The Australian June 30 reporting season steps up this week, with a handful of ASX 200 companies releasing their full or half year figures, while in the US and Europe, the reporting season continues after last week’s mixture of big surprises from some tech giants, and more shocks from the oil sector.
Up to Friday, US companies were doing a little better than expected – thanks to solid figures from the likes of Amazon and Facebook. But the June quarter will probably see another fall in profits and revenues.
But in Europe, companies in the Stoxx 600 index – the key continent-wide share price measure, earnings are down more than 11%.
And figures from major Asian economies such as Japan are weak as the stronger yen and mixed domestic investment and consumer spending hit exports and sales.
In Australia, after the downgrades since the interim reporting season in February, the market is looking for a weak set of earnings with few positive surprises.
Consensus expectations for 2015-16 earnings are now for an 8% decline in profits driven by the 50% fall in resources earnings and a 2% fall in bank profits leaving profits in the rest of the market up just 1%, according to a weekend note from the AMP’s chief economist, Dr Shane Oliver.
He says key themes in the reports are likely to be: “improved conditions for resources companies following a stabilisation in the iron ore and oil price; constrained revenue growth for industrials although improved business conditions according the NAB business survey may help; ongoing cost cutting; continuing headwinds for the banks; and an ongoing focus on dividends.”
Wednesday will see the guarded optimism about the resources companies tested with the release Rio Tinto’s half year figures.
It will give us a very good idea if the company has managed to benefit from the solid rebound in iron ore prices since January, and what the company sees happening in the second half of the year.
Also reporting this week will be contractor, Downer EDI, regional financial group and insurer, Suncorp, gaming group, Tabcorp, mortgage insurer, Genworth Australia, tech darling, Atlassian, kerry Stokes’ duo, Seven West Media and Seven Group Holdings, as well as Virgin Australia (which have more details about its whacking great loss and restructuring program mentioned in last week’s update).
Seven West Media will give a good idea how the depressed broadcast media sector is going after the weakest 12 month ad revenue figures for 8 years. Management and some of the board though will be off to the Rio Olympics after the results.
It should also detail a round of retrenchments and redundancies at the West Australian newspaper, while it will learn this week if the ACCC will allow it to buy the loss-making Sunday Times and associated website from News Corp Australia. That will give Seven a near monoply position in the Perth and WA media.
In the US and Europe, the reporting season tips over and is now heading towards the end after last week’s massive list of reporting companies.
Reuters said on Friday that aggregate second-quarter earnings of S&P 500 companies are now expected to fall 3.7%, worse than the 2.8% decline predicted on Thursday. That was after deeper than expected drop in profits by ExxonMobil and Chevron on Friday (the latter surprised with more write downs – $US2.8 billion).
And FactSet analysts say the reporting season is a bit better thane expected. It says the so-called blended rate of revenues, which combines actual results and analysts’ estimates is better than expected.
FactSet says 63% of companies in the S&P 500 have reported June quarter earnings so far. FactSet is also reporting a 3.8% drop year over year in the blended rate for earnings. That compares with market consensus forecasts for a 5.5% fall as of June 30.
Reporting companies in the US, Europe and Asia this week include Transocean, Diamond Drilling, Time Inc, AMC Networks, 21st Century Fox, Fluor, BMW, Siemens, Allianz, Heineken, HSBC, Standard Chartered, Proctor and Gamble, Tesla, Time Warner, Hanesbrands, Archer Daniels Midland, Discovery, KraftHeinz, Viacom, Liberty Global and Liberty Media, Trinity Mirror, LinkedIn, Commerzbank, Acer, Kepco, Credit Agricole, Societie Generale and UniCredit.
Of those, the figures and commentaries from HSBC and Standard Chartered will be of greatest interest seeking both banks remain tainted by claims of rate fixing, money laundering and sanctions busting in recent years.
