The Federal government has delayed its 2020-21 budget to October 10 from its mid-May timetable, while the states and territories are expected to follow suit and push their financial statements off to the same period.
Prime Minister Morrison told a Canberra media conference that it was agreed today that putting budgets together at this time is not something that any Commonwealth or State Government should be doing.
“As a result, we have already decided that we will not be now handing down a Budget until the first Tuesday in October,” he said.
“All other states and territories will be working to similar timetables. The idea that you can actually put together any sort of forecast around the economy at this time is simply not sensible.”
He said the government would be putting in place the necessary measures, with the support of the parliament, on supply and other continuances to ensure the proper functioning of government services and the continuation of vital programs.
He said he will meet with Opposition leader Anthony Albanese on Sunday, along with key members of both parties, to address practical issues around the functioning of the parliament – including insuring parliamentary chambers have fewer than 100 people in them at all times, as well as issues of supply and the funding of the operations of government.
Telstra has revised its critical strategic transformation plan to try and counter the adverse impact of the coronavirus pandemic.
As a result the company on Friday said it was freezing job cuts, speeding up its 5G mobile plans and warning it could miss its full-year 2019-20 forecasts.
The telco has been steadily reducing its workforce since announcing its T22 business transformation plan in mid 2018 as it tries to slash its fixed costs by $2.5 billion annually by June, 2022.
The telco has cut 6,000 jobs so far, but Telstra said on Friday that there will not be any further job reductions over the next six months. It said it is also beefing up its local contact centre workforce, with plans to hire an extra 1,000 contractors to temporarily field the calls flowing into its Australian centres.
The bulk of Telstra’s call centres, situated in Philippines, have been closed after the country enforced strict quarantine measures earlier this week. That has also impacted TPG Telecom where its main call centre is located in the Philippines as well.
The telco’s COVID-19 measures will also see it bring forward its spending on 5G capacity, with $500 million, originally due to be spent from the second half of 2020-21 to be spent in calendar 2020. The money will be deployed to increase capacity on its mobile network,
Telstra chief executive Andy Penn said it was important the company played its part in helping the economy.
“We are looking at every aspect of our business to see what we can do for our employees, customers, suppliers and the economy more broadly, while we maintain a focus on long-term value creation,” Mr Penn said.
“The most important thing is that as many businesses as possible are still here when we get through this crisis. While it is critical we maintain a strong position we also believe there are a range of additional initiatives we can undertake now to help support the broader economy.”
Mr Penn said while the full impact of the outbreak on Telstra’s financials was difficult to predict, he anticipated earnings to be in the range of previous guidance.
But he said growth in underlying EBITDA (earnings before interest, tax, depreciation and amortisation) will be at the bottom end of the range of zero dollars to $500 million, excluding the impact of the NBN.
“We know there will likely be more impacts for us from a financial perspective through this unprecedented period. It is a rapidly evolving situation and therefore, notwithstanding our outlook update today, we will continue to monitor the effect of COVID-19 on our business and make further updates if necessary,” Mr Penn said on Friday.
Telstra shares were down 6.1%, at $3.07, at Friday’s close.
BHP says it will start a mass hiring to bolster its Australian workforce during the coronavirus pandemic.
On Friday the miner said it would hire an extra 1,500 staff across a range of areas on six months contracts.
Roles will be created for machinery and production operators, truck and ancillary equipment drivers, excavator operators, diesel mechanics boilermakers, trades assistants, electricians, cleaners and warehousing roles across BHP’s iron ore, copper and coal operations.
The jobs will be offered through existing labour hire arrangements.
BHP’s acting Australia minerals business head, Edgar Basto said as part of BHP’s social distancing measures the company was introducing more small teams with critical skills to work dynamically across different shifts.
“The Government has said the resources industry is vital in Australia’s response to the global pandemic,” he said.
“We are stepping up and providing jobs and contracts. Our suppliers, large and small, play a critical role in supporting our operations. It is a tough time for our communities and the economy.
“We must look out for each other as we manage through this together.”
BHP said at the end of the six-month contracts it would look to offer permanent roles for some of the extra jobs and may increase the number of jobs available.
Friday’s announcement came a day after the company announced a $6 million fund to pay for labour hire workers’ sick leave and reduced payment terms to its small suppliers from 30 days to a week.
BHP shares rose nearly 1.2% to end at $27.01.
The bailout bill for Air New Zealand has leaped by more than 60% on the amount originally suggested on Monday.
The New Zealand government said yesterday it will provide almost a billion dollars to Air New Zealand as the national flag carrier experiences severe coronavirus-related turbulence.
The NZ government owns 52% of Air NZ and can convert the loans to shares and increase its stake if need be.
Earlier this week the size of the bailout was put at $600 million, but the cost has grown as the slowdown in aviation activity and more border closures (by Australia and Europe etc).
On Friday NZ Finance Minister Grant Robertson said up to $NZ900 million ($A890 million) could be loaned to the airline over the next two years.
“Air New Zealand has a unique and critical role in our economy and society,” Mr Robertson said.”Without this intervention, New Zealand was at risk of not having a national airline.”
Last week, Air NZ CEO Greg Foran revealed plans to cut his 12,500-strong workforce staff by up to a third. On Friday, Mr Foran said weekly flights were already down from 3600 to just 1500, with further falls to come.
“The airline is going to be a little bit smaller than what it was when we went in because there will be a little bit of time before demand returns,” he said.
Air New Zealand shares, which had been in a trading halt all week, dropped around 30% on Friday after the announcement.
The airline has also cancelled plans to issue an 11 NZ cents a share dividend as one of the terms of the loan.
Air NZ shares fell more than 36% on the ASX to $A1.
Solomon Lew’s Premier Investments reported a strong half-year result on Friday, with the company’s net profit for the six months ending January 25 rising 12.2% to $99.6 million.
