Amid the continuing flow of earnings downgrades (News Corp) and corporate failures (Allco and ABC Learning) we have had some moments of optimism.
One was at Telstra Corp, the largest Telco which yesterday reaffirmed its forecast for earnings and sales to climb this year on growth from its mobile and Internet units, despite the rising uncertainty and turmoil caused by the financial crisis.
The market liked the news, delivered at the company’s normal November investor day function, compared to the way it treated some other earnings statements yesterday. TLS shares ended up 3c at $4.21.
Earnings before interest, tax, depreciation and amortization will probably rise as much 6% to 7% in the 12 months ending June 30 next year. Earning before interest and tax will rise by up to 8%.
Telstra said sales this year may climb between 3% and 4%, as forecast mid-year.
"Unlike most companies at this time, Telstra is in an enviable position," chief executive Sol Trujillo told investors in Sydney today. "You can take it to the bank that we’re going to grow earnings."
Mobile-phone unit sales rose by a "double-digit" percentage in the fiscal first quarter ended September 30, he said.
Chief financial officer, John Stanhope said domestic economic activity was moderating but he said a recession was "unlikely".
Mr Stanhope said Telstra expects to save between $200 million and $300 million in labor costs by June 2010.
"We expect H2 09 Revenue, EBITDA and EBIT growth to exceed H1 09 levels," Mr Stanhope said in his presentation.
Construction giant Leighton Holdings has maintained its guidance for a 15% lift in annual net profit, despite a warning that the company will have a flat first half. Chairman David Mortimer told yesterday’s AGM in Sydney that the group’s core operating businesses remained strong, despite the challenges posed by the current financial market turmoil and softer economic conditions.
He said Leighton had earned a first quarter net operating profit of $105 million, up 7% on the prior corresponding period.
Total revenue grew 32% to $4.1 billion in the three months ended September 30.
"Work in hand at 30 September stood at $35.3 billion, up 17% since 30 June," he said.
The market ignored that and concentrated on the outlook for the first half and sold the shares off 4.7% or $1.35 to $27.30 at the close.
But, Mr Mortimer then told the meeting that the first quarter result had been "negatively impacted by the deterioration in listed asset values".
"We also expect the profit result for the 2008/09 half year to be similar to the previous period, after taking into account current asset pricing."
That would see first half earnings come in around $250 million, which is what it earned in the first six months of 2007-08.
But he said the group’s guidance for the full year to June 30 next was still in place.
"We still expect an increase in revenue for 2009 of around 15% and an increase in net profit after tax for the 2009 financial year of 15%," he said.
"The result is of course subject to the vagaries of the market and the impact that could have on asset values."
"The current market does not appreciate the strength of our forward order book and our own positive outlook.
"Whilst it is beyond our control I do hope the markets will begin to correct in the near future and that our share price will properly reflect the strong fundamentals of the Group’s businesses.
"The Group’s longer term outlook is positive based on a record level of work in hand, a strong position in its core markets, continued growth in those core markets and the implementation of a range of strategic initiatives to underpin long term growth.
While we expect there will be some short term impacts from the recent credit crunch, the fundamentals for Leighton remain very sound."
Mr Mortimer told shareholders that the company’s share price had fallen substantially in recent months.
"I understand this is very disappointing to shareholders and I share your concern," he said.
"I do however believe that the current price does not reflect our strengths and outlook."
Chief executive Wal King told shareholders Leighton was well positioned to ride through the current financial market turmoil and emerge stronger.
"We have great foundations and the right ingredients for success," he said.
"Our longer term outlook is positive based on a record level of work in hand, a strong position in our core markets, continued growth in those core markets and the implementation of a range of strategic initiatives to underpin long term growth."
Mr King said investment on infrastructure is forecast to stay at historically high levels, fuelled by existing funding commitments and the bringing forward of many national infrastructure projects by the federal government.
He said spending on transport and water projects in Australia’s capital cities and on a number of major hospitals will provide a solid base for increased activity levels.
"Property fundamentals remain sound however credit tightening is impacting investor confidence and activity levels in the property sector are therefore expected to slow in 2009," Mr King added.
And the market handed out similar treatment to a rival contractor of Leighton, United Group after it said yesterday that it was still on track to deliver earnings growth of 10% to 20% in the
