earlier, ZIP Co (Z1P) opens today’s trading up over 8%, posting a net loss of A$20 million, increasing losses over 44% from one-year earlier. Revenue for the year surged 91%, as the payments solution company reports a 63% increase in customers for the year, participating merchants up 61% on the year to 24,500.  A number of one-off items, as well as a 64% increase in operating costs, contributed to the net loss figure. Outlook for FY21 focuses on global expansion, QuadPay acquisition to accelerate growth in the US market, planned launch in UK in H1FY21. 

Tomorrow: Openpay Group, Village Roadshow, Boral Ltd

Matthew Chapman, Stockbroking Alpha Team

26-08-2020

Seven Group (SVW) reported a decline in net attributable profits for the year of 42.4%, underlying profits when excluding one-off items increased 2.8%. Revenues were up 11.7%, strengthened by the company’s mining and construction equipment business WesTrac, as Seven Group expects to see strong growth in industrial services into FY21, however media and energy contribution is less certain. A final dividend of 21 cents per share was announced.

NSW-based coal producer Whitehaven Coal (WHC) saw share prices drop over 8.5% this morning off reports that profits slumped a massive 94% on weak demand for thermal coal , coupled with lower realized prices throughout the COVID-19 pandemic. The key buyers of thermal coal, power generators, have been prompted to operate at reduced capacity, causing strain on coal market consumption and prices. The company remained within revised production guidance, with a 7% decline on fiscal 2019, digging up 20.6 million tons of coal in the 12 months through June. No final dividend will be paid, as economic uncertainty due to the coronavirus limits guidance for FY21.

Tomorrow: Afterpay, Woolworths, Zip Co, Ramsay Health, Nine Entertainment

Matthew Chapman, Stockbroking Alpha Team

25-08-2020

Ansell (ANN) supersedes market consensus as profits reported up 42% off increased sales in protective garments driven by the coronavirus. Revenues rose 7.7% to beat estimates, sales accelerating in H2 for single-use items such as examination and surgical gloves. Factory closures resulted in softer sales for mechanical demand, offset by rising demand for chemical protective clothing and gloves. Global sales in health care products soared 13%, while sales of industrial products rose 1.3%. A final dividend of 28.25 cents per share was declared.

Blackmores (BKL) reported a 3.5% decline in revenue and a 66% hit to net profit for the full year. The vitamins and health supplements company signals a 10% cut to workforce, streamlining operations in focus. One-off items stripped out, the company reported $18.7 million underlying net profit, in-line with market consensus. No final dividend will be distributed to shareholders.

Westfield shopping centre operator Scentre Group (SCG) share price gains 4.5% on open after reporting A$3.61 billion loss for the six months through June, down from A$740m at the same stage one year prior. A significant drop in shoppers weighed heavy on retail property asset valuations, as well as the company’s ability to collect rent during the half-year period, down to 70%, as tenants seek assistance during COVID restrictions. Funds from operations fell by 46%, with the company’s gearing sitting at 38.4% for the end of June. No earnings or distribution guidance was provided, as continued uncertainty hangs over the retail sector.

Oil and gas exploration company Oil Search (OSH) suffers a US$266.2 million net loss for the six months through June, compared to US$161.9 million profit a year earlier. Slumping energy prices coupled with large write-downs and impairment charges pulled company returns into the red. Sales revenue dropped 19% during H1, as plummeting energy prices offset the 4% gain in production of 14.66 million barrels of oil equivalent. No interim dividend will be paid, as outlook for near-term oil prices remains uncertain amid challenging economic conditions.

Australian diversified property group Stockland (SGP) traded 2% higher on open, despite announcing A$14 million net loss for the year. Funds from operations were also down 8%, largely driven by COVID-19 impairments.  Company directors were still able to declare a 10.6 cent per share distribution, in-line with guidance provided in June.

Bingo Industries (BIN) opens trading 7% higher off the back of net profit results almost tripling from one year earlier at A$66 million. FY revenue was up 21%, underlying earnings up 41%, however COVID-19 impacts are forecasted to hit non-residential commencements by 20% in FY21, and residential to reduce by 15%. A final dividend of 1.5 cents per share was announced.