That was struck on revenue for the half up 7.6% to $732.1 million. Comparable sales across the company’s brands, which include Just Jeans, Smiggle, Peter Alexander, Dotti and Jay Jays, rose 4.3%.
But directors warned of major disruptions ahead from the impact of the COVID-19 virus, with chair, Solomon Lew urging retail landlords to do their bit and give tenants lower rents or rent holidays.
But despite this approaching disruption, Premier declared a dividend of 34 cents share, up a cent from a year ago and fully franked, and payable on September 30. That’s three and a half months later than last year when the interim was payable on June 14.
The company did not provide any guidance, saying it was currently “impossible to predict or forecast the nature and impact of COVID-19”. That in itself was something of a guidance forecast – the company sees the virus hurting it and other retailers.
Premier said all seven of its brands delivered positive comparable sales growth, with sleepwear outlet Peter Alexander posting an 11.1% increase to sales, buoyed by “very strong” Christmas and January trade.
Premier says it is set to be hit by the coronavirus troubles hitting the rest of the retail sector, with the company warning that some of its markets had been “severely disrupted”.
“During the reporting period, Premier traded through Brexit uncertainty in the United Kingdom, protests in Hong Kong, devastating bushfires in Australia and a continuing fall in the Australian dollar. These pressures claimed many other retail businesses across Australia and the globe,” Mr. Lew said.
Premier shares rose 15% to $11.93, despite the warning about the second half.
Metal and electronics recycler Sims has pulled its second half guidance, blaming the move to the coronavirus crisis.
In mid-February Sims had told the market it’s second-half underlying EBIT (earnings before interest and tax) was expected to be between $40 million and $60 million. But it also warned at the time that COVID-19 was a risk to its outlook.
In a statement to the ASX before the market opened on Friday Sims said that “given the unprecedented world-wide response to slowing the spread of COVID-19, and the magnitude of the impact this will have on economic activity, it is prudent to withdraw” its second-half outlook.
“We’ve entered this environment with a strong balance sheet. While our focus has always been on disciplined capital expenditure and cost management, we will be particularly cautious during this period.
This will put us in a strong strategic position when the market normalises,” said Sims chief executive Alistair Field said in the statement.
The company said that despite the “significant contraction” in global economic activity, it was still making sales in all its divisions.
Sims shares fell 0.3% to $6.40.
The continuing spread of the virus across the US has forced building products manufacturer Brickworks to close five of its plants in the US state of Pennsylvania after that state’s governor ordered all non-life-sustaining businesses to close their physical operations to curb the spread of COVID-19.
“This means five of our 12 plants currently in operation will close. This includes our plants at Harmer, Bigler, Hanley, York and Mid Atlantic will close. Our remaining seven plants will remain in operation,” Brickworks told the ASX on Friday.
In Australia, Brickworks will delay the letting of major contracts for a new $125 million brick plant in western Sydney by three months because of the uncertainty created by the coronavirus.
Brickworks shares fell 3.2% at $15.37. The company is due to report its first-half results on Thursday, March 26, as will its biggest shareholder, Washington H Soul Pattinson.
Friday saw pathology group, Sonic Healthcare join the list of companies withdrawing their outlook for the 2019-20 financial year.
While the company’s pathology labs are playing a vital role in testing patients for COVID 19 in Australia, Europe, and the US, public containment measures like self-isolation and quarantine are likely to significantly cut the number of patients visiting its collection centres.
Sonic’s CEO, Dr. Colin Goldschmidt, said: in the statement “As a global laboratory company, Sonic is currently playing a crucial frontline role in combating the pandemic. Our laboratories in Australia, the USA and Europe are testing thousands of patients every day for COVID- 19, and we continue to increase our testing capacity to meet the needs of the communities in which we operate.
“Our expert and experienced management teams and medical staff are working with governments and other healthcare organisations to provide as much assistance as possible. We are also working closely with our major suppliers to ensure we continue to have the necessary materials and equipment for COVID-19 testing.
“Sonic’s trading results are consistent with the earnings guidance previously provided, however as populations in Sonic’s markets self-isolate or are quarantined there is potential for diagnostic testing volumes to be impacted in the short to medium term,” the company’s CEO said.
With a billion dollars of cash in its coffers (prior to the payment of its interim dividend), no debt payments due until calendar year 2021, Sonic said it was confident of riding out the storm.
Despite that assurance, Sonic shares fell more than 12% to $21.67 on Friday.
Shares in oOh! Media went into a trading halt on Friday at 84 cents after the company revealed it had started discussions with shareholders about a possible capital raising.
The move came after Webjet, the online travel operator, asked for a trading halt to allow it to raise capital to stave off collapse. Webjet will report back on March 23, oOH!Media the next day.
Earlier this week the business withdrew its earnings guidance due to weaker advertising market conditions caused by the coronavirus pandemic. oOh! Media told the market that while revenue was in line with the previous corresponding period, deteriorating conditions and uncertainty from advertisers had made full-year forecasts difficult.
oOh! Media fell 14% to 84 cents on Thursday
And in a bit of good news, the Foreign Investment Review Board has approved the $1.72 billion sale of Orora’s Australasian fibre business to Japan’s Nippon Paper Industries.
The sale of the Orora division, a major recycler of cardboard and manufacturer of corrugated boxes, will allow the ASX-listed company to concentrate its Australian operations on aluminium cans and glass bottles, where it is a dominant player on the local scene.
Orora told the ASX that the deal was now expected to be completed “over the coming weeks”. It has suggested it could return at least $1.2 billion of the sale proceeds to shareholders, although the current COVID-19 crisis could see it delay that move.
Competition regulator, the ACCC greenlighted the sale earlier this month.
