Has market confidence really changed that much?
The market survived ANZ delivering some bad news on Monday, although the ANZ and the major banks were sold off.
Yesterday another nervy nellie from February, ABC Learning Centres, seemingly survived a late earnings downgrade, despite a tough day on the market which fell 1%.
ABC issued a statement at 3.10pm revealing that 2008 earnings growth will be lower than previously forecast.
The company had forecast earnings per share of 41c, that’s now a range of 34c to 36c.
ABC said the new forecast was before any successful deal to sell 60% of its US centres to the private equity arm of Morgan Stanley.
The statement had no further details on the progress of that sale, which is now well past the previous suggested completion date.
If it had been in the volatile days of February, it is likely ABC shares would have taken a pounding, with short sellers out in force. But the shares closed off 4c at $1.60, a far better outcome than might have been expected.
ABC’s previous forecast of 41c per share earnings for 2008 was a rise of 15% in EPS, so the lowered figure could mean no growth at all.
In a statement to the ASX, ABC company secretary Matthew Horton said ABC had lowered its guidance after slowing the pace of its childcare centre acquisition program.
"Timing issues associated with the slowed pace of the childcare centre acquisition program and property disposal program referred to above, coupled with other less material profit and loss impacts, have resulted in ABC forming a view that EPS will likely be 34 cents to 36 cents per share for FY08," Mr Horton said.
"This guidance is prior to any transaction with Morgan Stanley in relation to the United States business, the impact of which will be announced if and when such (a) transaction is consummated."
The statement also referred to "other less material profit and loss impacts" which were not explained.
Mr Horton said: "Furthermore, ABC confirms that it has also slowed the pace of acquisitions of new childcare centres in Australia, New Zealand and the United States. In H2 FY08 ABC still expects to spend on non-material childcare centre acquisitions an amount substantially in line with the A$137 million stated in the H1 FY08 results presentation.
"ABC has also previously announced an ongoing program for the sale of the freehold property associated with its childcare centres which is expected to generate in excess of A$250 million. Recent market conditions have seen a total A$150 million worth of property sales which had been planned for H2 FY08 deferred to FY09. The Company remains confident that the sales will still occur but at a later date than had been expected."
Mr Horton said in the statement: "However the delay in planned purchases means that most of the earnings associated with these centres will be realised from FY09 and not during H2 FY08 as originally anticipated"