Tomorrow: IOOF Holdings, Seven Group, Whitehaven Coal and Reece

Matthew Chapman, Stockbroking Alpha Team

24-08-2020

It has been a big year for iron ore, last week the commodities price topping heights not seen in six years. This has benefited Aussie iron ore company Fortescue Metals (FMG) who this morning announced record profit growth up almost 50% for the year. Revenue was also up 29% on increased shipping and rising prices of its primary rock and mineral product, as Fortescue delivered above its 177.0 million ton guidance, shipping a record 178.2 million metric tons of iron ore on the back of China’s economic recovery and supply disruptions in Brazil.  Company directors announced a A$1.00 final dividend.

St Barbara (SBM) reports net profit for the year down 11%, as depreciation and amortisation expenses weigh heavily on the company’s bottom line. Gross profit and EBITDA both up 26.1%, supported by record-breaking gold prices. The company presented FY21 outlook, as the Aussie gold miner forecasts gold production and all-in sustaining costs to run in-line or slightly above FY20 levels. A final dividend of 4 cents per share will be paid.

Super Retail Group (SUL) opens trading this week up 2.8% from close on Friday, as the diverse retail business posts a 4.2% uptick in revenue on the back of strong same-store sales across its BCF, Rebel, Supercheap Auto and MacPac operations. Net profits took a 21% hit for the full year, largely attributed to repayment costs related to the $62 million underpayment scandal earlier in the year. Excluding one-off items, NPAT was up 1% for the year. Coronavirus-driven online sales accounted for 10.2% of total sales, with demand for stay-at-home and outdoor items increasing over recent months. A final dividend of 19.5 cents per share was announced.

Tomorrow: Blackmores, Scentre Group, Ansell, Stockland, Oil Search, Bingo Industries

Matthew Chapman, Stockbroking Alpha Team

21-08-2020

Suncorp Group (SUN) posts a positive net profit result for the year of A$913 million, up from A$175 million one year earlier. A number of one-off items seems to have played a significant hand in these numbers, as the Aussie financial services conglomerate’s bottom line suffered a year earlier when it booked a significant loss on the sale of its life insurance business. This year, Suncorp profited over A$280m from the sale of its Capital SMART and ACM Parts businesses, however this was offset by a A$89m non-cash impairment charge tied to their core banking platform. Cash earnings fell 33%, with a 34% decline in profits seen in both the company’s Australian Insurance division and Banking and Wealth division. The business advised the bank’s collective provision as at June had increased just under 9.5% from three months earlier, declaring a final dividend of 10 Australian cents per share, down from 44 cents one year earlier.

Australian healthcare company Healius Limited (HLS) suffered a net loss of A$70.5 million for the year, as the company faced a A$142.5 million loss on the sale of their medical centres unit. The business posted a 0.18% increase in underlying profits when stripping out discontinued operations, within guidance provided in late July. Directors declare a final dividend would be deferred, however hinted toward regular dividend payments to resume first half of the current fiscal year after posting strong pathology revenue growth in July, up 25% on the back of increased COVID-19 testing.

As COVID19 accelerates ecommerce, online marketing business Redbubble Limited (RBL) saw revenues increase over 35.5% for FY20, posting a loss for the year of A$8.8 million down from the A$27.6 million loss reported one year earlier. RBL shares opened up 6.5% on trading. The company has reported growth in all product categories since the coronavirus pandemic took full-swing, with Homewares and Artworks up 63% and 68%, respectively, YoY for FY 19-20. Facemasks contributed to 18% of marketplace revenue in June 2020. No final dividend will be paid.

Australian telco provider TPG Telecom Ltd (TPG) opened trading today up 1.2% after posting A$83 million profit for the first half of the year, up from the A$153 million loss seen one year prior. Revenues were down 12% for the six months to June, as pre-paid mobile connections fell by 30% and post-paid fell 20%. Mobile roaming margins also dived 80% amid a halt on international travel. Total mobile subscribers were down 8.7% on a year earlier, with no final dividend declared by directors.  

