Gunns’ profit drop earlier in the week was a big shocker for investors, but apart from Tasmania, it was not a big deal for the rest of Australian business.
In contrast Transport giant, Toll Holdings, is a big deal, as the near 18% plunge in the share price was a big move yesterday.
More than $1 billion was wiped from Toll Holdings’ market value yesterday after the company revealed a worse-than-expected fall in first-half profit.
Toll’s shares were pounded in a market that turned south very quickly in the afternoon after news that Greece might have its credit rating cut for a second time.
Markets here and in Asia fell into the red very quickly. Toll’s might have been pushed along by fall.
Toll told the market that it’s looking at a 30% plus drop in profit.
Toll shares fell, then dropped very quickly, touching a low for the day of $7.00, before ending unsteady at $7.10.
That was a fall of $1.55, or 17.9%, for the day.
The reason for the fall was weak shipping and trade figures in Australia, especially in Asia where Toll has been expanding in the past couple of years.
Toll said net after tax first half earnings fell 32% at $107 million, down from $158 million in the December half of 2008.
The first half result included an adverse impact of $37 million in one off items.
Earnings Before Interest and Tax, and before those one off items were down 16%, at $224.1 million compared to $266.4 million in the previous period.
Toll managing director, Paul Little, said in a statement to the ASX that the company had experienced "one of the toughest trading environments for the logistics sector in many years".
Revenue fell 6% to $3.3 billion as Toll’s major customers traded down on the previous year.
“Much of the revenue shortfall generated a disproportionate impact on EBIT as our key express networks were unable to completely defray the impact of revenue shrinkage.
“As volumes return however, these higher yielding businesses will move quickly to higher levels of profitability.
“A pleasing element of these results is the strength of our EBIT margins across the Group which remain well above industry standards,” Mr Little said.
The company "confirmed revenue has recovered from the lows of the first quarter, and that the company expects this trend to continue over the remainder of the year," the company said,
Toll declared an interim dividend of 11.5c a share, unchanged from the figure for the previous corresponding half.
"Trading conditions in the Australian businesses improved progressively through the period (first half), and revenues for the first two months of calendar 2010 provide encouraging signs that this trend will continue," Toll said in a statement.
"The global resources business is continuing to see higher activity levels off the back of strong commodities demand.
"Our Asian businesses continue to experience flat trading conditions in most regions, and the global forwarding business is still facing the challenging conditions that are being experienced throughout that market segment.
"Overall, we would expect the group’s trading results in the second half of the fiscal year to be broadly in line with those achieved in the first half of the year.
Insurance Australia Group lifted earnings, as expected, in the December half year, as it updated the market a week or so ago.
Better returns from its insurance business (echoing Promina’s improvement for Suncorp), rising premiums and absence of any major natural disaster, were the major factors.
Rising returns (from higher interest rates) from its investment funds also helped boost the result.
IAG’s net profit for the six months to December 31 was $329 million, up from $4 million in the previous corresponding period of 2008, the company told the market.
A better guide was the improvement in its insurance result – a profit of $488 million – up from $227 million, representing an improved insurance margin of 13.4%, compared to 6.2%.
IAG shares rose, then eased in the afternoon sell off.
They still ended 3c higher at $3.98.
IAG also confirmed its guidance for the full year insurance margin, with CEO, Mike Wilkins saying he expected a further and steady improvement in operating performance over the balance of this financial year.
"As announced earlier this month, we now expect the group to achieve an insurance margin in the range of 11.5 per cent to 13 per cent for the full year, up from previous guidance of nine to 11 per cent," he said in a statement today.
IAG also expects full year underlying gross written premium growth of 3% to 5%.
"This revised outlook reflects both the stronger than expected first half performance as well as our expectation that the improvement in the group’s operating performance will continue during the second half, on the back of ongoing operating efficiencies and improved underwriting disciplines," Mr Wilkins said.
Mr Wilkins said, "Our significantly improved first half insurance profit demonstrates tha
