On Tuesday we noted the earnings downgrade from Skilled Group (SKE) and warned to be on the look out for more warnings to surprise on the downside than the state of the market would have us believe.
Since then Caltex yesterday has warned of a weak start to the 2010 financial year while starting a $170 million cost cutting program.
Alesco Corporation, the building products group (see below) issued a warning as well about earnings for the current half, and yesterday Ten Network told us that the ad market was firming, but didn’t give any update on earnings.
Ten is probably being ultra cautious, seeing the company has been through the wringer this year of slumping sales and earnings, write-downs, losses and ending the relationship with its Canadian parent.
So the reticence on forecasting earnings was probably understandable.
Executive chairman Nick Falloon told shareholders at the company’s AGM the group was benefiting from its stronger 2009 ratings performance in renewal negotiations with key advertising buying groups.
"Network Ten has substantially completed its negotiations for 2010 with the major buying groups," he said yesterday. "These negotiations, coupled with our strong ratings performance in 2009, support our ongoing goal of achieving a 30 per cent share of revenue."
Ten shares closed down a cent at $1.53 yesterday.
Mr Falloon said there was a continued focus on cash flow management and cost control across the company.
"Television costs for the 2010 financial year will include a full year of ONE, which commenced in March 2009, the AFL Grand Final in the first quarter, and the return to a normalised level of sales and executive incentives," he said.
"On a normalised basis, we expect the increase in television costs (ex selling) in 2010 to be in line with CPI (consumer price index)."
He said Ten’s board continues to review the company’s dividend policy and will update shareholders on its decision with its fiscal 2010 first half results announcement.
But no figures. Ten, by the way, is reverting to interim and annual earnings reports instead of the quarterly statements it issued because it was 56% owned by Canwest which reported every quarter.
In October, Ten reported a 47.4% fall in normalised net profit to $47.17 million for the year ended August 31. Its statutory result was a net loss of $89.35 million and it did not pay a final dividend.
Alesco’s warning this week wasn’t the first from this company in the past 18 months, but this time it was a bit more surprising given there are positives for its major area of interest, building and construction.
But Alesco (ALS) warned that pre-tax earnings will drop 29% to just $30 million in the first half, thanks to the softness in the housing construction market.
The profit downgrade came three months after it told shareholders at the AGM that trading conditions had been subdued in the first quarter, but there had been an improvement in the second quarter.
“Trading in the second quarter of FY10 was significantly better than the first quarter with sales up by approximately 10%, quarter on quarter.
"In addition, EBITA more than doubled in the second quarter, reflecting the seasonality of the business, an improved contribution from the Water Products & Services division and the benefits from the appreciating Australian dollar,” the company said.
Shares in the company fell almost 9% Wednesday or 43c, to $4.49 and were weak again yesterday, losing a further 6 cents to $4.43, to take the two day fall to more than 10%.
Alesco said earnings per share for the full year would be between 34c and 36c, well down on the market’s expectations of 44.5c. Sixty per cent of its business is exposed to the housing construction and renovation markets.
The chief executive, Justin Ryan, said all divisions had felt the full impact of the global crisis.
Sales were down because of the weak housing markets in Australian and New Zealand.
Revenue from the company’s continuing operations fell by 15% in the first half.
"Based on preliminary unaudited management accounts, Alesco’s 2010 half year earnings before interest, tax, amortisation and significant items is expected to be approximately $30 million, down approximately 29% from the prior corresponding period.
"This comparison excludes the contribution from the Scientific & Medical division, which was sold on 30 April 2009. Earnings per share before amortisation and significant items are expected to be approximately 16.5 cents."
Based on this FY10 first half performance, ongoing operational initiatives and forecast market conditions into the second half, the Board expects EPS for the full-year to be in the range of 34 to 36 cents.
Revenue from the continuing businesses for the first half of FY10 was down approximately 15% compared to the prior corresponding period.
"Margins were adversely impacted by lower volumes, pricing pressures and the volatility of the Australian dollar against the US dollar and Euro, particularly in the first quarter.
"The continuing benefits from cost reduction initiatives have reduced expenses by approximately 13% compared to the prior corresponding period."
But higher effective interest rates following refinancing of the group’s borrowings in July 2009 and associated costs have resulted in financing costs of appr
