Four profits yesterday from companies of varying sizes illustrate the current state of the Australian economy, and where the profits, revenue growth and pain are occurring.
The four companies selected – Flight Centre, iiNet, Fantastic Furniture and Monadelphous Group – all lifted interim payments to shareholders and saw strong rises in the value of their shares which easily topped the 0.8% rise in the wider market.
We already know that most resources companies – from BHP Billiton, to Rio Tinto, OZ Minerals and oil groups like Santos, and Oil Search yesterday – are doing well.
So are mining services companies, engineers and contractors (as the Downer result showed, see story below) and Monadelphous Group, a Perth based contractor, which reported yesterday.
The internet is wreaking great change on businesses of all types, from retail to services, health and education. The rapidly growing iiNet yesterday produced a solid first half result.
Retailing is a minefield, but it’s not a black hole, as many investors still think.
Fantastic Furniture turned in some decent figures yesterday to underline the point that well run retailers prepared to take tough decisions in tough times, can be successful.
And then there’s overseas travel which is all about rising disposable income, thanks to the resources boom, and the sustained strength of the Aussie dollar.
That’s Flight Centre’s performance in a nutshell and yesterday it reported a double-digit lift in first half net profit and upgraded profit guidance for the full year.
The travel agency group said net profit for the six months to December 31, 2011, was $81.6 million, up 15.7% from the first half of the 2010-11 financial year.
Total transaction value, or sales from airline and accommodation bookings, rose 9% to $6.18 billion, Flight Centre said in its profit statement yesterday.
Earnings before interest, tax, depreciation and amortisation rose 13.4% to $137.5 million from $121.3 in the previous corresponding half.
The group boosted interim dividend to 41c a share from 36c, a move supported by the solid outlook for the rest of the year with the upgraded profit guidance.
"Growth of this magnitude is a sound achievement for a company of our size and given the economic uncertainty in some regions," Flight Centre managing director Graham Turner said in the statement yesterday.
The company said the "solid" start to 2011-12 was built around a strong first quarter globally.
"Growth slowed in Australia during the second quarter, before rebounding in January," Flight Centre said.
In terms of current trading, Mr Turner said profit before tax (PBT) for the first seven months of 2011/12 was "in the order of 20-22 per cent higher’’ than during the previous corresponding period. It was also above the company’s initial full-year target of between 8% to 12% growth.
‘‘In light of our position after seven months’ trading, we believe it is appropriate to increase our full year profit target from the initial $265 million to $275 million range,’’ Mr Turner said.
‘‘We will now target a PBT between $270 million and $290 million, excluding any major abnormal items that may arise and assuming stable trading conditions.’’
That would be an improvement of 10 to 18% in pre tax earnings of $245 million achieved in 2010-11.
"Reaching our new full year profit target will not be a formality," Mr Turner cautioned.
"Economic conditions are volatile in some regions and we will need to build on the record second half result achieved last year."
Flight Centre said the grounding of Air Australia after the airline entered voluntary administration was expected to cost the company up to $1 million.
The company’s shares jumped 3.7% or 77c to $21.50.
iiNet reported a 17% lift in interim net profit for 2011-12 to $14.4 million, from $12.3 million in the first half of in 2010-11.
That would have been higher at $16 million but for the cost of the ongoing copyright case between iiNet and representatives of Hollywood studios, which is now awaiting a High Court decision
iiNet said in its statement revenue was up 11% to $365 million and EBITDA jumped 36% to $56.4 million for the December half year.
Interim dividend was lifted 20% to 6c a share (up 1c), fully franked, for the half.
The company said its customer base increase was aided by two large acquisitions during the period. iiNet recently purchased Canberra’s Transact Network and Adelaide-based Internode, which has customers across the country.
iiNet gained 40,000 from Transact and 190,000 customers from Internode, taking the total number of subscribers to 860,000, who are paying for a total of 1.7 million services.
Chief executive Michael Malone said in yesterday’s statement that the company was ready for the roll-out of the national broadband network and would take advantage of a recent regulatory decision which lowers the cost of buying Telstra wholesale broadband services.
"The recent acquisitions of TransACT and Internode have been key in building further scale, and taking iiNet’s broadband market share to around 16 per cent.
"These acquisitions further
