The Australian December half profit reporting season gets under way with a handful of companies due to report this week.
So far we have seen a small handful of reporters – mostly Listed Investment Companies like Australian Foundation Investment and Milton Corp. Those reporting in the coming week include Navitas, Downer EDI, Tabcorp, GUD Holdings, Whitehaven Coal and James Hardie.
Argo Investments, the country’s second biggest Listed Investment Company releases its interim report today, along with US controlled Genworth Mortgage. Capilano Honey is also due to release its report on Friday.
After two years of falling profits, this financial year is expected to see a return to earnings growth and the December half results are likely to confirm that, according to the AMP’s chief economist, Dr Shane Oliver.
Look for the likes of the Commonwealth Bank and its interim result on February 15, along with first quarter updates from the NAB (February 6) and the ANZ (February 17) to dominate investor thinking about the outlook for the year.
Steady earnings upgrades for resources stocks on the back of the rise in commodity prices has seen the consensus expectation for 2016-17 earnings growth rise to 16% from around 7% just after the last reporting season ended in August.
Resource company profits are expected to more than double, but profit growth across the rest of the market is likely to be around 5% led by food producers and retailers, utilities, telcos and building materials companies.
Key themes are likely to be: a massive turnaround for resources companies on the back of stronger global growth and higher commodity prices; constrained revenue growth for industrials with the September quarter economic slowdown not helping; continuing constrained revenue growth for the banks; and an ongoing focus on dividends.
Quarterly reports will come from OZ Minerals, Beach Energy and Iluka the stand out with their quarter and full year production and sales figures (in the case of OZ Minerals).
US December quarter earnings reports will continue to flow with over 100 major companies due to report, with tech giants dominating the week. Apple’s first quarter report is out Wednesday our time, followed by the 4th quarter reports from Facebook and Amazon.
Netflix, the other major tech growth favourite reported a sharp improvement last week for the 4th quarter, but analysts are tipping a weak report from Apple, but solid figures and growth from both Facebook and Amazon.
Apple, Facebook and Amazon are just three of more than 100 companies listed on the S&P 500 reporting results the week. Pfizer, ExxonMobil, Shell, ConocoPhillips and Ralph Lauren are also on the roster as are Eli Lilly, Siemens, Daimler, Symantec, Hershey, and Hanesbrands (which bought Pacific Brands last year).
Deutsche Bank’s 4th quarter and 2016 figures will also be watched closely for any more bad news.
