The Australian December half earnings reporting season finished today with several large groups reporting interim of full year results See the Diary).
But the real story will again be the flood of poor reports, mostly from small miners, that will be released in their hundreds during the day and into this evening.
Failure to release reports could see the company involved suspended by the ASX.
QR National and QBE will both release reports today and both are expected to show falls.
QBE has already warned of a fall of 30% or more in profit, QR National will be releasing its first profit report since listing last year. It faces pressure on earnings from he flooding in the Queensland coal fields in December, and the floods in January will hit the second half result as well.
Apart from these and the mass of other reports (also watch for Downer EDI), the reporting season is over.
Last week saw confirmation that retailers were doing it tough with Woolworths reporting a modest increase, Harvey Norman a 17% and David Jones a small fall in sales for the second quarter and first half.
The AMP’s chief strategist, Dr Shane Oliver says the "good news is that the results have been better than feared and there were no major blow ups."
He said "most importantly 68% of companies have reported a rise in profits on a year ago."
"However, only 37% of companies have come in above expectations, which is down slightly on the August reporting season last year and well below the norm over the last seven years of 46% (See graphs below),
"What has been disappointing is that the ratio of positive to negative outlook statements has slipped from 4 to 1 earlier in the reporting season to now around 1.5 to 1."
Dr Oliver said the reporting season had two apparent themes.
First, he said, "he results confirm the three speed economy with resources companies shooting the lights out with 50% plus profit growth, banks doing well, but the rest of the market struggling with low single digit profit growth."
Second, Australian companies are starting to return cash to shareholders via increased dividends or share buybacks.
Dr Oliver said 78% of companies increased their dividends from year ago levels.
And that statistic seems to be at odds with much of the gloom and doom around the market from some brokers and many CEOs.
It seems some companies are talking things down, while lifting payments to their owners. The boards must be confident that things are not THAT tough to be increasing payments to the real owners.
Even if the increase is just half or 1c a share, its a big message to shareholders (especially super funds), that the outlook is not as tough as we might think, even if some companies have withheld forecasts until later in the year.
With corporate cash holdings at record levels and gearing low there is plenty of scope for further increases in dividends and buybacks going forward, both of which are positive for the share market.
In the US, the December quarter and 2010 reporting season is almost at an end.
Thomson Reuters says that of the 475 companies in the S&P 500 that have reported earnings to date for the fourth-quarter of 2010, 71% have posted results that beat Wall Street’s expectations.
Many companies in the US have lifted dividends and/or started share buybacks.
US banks are prevented from buying back shares or making or increasing dividends by regulators who are currently testing some of the country’s biggest financial groups to see if they can withstand a return to higher shareholder payments.
