The June 30 profit season comes to a head this week.
Cut off date for the full year and an interim result is flexible, which in profit season can be late at night or early the following morning.
The results must be filed by the close of business on the last day of August.
So three days of reports, and many will not be good. In fact the bulk of reports will come from small mining companies which have a lot of red ink to play down.
The Australian market is down 5% so far this month, and most of that can be blamed on offshore nerves, especially in Europe and the US.
The impact of the profit season has been surprisingly muted.
Share buybacks have been used to boost share prices (Pacific brands and Hills are two good examples).
Among the last of the big companies expected to release results are Goodman Fielder, QR National, Harvey Norman, Lynas Corporation, Premier Investments and Paladin Energy (See Diary for a fuller list).
The AMP’s Dr Shane Oliver says that 70% of companies have seen profits up on a year ago, and thanks to a run of good results over the last week 38% of results have surprised on the upside compared to 28% on the downside.
But he says this "is down from the norm though of 45% upside surprise".
" What’s more, positive and negative outlook statements have been roughly matched which is well down from the last four reporting seasons which have seen more positive than negative outlooks.
"The good news though is that profit results haven’t been nearly as bad as feared.
"52% of stocks have seen their share price outperform the market on the day of their profit release as against 48% who have underperformed.
"A key theme has been subdued sales growth chopping into margins and necessitating job layoffs which are now accelerating.
"While profit growth for 2010-11 has come in at around 10% which is pretty much as expected this masks a huge divergence between the resources sector with 34% profit growth (highlighted by BHP’s record result), 10% growth for the banks but a 5% contraction for the rest of the market.
"Mixed outlook statements have seen earnings growth expectations for 2011-12 cut by around 2%, taking them to a still too high 13%,." Dr Oliver wrote on Friday.
Companies buying back shares included Hills Group, Pacific Brands, Newcrest, GPT, CSL, Rio Tinto, News Corporation, Bradken, Ansell, Stockland and iiNet.
The Commonwealth and Bendigo banks, both June 30 reporters, stood out with solid results.
The third quarter update from the NAB was solid, but Westpac and the ANZ were less than what had been expected.
But they will still earn record profits in the year to September 30.
BHP Billiton was the big disappointment as some analysts had factored in a new buyback after the company completed its existing $10 billion offer early.
But it still earned a huge profit, followed by Rio Tinto.
Macquarie’s Neale Goldston Morris said on Friday he sees the industrial company downgrades continuing for some time.
As expected, retailing was weak, with Woolworth’s low profit growth forecast for the coming year a measuring stick for the rest of the sector.
JB HI-Fi did well, but its outlook isn’t as confident as it was a year ago and sales growth remains weak to non-existent.
Restructuring in retailing was a feature, with the likes of Harvey Norman and JB Hi-Fi taking the axe to underperforming weaker brands.
Other chains have cut back, such as David Jones (which with Myer reports next month).
Both are reported to have cut hours and days for casual staff.