Monday: Fortescue, St Barbara and Super Retail

Matthew Chapman, Stockbroking Alpha Team

20-08-2020

With the start of another busy day of reporting upon us, Wesfarmers (WES) kicks us off with an all-too-familiar trend we have seen coming out of Australia so far - positive revenues coupled with declining profits. The diversified Australian supermarket and department store business this morning posted a 10% increase in revenue from continuing operations for the year, however suffered a 69% decline in net profits. The company looks toward the Coles spin-off in late 2018 as a contributing factor to this profit decline, as Wesfarmers reports an increase in net profits for the fiscal year of 8%, with one-off items such as the demerger stripped out. Bunnings sales were up 14% on the year, with DIY and home improvement front of mind for consumers stuck at home. Wesfarmers approaches the coming year with a cautious outlook given the coronavirus pandemic, announcing a final dividend of 77 Australian cents per share, with a special dividend of 18 cents per share declared to reflect gains from the sale of Wesfarmers’ interest in Coles. 

Webjet (WEB) released their end of year results late yesterday, with the company’s share price ending the day over 7.5% higher, despite announcing a 27% decline in revenue and a reported statutory net loss of $143.6 million for the year. COVID-related travel restrictions weighed heavy on the travel business, with the pandemic leading to a collapse in booking activity and revenue in the second half of the year. The company has opted to defer its interim dividend until further certainty returns to market.

South32 (S32) reports US$65 million net loss for the financial year, underlying earnings fell by 69%. Weaker realised prices across commodities and impairment charges and restructuring charges totalling US$94 million were to blame. Directors were able to deliver a final dividend of 1.0 US cent per share, down from 2.8 US cents one year prior. South32 decides to keep suspension on buy-back in place, pending improvements to economic outlook.

ASX Limited (ASX) reported a 1.4% increase in annual profit, attributing growth in its main businesses led by higher cash and customer demand for technical connection and information services. However, heightened trading activity over the last five months relating to COVID-19 has strained resources and resulted in an increase in expenses above guidance for the Australian securities exchange. Company directors announced a final dividend of A$1.225 per share, up 7.2%.

Australian development and construction company Mirvac Group (MGR) takes a 45% hit to net profits for the year, suffering from the coronavirus pandemic on both their retail and residential portfolios. Government restrictions and lockdowns saw A$86 million net impact to earnings, with defaults rising 2.2%, however government stimulus from the HomeBuilder program is supporting demand in the sector. No final dividend to be paid, however a distribution of 3.0 Australian cents per stapled security from the Mirvac Property Trust will be allocated.

Coca-Cola Amatil (CCL) posts A$9 million first half net loss, reflecting non-trading items relating to their Samoan, Fijian, and Indonesian business. Group revenues were down 9%, and net profits are down 35% to A$112 million with one-time items excluded. As with many other company’s already reported, earnings guidance has not been provided due to coronavirus-driven uncertainty. A final dividend of 9 Aussie cents per share was announced.

Santos (STO) also suffers a first half net loss, with large write downs on its assets resulting in a US$289 million loss for the six months through June, reflecting the severity of the impact the coronavirus pandemic has had on the sector, coupled with teetering oil prices seen throughout the year. The company announced an interim dividend of 2.1 US cents per share, down from the 6.0 US cents a year ago.

Medibank Private (MPL) this morning reported a 31% drop in net profit for the year, with net investments and other income for the year down a massive 91% to A$9.8 million. Health insurance premiums however were 1.3% higher on the year, dampened by a fall of 13% in operating profits. A full year dividend of 6.3 Australian cents will be paid.

Given the current coronavirus pandemic, few greater would be in line to suffer more than Qantas Airways (QAN), and unsurprisingly, the number one Australian airline has reported significant losses for FY20. The company has reported a statutory net loss of A$1.9 billion, compared to A$840 million profit a year prior. With much of this loss attributed to write downs on aircraft, looking at stripping out one-off items, Qantas said its underlying profit before tax was down 90%. With revenues also falling by 21% for the year, driven by border closures and forced cancellations of flights globally, strong cash flow had been generated by the company’s freight and loyalty business. No dividend was declared.

