The Australian December half profit reporting season wraps up today and tomorrow with 15 major companies due to report, along with a pack of small miners and industrials, and loss-makers like Slater and Gordon and small retailers, Temple & Webster and Surfstitch.
The losses and poor results from the smaller companies will tend to overshadow an improvement in many results.
The AMP’s chief economist, Dr Shane Oliver “says consensus profit expectations for the overall market for this financial year have been revised up by around 2% through the reporting season to a strong 19%.”
This improvement has been driven by the rebound in resource company results, such as BHP, Rio Tinto, Whitehaven Coal, OZ Minerals, Santos, Woodside, while the banks such as the CBA, Bendigo and Suncorp’s Metway have battled, but seem to have come through in good shape.
We will learn more in April when the NAB, ANZ and Westpac report their interims.
The few major groups reporting today include QBE, Harvey Norman and Lend Lease.
Many of the small companies will be slipping out weak to appalling results, dripping in red ink (Slater and Gordon, Temple & Webster and Surfstitch, Cardno, Yancoal, possibly Austal).
Fund manager and mortgage group, Yellow Brick Road is one small company that will be watched closely to see if executive chair, Mark Bouris can reverse the slide into losses in 2015-16, the second annual loss in a row.
Dr Oliver says December half profit reporting season is now just over 90% done.
He says results remain consistent with a strong return to profit growth “but as always we have seen more soft results as the reporting season has progressed.
"46% of companies have exceeded earnings expectations compared to a norm of 44%, 59% of companies have seen profits up from a year ago and 59% have increased their dividends from a year ago.
But reflecting the strong rally in the market ahead of the results only 50% of companies have seen their share price outperform the market on the day they reported as a lot of good news was already priced in,” Dr Oliver reported.
"This upgrade has all been driven by resources companies which are on track for a rise in profit of 150% this financial year reflecting the benefits of higher commodity prices and volumes on a tighter cost base.
"Profit growth across the rest of the market is likely to be around 5% with mixed bank results and constrained revenue growth for industrials.
“Outlook comments have generally been positive and as a result the proportion of companies seeing earnings upgrades has been greater than normal.
“The focus has remained on dividends with a high 79% raising or maintaining their dividends. Share buybacks though have been less popular unlike a year ago.
In the US the reporting season all but over with only a handful of companies issuing results, though a couple will be of interest – Costco, the big US bulk retailer (with operations in Australia) is down to report, Best Buy, an electronics retailer, Revlon and UK media groups, ITV and Trinity Mirror.
Luxottica group, the big Italian glasses and frames group a is also due to report. Global marketing and advertising giant, WPP is down to report on Friday night, our time.
