It’s the final week for the June 30 profit reporting companies after good, results, higher dividends and the odd buyback, helped boost the Australian share market last week to a post GFC high.
All up some 50 major companies are due to report this week, and the AMP’s chief economist, Dr Shane Oliver says investors should realise that June results "are nowhere near as bad as many feared."
By the close last Friday an estimated $15.3 billion in buybacks and dividends had been announced this reporting season, up from around $13.6 billion for the same period, according to investment bank, CIMB.
That includes $1 billion buybacks from the likes of Telstra, Wesfarmers, and a string of higher dividends as well, from the likes of AMP, Rio Tinto, BHP, and of course Telstra and Wesfarmers.
In fact up to Friday 75% of reporting companies had filed the June 30 figures and the AMP’s chief economist, Dr Shane Oliver says the results are shaping up as the best for nine years according to some measures, such as companies surprising on the upside.
BHP dominated last week along with fellow miner, Fortescue, plus the National Australia Bank, Wesfarmers (and some small retailers) and a range of large industrials, such as Tatts, Arrium and the big utilities in AGL and Origin (both of which reported weak earnings).
This week will be dominated by the annual sales and profit figures from Woolworths on Friday (including big losses from its hardware adventures).
Besides Woolworths, several other retailers will report including Speciality Fashion Group, and Noni B, which will reveal a loss of around $8 million for the year, based on previous guidance.
Harvey Norman is down to report on Friday and by all accounts will reveal a solid set of figures.
Flight Centre will reveal the already forecast record result for the year to June, but the news won’t be good from Qantas and Virgin Australia, both of which will report bottom line losses, but will try and tell us how well the ‘underlying results’ were.
Ausdrill is another mining services company expected to reveal some bad news for shareholders week, along another drilling group, Boart Longyear. Drill Search also reports.
Resources services and engineering group, WorleyParsons reports late in the week and will be watched to see if this bellwether stock shows any signs of an improvement in business from the mining and petroleum industries.
And several media companies will report – Seven West Media, its parent, Seven Group, Nine Entertainment and Prime Media (Seven’s regional affiliate).
We can expect the number of poor reporting companies to rise as the week goes on, culminating on Friday and Friday night (the cut off for the reporting season is Friday night).
"In fact, the profit results overall are looking pretty good," Dr Oliver wrote at the weekend.
"53% of companies have exceeded expectations (compared to a norm of 43%), which is the best result in nine years; 71% of companies have seen their profits rise from a year ago (compared to a norm of 66%);
"67% of companies have increased their dividends from a year ago (up from around 60% in the last two years); and 58% of companies have seen their share price outperform the market on the day they released results, which is the best result in four years.
"Key themes have been continued strength for resources (notably Rio, although BHP disappointed), banks doing well (with a good result from CBA), ongoing cost control making up for still soft revenue growth and strong growth in dividends reflecting investor demand for income and corporate confidence in earnings prospects.
"Australian earnings for 2013-14 look to be on coming in a bit stronger than consensus expectations for growth of around 12 to 13%.
"This is being led by resources with a 28% gain, followed by banks up 10% and the rest of the market up around 4.5%.
"Consensus expectations for 5% earnings growth in the current financial year look a bit low to me," Dr Oliver wrote in a note at the weekend.
Here’s how the reporting season looked to close of business Friday:
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Source: AMP Capital
And looking at the companies down to report this week, they include:
Monday: BlueScope Steel, M2, Spark, Beach Energy, UGL, nib Holdings, Patties Foods, Orora, Caltex interim.
Tuesday: Pacific Brands, Boart Longyear (interim); Paladin Energy, Blackmores, McMillan Shakespeare Group, AWE Limited, Southern Cross Electrical.
Wednesday: Seven West Media, Seven Group, Lend Lease, Whitehaven Coal, Drillsearch, BC Iron, Boral, Flight Centre, Prime Media, WorleyParsons, Veda Group.
Thursday: Qantas Airways, Nine Entertainment, Ramsay Health Care, Perpetual, Billabong International, Adelaide Brighton, Noni B, Atlas Iron.
Friday: Woolworths second half sales and full year profit, Virgin Australia Holdings, Harvey Norman, Transfield Services, Horizon Oil and Persus Mining.