Crown Resorts (CWN) seemed to have set the tone for the gaming and hospitality sector amid the coronavirus pandemic with its reported results yesterday, and this morning Star Entertainment (SGR) has followed suit. Revenues for the year were down 31%, with a reported statutory net loss of A$95 million for the Australian casino operator. Casino closures and travel restrictions were the key drivers. No dividend was declared.

Origin Energy (ORG) opens the trading day 4.5% lower as the energy business posts significant declines in net profits, fuelled by retreating wholesale energy prices, reduced revenue from liquefied natural gas sales and the company absorbing a large write down of its Australia Pacific LNG project. Net profits were down a hefty 93%, revenues also taking a 5% hit for the year. Company directors announced a final dividend of 10 cents per share, bringing the full-year payout to 25 cents.

International medical diagnostics company Sonic Healthcare (SHL) sees annual profits slip 4% to A$527.7 million, as the coronavirus pandemic and government enforced lockdowns saw a large drop-off in patient volumes. Revenues increased by 11%, largely driven by the Aurora Diagnostics acquisition completed in early in 2019, as well as favourable exchange rate movements. The share price opened almost 10% higher on trading this morning, as the company states patient volumes had largely recovered in June due to COVID-19 testing. No FY21 guidance was provided, as the company announced it would maintain a final dividend of 51 Australian cents per share. 

Tomorrow: Redbubble, Suncorp, Mayne Pharma, Healius, TPG

Matthew Chapman, Stockbroking Alpha Team

19-08-2020

For one of the busiest days we have seen since the start of the August reporting season, A2 Milk Company (A2M) comes out swinging, setting a high standard to start the day with its reported 34.1% increase in net profits for the 12 months ended June. The company attributes strong demand from China as the driving factor, however acknowledges they won’t see 3Q2020 COVID benefits being replicated. Revenues jumped 32.8%, with investment in growth activities prioritised over capital returns by the infant formula and fresh milk company, as marketing investment totalled NZ$194.3M for the year. The company targets 30% EBITDA in the medium term, sees FY21 capital expenditure of NZ$50M.

Nearmap (NEA) suffers A$36.7 million net loss for the full year, as revenues top A$96.7 million, 25% higher than the year prior. The geospatial map technology business opened 2.5% higher on trading this morning, announcing the company will scale for global market opportunity. Directors declare no final dividend will be paid.

CSL LTD (CSL) reports underlying sales revenue up 9%, with underlying net profits (when excluding currency impacts) up 17%. The Australian-based biopharma company said the strong growth in their immunoglobulin portfolio was key, with sales in Privigen up 20% and Hizentra sales up 34% for the year. EBIT for the company’s flu-vaccine unit Seqirus grew 70%, another key driver in the company’s strong profit growth. A final dividend of US$1.07 was declared, a 9% rise in full-year payout to US$2.02 per share. Forward looking FY21 net profits (excluding currency impacts) expecting to range between $US2.1 - $2.256 billion, however ability to collect plasma considering COVID impact is key.

Domino’s Pizza (DMP) capitalise on the coronavirus-influenced trend in online ordering, posting a statutory net profit increase of 20%, as revenues grew 32% for the year. Overall network sales grew to A$3.3billion, with online sales contributing A$2.4 billion, up 21% for FY20. Directors declare a final dividend of 52.6 Australian cents per share, with medium-term outlook focused on 7%-9% in network growth.

Tabcorp Holdings (TAH) posts a downturn in revenue of 5% and net loss of A$870 million for the full year, coupled with the company’s shares moving into a trading halt to start the day, pending an entitlement offer announcement. The equity raising will be used to pay down debt on the back of this large annual loss, an offer price of $3.25 per share (just over 11% discount), with eligible shareholders able to receive 1:11 shares they own. No final dividend announced.

