Downgrades and upgrades yesterday as the guidance period for June 30 balancing companies started. JB Hi-Fi surprised on the upside, while others were mixed.
Origin Energy narrowed its earnings guidance for 2009 financial year, after taking into account the progress of its 51%-owned New Zealand power generator Contact Energy.
"Taking into account Contact’s latest earnings guidance and with the knowledge of retail operating conditions to the end of May, we now expect underlying profit for the full year is unlikely to be more than 20 per cent higher than last year," Origins manager director Grant King said in a statement to the ASX yesterday .
"Yesterday, Contact announced that its earnings guidance had been further reduced due to adverse hydrology conditions in New Zealand.
"Historically high hydro inflows in the South Island has seen current hydro storage levels at 136% of mean resulting in lower wholesale electricity prices with the outlook for wholesale prices remaining low for the remainder of the financial year.
"In Origin’s Retail business, it had been expected that margin foregone as a result of the Queensland Competition Authority (“QCA”) setting the benchmark tariff increase at 5.38% at the beginning of the year, which was not fully reflective of the increased costs faced by the business, would be recovered through other initiatives.
"Last Friday’s announcement by the QCA that the benchmark tariff increase for 2008/09 should have been 9.06% confirms that foregone margin in Origin’s Retail business is approximately $40 million this year and due to Retail operating conditions, this has not been able to be fully recovered," the company’s CEO said in the statement.
Origin said it will be announcing its full year results on August 19.
The shares fell 3.6% or 55c to $14.45 in reaction to the downgrade.
Engineering services group Coffey International says it’s expecting a small rise in earnings in the current financial year, despite reporting weak trading conditions in the third quarter.
The Sydney-based company said yesterday in an update to the ASX that it now expects operating earnings before interest, tax, depreciation and amortisation (EBITDA) in the range of $54 million to $57 million for the year to June 30, 2009, including one-off costs of around $2 million associated with redundancy payments.
This compares to a result of $49.7 million in the previous financial year.
Coffey said that after the strong first half performance, it had encountered a significant drop in revenue across its consulting and project management divisions in the third quarter that was only been offset partly by the continuing strong performance of its international development division.
Coffey said some of the revenue drop stemmed from project delays and cancellations, but others were a result of temporary events such as cyclones in northern Australia.
The company said it had seen improved performance in April and May and expected June to continue to show improvement, but it would below the levels achieved in the last half of the 2008 year.
"It is pleasing that the UK Geotechnics business, in the last month, has almost returned to a break-even position after suffering losses for all of this year to date. We believe this contract will support continuing improvement in this business," it said in the statement.
"The commercial property and mining sectors are still slow but we remain optimistic about our strategies in these sectors, as we work with clients to assist them during these challenging times.”
Coffey said the recent federal government stimulus packages now were having a positive effect.
"The company has won several major contracts in the education and housing sectors and we are currently involved in many other major project bids being delivered under the infrastructure spending packages, much of which is still planned for the months to come.
"We have also won numerous other projects with governments around the world, and in the LNG industry, where several major projects are under development."
Coffey said directors had approved its next three year plan, which would emphasise building the company within current geography.
"We will focus on organic growth and plan to fund this from existing capital and debt facilities," managing director Roger Olds said.
“The cost reduction program commenced in January 2009 and to date some $8 million of annual cost savings have been achieved. An internal focus remains on reducing expenditure, with plans to save $20 million of annual costs through common systems, and other efficiency gains."
The shares slipped 3c to $2.07.
Internet service provider, iiNet Ltd, says it expects "strong growth" for financial 2009, with expected full-year net profit of $25 million, up from the 2007-08 net profit of $23.3 million.
iiNet said in a statement to the ASX yesterday that it expected revenue would be more than $415 million for the financial year ending June 30, up from February’s forecast of over $400 million.
Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to be over $65 million.
"The anticipat
