The Australian December half profit reporting season is now essentially complete.
While results have been a bit mixed over the last week or so, the overall impression has been strong, suggesting that earnings have now bottomed out and are on the way back.
Woolworths, AGL and Harvey Norman impressed in Friday’s flood of reports on the last day. Over 250 companies reported Friday.
Woolies, which balanced on January 3, could have reported this week.
QBE’s full year result was OK, but the shares fell because investors though it was a bit light on.
The AMP’s Dr Shane Oliver says that "after a 2 year slump, aggregate net profits are up about 12% on the June half".
Around 60% of companies have seen profit gains from a year ago (compared to an expectation of just 50%).
48% of results have exceeded expectations, which is just above the long term norm of 47%, and compares to just 27% a year ago.
Dividends are up about 4% from a year ago adding to confidence in the sustainability of the upswing in profits.
Dr Oliver says outlook statements have generally been positive, running nearly six to one in favour of positive comments, which is consistent with a continuing recovery.
As a result, there has been a modest upgrade to consensus earnings estimates of around 4% for 2009-10 and 2% for 2010-11.
Other key themes have been strong results for banks, downside surprises amongst some key defensive stocks (eg Telstra) and cyclical stocks starting to benefit from economic recovery.
Overall, the results provide confidence that profits will growth 20% or so over the year ahead.
More than 70% of S&P 500 companies have beaten earnings estimates so far for the fourth quarter, well above the 61%, according to figures from Thomson Reuters.
With 96% of S&P 500 fourth-quarter results already in, earnings are expected to increase 201.3% from a year ago, when the economic downturn fell off a cliff and badly mauled corporate results.
The March quarter figures start in five weeks time and the same comment will be made about the comparison with the first quarter of 2009.
That’s when really big losses happened, with the rebound in markets not starting until mid March and the economic rebound late in the second quarter.
Earnings have also been strong in Asia but more mixed in Europe.