Crown Resorts (CWN) struggles with COVID-19 lockdowns and travel restrictions, with the gaming and entertainment business reporting a whopping 80% fall in net profits for the year, with revenues down 23% as VIP turnover and gaming takes a dive with changes to travel and operating conditions. The company’s Crown Melbourne reported a 27.9% decrease in main floor gaming revenue, with hotel capacity sitting between 70-80%, buoyed by accommodation provided by the Victorian Government for the purpose of quarantining returning travellers. No final dividend was declared.

Specialist fibre and network solutions provider Vocus Group (VOC) reported a A$178.2 million net loss for the 12 month through June, down from A$34 million profit a year earlier. Pandemic-related impairments were to blame, including a A$202.1 million in non-cash impairments against the retail business unit. Revenues dropped by 6%, as the Australian NBN further erodes Vocus Group’s retail operational business. Directors opted against a final dividend payout.

The coronavirus pandemic wasn’t enough to disrupt the bottom line for WiseTech Global (WTC), as net profits shot up to A$160.8 million, compared with A$54.1 million one year prior. Revenues were in line with WiseTech’s downgraded guidance and beat consensus with a 23% increase to A$429.4 million for the full year. The company expects to see increased demand amongst large global logistics service providers for their technology solutions in the current environment, forecasting FY21 revenue growth between 9 to 19%. 

Dexus Property Group (DXS) announces a 23% decline in net profits as the company prepares for high vacancy levels in key office environments. The uncertain operating environment driven by the coronavirus pandemic has recently stalled the trend of Dexus, and many other REITs, benefiting from strong inflows of capital and asset sales. Revenues were up 25%, however more flexible work arrangements implemented by companies prove to be the key threat. Dexus forecasts Sydney CBD rents to decline by 40% in 2022, up from the previously forecasted 30% drop.

OZ Minerals (OZL) sees increased net profits by 82% for the year, as the company benefits from lowers costs, and rallies in gold prices offset weaker copper production. An interim dividend of 8 cents per share was declared. Revenues are up 37% on year, as the miner expects to produce between 88,000 and 105,000 tons of copper this year and 227,000-249,000 ounces of gold.

Tomorrow: South32, ASX Ltd, Wesfarmers, Mirvac Group, Webjet, Coca-Cola, Santos, Medibank, Qantas, Star Entertainment, Origin Energy and Sonic Healthcare

Matthew Chapman, Stockbroking Alpha Team

18-08-2020

BHP Group (BHP) reports a 5% decline in revenue and a 4% hit to net profits for the full year, diminished by associated costs in response to the coronavirus pandemic, and one-off charges totalling US$1.1 billion. Net debt for the year landed in the bottom end of the company’s forecasted US$12 billion-17 billion target range, as company directors announce a full-year dividend of US$1.20 per share, down 10% from the prior year. Iron ore strikes as the strongest contributor to the company’s group EBITDA at 64%, with copper contributing 19% to the US$22.1 billion group earnings figure.

Although Coles Group (COL) were able to report a 7% increase in sales revenue, fuelled by coronavirus restrictions and consumers spending more time housebound, statutory profits (which consider one-off gains/losses for the year) came in 32% lower for the year. The company insists this US$705 million reported figure was impacted by new accounting rules relating to leases, one-off items, and costs associated to the company’s demerger from Wesfarmers Ltd.  Profits from continuing operations rose 7%, a figure that Coles believes best represents the overall underlying business performance. A final dividend was declared of 27.5 cents (Australian) per share, up almost 15% from the 12 months prior, bringing the full year dividend to 57.5 Australian cents.

Cochlear (COH) shares opened up just under 2% on trading this morning, despite posting a net loss of AU$238.3 million for the full year. The company points to litigation expenses of A$416.3 million relating to the patent infringement ruling it lost in March as a driving factor for this net figure, along with lower demand for hearing implants surrounding the coronavirus pandemic. Total revenue fell by 6.5% for the full year, postponements to implant procedures called out as the key contributor. Removing one-off items and currency movements, Cochlear posted a net profit figure of A$153.8 million, down 42% from FY 2019. Outlook for the company is uncertain given the driving forces COVID-19 has on the businesses operations, as Cochlear announces no final dividend would be paid, suspending any payout until trading conditions improve.

