The December half profit reporting season ramps up this week with 80 major companies due to report – 13 on Tuesday alone – after last week’s solid end with big results from the Commonwealth Bank and Telstra and Rio Tinto’s buyback and higher dividend.
The Rio buyback had been long tipped, but its confirmation sparked a $40 billion surge on the local market on Friday, even though some of the results were average.
Among the companies reporting this week are Aurizon Holdings Limited, Bendigo and Adelaide Bank and Charter Hall Retail. Amcor, Coca Cola Amatil (full year and a weak result), InvoCare, Seek Limited and Sonic Healthcare, Arrium (a big loss after the write downs and restructuring announced last month), Asciano, IAG, Seven West Media, Toll Holdings and Woodside Petroleum (full year and watch for capex cuts and write downs) are scheduled to issue results.
Insurer, IAG reports, as does, AMP, Fairfax Media, Federation Centres, Origin Energy (will there be write downs in Queensland), Super Retail, Macmahon Holdings, The Reject Shop, Tatts Group, Virgin Australia (it will be a solid profit) Wesfarmers, Fortescue, Adelaide Brighton, Crown Resorts (a weak result is tipped), James Hardie, Medibank Private (it’s first as a listed company) and Santos (full year and a loss and last week’s write-downs).
Macquarie Group has an operational briefing due for tomorrow (we know the bank has already upgraded its full year estimate,) while the ANZ also releases its first quarter trading update tomorrow as well.
The AMP”s chief economist, Dr Shane Olive says; “consensus earnings growth expectations for this financial year are near zero, driven by an expected 25% drop in resource profits on the back of the slump in commodity prices.”
"However, the rest of the market is much stronger with industrials expected to see growth of around 10% and banks to see about 8% growth. Expect ongoing cost cutting, help from the lower $A and strong dividend growth to be key themes,” he wrote at the weekend.
Key themes have been weakness amongst resources shares (on falling commodity prices) and mining services companies (on falling mining investment), continued strength for the banks, ongoing cost control and solid growth in dividends in most sectors – but not the mining services companies.
Looking at the reporting season so far, Dr Oliver says "It’s early days in the Australian December half profit reporting season with just less than 20% of companies reporting to date and there is also a tendency for the good results to come out early, but so far so good.
“60% of results to date have beaten expectations against a norm of 45%, 76% have seen profits rise from a year ago, 54% have seen their share price outperform the day results were released and 73% have increased their dividends,“ Dr Oliver wrote.