Tomorrow: Nearmap (NEA), A2 Milk (A2M), CSL LTD (CSL), Brambles (BXB), Tabcorp (TAH), Crown Resorts (CWN), Domino’s Pizza (DMP), Vocus Group (VOC), Wisetech (WTC), Dexus (DXS), Oz Minerals (OZL) and Vicinity Centres (VCX)

Matthew Chapman, Stockbroking Alpha Team

17-08-2020

Bluescope Steel (BSL) recorded a 91% decline in annual net profits, down from A$1.02 billion in the same period last year. Profits slumped on weaker demands in key regions driven by the coronavirus pandemic, with results also being dampened by a A$197.0 million impairment charge against its New Zealand and Pacific Steel segment. Earnings before interest and tax reported down 58%, roughly in line with revised mid-July guidance, and the final dividend remained steady at 8 cents per share.

Beach Energy (BPT) opens the trading week up, despite suffering a 13% decline in net profits, with impairment charges against assets and declining oil prices leading the fall. Revenues were also down 17% at A$1.73 Billion, however Directors declared a final dividend of 1.0 cents a share, in line with the payout a year ago.

Lendlease (LLC) lodged a A$310 million loss, with revenues falling 20%. Weaker trading conditions for Lendlease’s Communities business, as well as delays in converting development opportunities across the company’s urbanization pipeline proved the driving factors. The company’s directors also revealed that no dividend would be paid, however a final distribution from the Lendlease Trust of 3.3 cents (Australian) per share would be paid. The company reported it is also expecting restructuring costs to exit the engineering business to be at the top-end of the previously guided A$450 – A$550 million range. 

Bendigo and Adelaide Bank (BEN) revealed a decline in profits of 49%, as the bank were unable to provide meaningful guidance for fiscal 2021 due to coronavirus pandemic-driven uncertainty. Cash earnings came in 27% lower at $301.7 million, with a decision on paying a final dividend deferred by directors as the impact of COVID-19 remains uncertain.

Lynas Corporation (LYC) starts the week in a trading halt pending a capital raising announcement, seeking A$425 million in Equity to fund foundation projects that it aims to complete in 2023. This announcement is off the back of FY20 results released that revealed losses of A$19.4 million, with production and revenue impacted by a production halt in late 2019, and a shut-down for three months from March due to COVID-19.

JB Hi-Fi (JBH) comes out on top to start the week, reporting profit growth of 21% at A$302 million, driven by coronavirus lockdowns, with sales figures reflective of consumers spending more time at home. Online sales rose 50% to nearly A$600 million, with the company’s main JB Hi-Fi Australia unit posting 42% total sales growth in July. The company directors declared a final dividend of 90 cents per share, an increase of 76%, bringing the total dividend up 33% for fiscal 2020 to A$1.89.

GWA Group (GWA) suffers a 53% hit to profits for the full year, reflected in its opening price this morning, down 6.5%. Lower construction activity, merchant destocking in the first half, lower than forecasted merchant restocking in Q4, and the impact of the coronavirus pandemic have been called out as contributing factors. Revenues were up 4%, and a final dividend of 3.5 cents per share was announced, bringing the full-year final dividend to 11.5 cents per share.

Altium (ALU) struggled to maintain demand for their circuit board software in the current COVID-19 climate, recording a decline of 42% in full-year profits. The company reported a pre-tax profit gain of 12%, however it was hit by a larger tax expense, including a one-time impact of US$16.4 million, due to a restructuring in the US. Revenues rose 10%, and a full-year dividend payout of 39 cents was announced, up from total 2019 payout of 34 cents.

Viva Energy (VEA) records a 33% decrease in underlying net profits, as the company announces it intends to continue with up to A$50 million of its share buyback. A significant one-off gain was reported during the period for $187.4 million, relating to the sale of 35.5% holding in Viva Energy Waypoint REIT. Viva plans to return all remaining proceeds from this divestment through a combination of a capital return, a special dividend and an on-market buyback. Method to distribute remaining $100 million to be confirmed.

Tomorrow: BHP Group, Coles, Cochlear

Matthew Chapman, Stockbroking Alpha Team

14-08-2020

Newcrest Mining (NCM) reported a 15% lift in profit for the full year. Record prices for gold and a lower Australian dollar offset production issues. Underlying profit rose 34%, beating estimates. However the company expects to produce lower volumes in the coming year, and a falling gold price. The final dividend is 17.5 US cents, or around 24.5 AU cents. This morning NCM opened 0.5% lower.

Iluka (ILU) suffered an 18% decline in earnings over the half year on a 15% drop in revenues, largely attributable to weaker prices for the industrial minerals the company produces from its sand mining operations. Management have declined to pay a half year dividend. These negatives are somewhat offset by plans to spin off the royalty stream from its iron ore interests. The share price traded both higher and lower in the first half hour after the announcement.

Monday: Bluescope Steel (EPS f/c $0.70), JB HiFi (EPS f/c $2.82), Altium (EPS f/c $0.34), Viva Energy (EPS f/c $0.01), Bendigo and Adelaide Bank (EPS f/c $0.61), GWA (EPS f/c $0.18), Lynas (EPS f/c -$0.01), Bingo (EPS f/c $0.08) and  Beach Energy (EPS f/c $0.20).

Michael McCarthy, Chief Market Strategist

13-8-2020

A tougher day for corporate reports, with more misses than hits.

Telstra (TLS) reported a 16% decline in profits as the NBN continues to erode Telstra’s data market share. Additionally, both fixed line and mobile revenues fell. The final dividend is 8 cents per share. TLS dropped more than 7% after the announcement. AGL shares are also down significantly this morning after the company reported a 22% decline in annual profit, and guided analysts to a FY21 profit range of $550 to $660 million - well below current forecasts.

Woodside Petroleum (WPL) lodged a US $4.07 billion loss for the half year after taking a $3.92 billion write down of assets. Underlying operating profit fell to $303 million from $419 million previously. WPL has a strong balance sheet, and its main problem is lower oil and gas prices. Management lifted the dividend payout ratio to 80%, delivering a US 26 cent dividend, above most estimates.

Treasury Wine Estates (TWE) leapt more than 11% this morning despite a 25% fall in net profit to $316 million. Investors may have focussed on the potential sale of select brands, and the future benefits of operational cost-cutting measures. The company said it has seen recent improvement in sales, but declined to guide on earnings for the coming year.

AMP revealed yet another fall in operating earnings. Wealth management business units saw declines of 18% to 43%. The sale of its life insurance business during the year has released capital. While AMP will not pay a final dividend, it is paying a 10 cent special dividend and will buy back $200 million in shares this year. The capital return is the most likely explanation for a 10% jump in AMP’s share price this morning given the dire numbers.

Tomorrow: Iluka (EPS f/c $0.28) and Newcrest Mining (EPS f/c $0.88).

Michael McCarthy, Chief Market Strategist

12-08-2020

The Commonwealth Bank of Australia’s (CBA) full year profit came in just below consensus (EPS $4.22, forecast $4.24). Although revenue increased slightly, an almost doubling of impairment provisions to $2.5 billion saw cash profits fall 11.3%. Statutory profit was up 12.4% after divestments this year. Net interest margin declined 3 basis points to 2.07% The dividend for the half year is 98 cents, representing just under 50% of earnings - the maximum allowed by regulators.

Toll road operator Transurban (TCL) reported a net loss of $111 million dollars on a 3.4% decline in proportional revenue. The company said that traffic volumes are picking up in every centre except Melbourne. Seek (SEK) unveiled a $180 million loss after taking a non-cash write down of $198 million. Containment measures mean ANZ billings in July are down 30%, and Asian billings are off 40%. SEK will not pay a final dividend.

Michael McCarthy, Chief Market Strategist

Magellan Financial (MFG) reported a profit increase of 5%, and an adjusted profit up 20% to $438 million. MFG will pay a 0.92 final dividend. Its shares traded 2% higher this morning.

Tomorrow: Woodside (EPS forecast $0.32), Telstra (EPS f/c $0.175), AMP (EPS f/c $0.07), Breville Group (EPS f/c $0.59), Treasury Wine Estates (EPS f/c $0.44), QBE (EPS f/c -$0.52), AGL (EPS f/c $1.28) and Evolution Mining (EPS f/c $0.22).

Michael McCarthy, Chief Market Strategist

11-08-2020

A mixed bag of results this morning. James Hardie (JHX) shares traded more than 5% higher despite an 89% fall in profits and a 5% fall in sales. The outlook statement is the key, as management estimate that North American sales will grow at 20% above previous forecasts.

Sydney Airports (SYD) was heavily impacted by Covid-19 restrictions. Revenue fell 36%, and the trust reported a first half loss of $52 million (previous $17 million profit). International passengers fell 57%, and there will be no distribution (dividend) for the half. Challenger (CGF) reported a loss of $416 million (previous) and suspended its dividend payments. CGF shares fell 2% in early trading.

Tomorrow: CBA (EPS forecast $4.24), Transurban (EPS f/c $0.03), Computershare  (EPS f/c $0.55) and Seek (EPS f/c $0.29).

Michael McCarthy, Chief Market Strategist

10-08-2020

Aurizon (AZJ) reported a 7% lift in earnings and a 28% increase in net profits for its full year. The full year dividend is 13.7 cents per share, up 10%. AZJ shares initially traded lower, possibly due to management forecasts of flat coal volumes for the coming year.

GPT took a $711 million hit on property valuations, forcing a $519 million loss for the half year. The property group saw operating earnings down almost 10%, but a sell down in the lead up to the announcement means GPT units have bounced in post-result trading.

This week’s highlights (subject to change):

  • Tuesday: James Hardie, Shopping Centres Australia
  • Wednesday: CBA, Transurban, Computershare, Seek
  • Thursday: Telstra, Woodside, Breville Group, QBE
  • Friday: Iluka, Newcrest Mining

Michael McCarthy, Chief Market Strategist

07-08-2020

Newscorp (NWS) reported a 19% hit to 4Q operating profits due to the impact of Covid-19. After write downs the quarter delivered a US $1.5 billion net loss, less than forecast. NWS is trading 4%+ higher. NWS owns 61% or REA Group, which reported a 7% increase in profit for the year, despite a 9% fall in operating profit. The stock is also trading higher, despite warning that Victorian lockdown measures will hurt profits this quarter.

Insurance Australia Group (IAG) is trading lower after announcing a 60% fall in yearly profit. Reported insurance margin contracted from 16.6% to 10.1%, below company guidance. The company also warned on Covid-19 impacts. However its customer remediation provisioning proved conservative, and the sale of its Indian investment bolstered the balance sheet.

Michael McCarthy, Chief Market Strategist

06-08-2020

Resmed (RMD) shot the lights out with its 4Q results. Earnings per share rose to US $1.33, well ahead of estimates nearer $1.07. Revenue grew by just under 10% to $770 million. Forecasts clustered around $750 million. However, in a classic “buy the rumour, sell the fact” scenario, RMD shares traded more than 4% lower this morning, having lifted from $23 in early June to touch $29 in the lead up to the announcement.

Tomorrow: Insurance Australia Group (EPS forecast $0.14) and REA Group (EPS forecast $2.00).

Michael McCarthy, Chief Market Strategist

05-08-2020

The corporate reporting season is a crucial opportunity for investors to glean insights. Tomorrow morning Australian company reporting season starts in earnest with medical device manufacturer Resmed. Analysts expect a higher operating margin at around 27%, and earning per share of $1.07. Later in the week Insurance Australia and REA Group will present their results to shareholders. The pace picks up next week with announcements from Commbank, Telstra, Seek, Transurban, AGL and Computershare, among others.

Each day of August we’ll drill into the numbers, highlight the results that matter, and preview coming reports. Keep up to date with the latest on the ASX reporting season here.

Michael McCarthy, Chief Market Strategist


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