Shares in the Kerry Stokes-controlled Seven West Media jumped sharply yesterday as the company sprang a surprise upgrade for 2020-21 earnings and revenues.
The company told the ASX in an early morning release that it will beat consensus estimates for the June, 2021 financial year; news that saw the shares rise more than 23% to 49.5 cents.
That’s still well under the most recent peak of 53 cents on April 26.
Seven West said that its advertising revenue for the June quarter is estimated to be up more than 45% and there are “early indications of ongoing positive momentum into the September quarter.”
“The group now expects underlying EBITDA (earnings before interest, tax, depreciation and amortisation) to be between $250 million and $255 million in FY21 including the temporary benefits outlined in the first-half results, compared to analyst consensus of $235 million to $245 million,” Seven West said in the statement.
The company indicated that increasing audience share has also been a contributor with its increased market share translating into revenue gains.
“Seven has won 12 of the 24 weeks in total people so far in calendar 2021 and is on track to win a 13th week. For the ratings year, Seven has won seven out of 16 weeks so far and is on track to win an eighth week,” the company said in its upgrade.
The broadcaster said it topped revenue share for linear TV in April and said it is highly confident in Seven’s schedule for the next six months which includes the Olympic Games in Tokyo and the Ashes Test series.
Digital earnings have continued to grow strongly with EBITDA expected to rise 130% to $60 million this financial year and more than double in the 2022 financial year.
The company said cost guidance remains at the lower end of the range provided at its half-year results in February.
The company posted a net profit of $116.4 million for the fiscal half year compared to a $49.4 million loss a year earlier.
In February Seven West said it had found an additional $30 million in cost savings on top of the $170 million already identified. It also promised to reduce debt from $329 million.
Seven West said its net debt is now projected to be in the range of $240 to $250 million (that’s after cash on hand).
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Shares in annuities group Challenger bounced around yesterday after the company confirmed 2020-21 earnings would not be any higher than the lowered guidance figures from earlier in the year and forecast only a modest a rise in 2022 earnings.
Challenger reaffirmed that it is expecting normalised net profit before tax at the bottom end of its guidance range of between $390 million and $440 million this year.
For 2021-22, its normalised net profit before tax is expected to grow to between $430 million and $480 million.
Both forecasts see the company’s favoured profit measure falling short of 2019-20’s figure of $507 million and the figures for 2019 ($548 million) and $547 million for 2017-18.
The shares fell initially to a day’s low of $5.32 (down more than 7%) before edging back to finish at $5.55, down just 1.7% for the day.
“Over the past three years we’ve faced a confluence of disruptive external events and have emerged in strong shape, with a significant capital buffer, a market leading Funds Management offering and diversified revenue flows in our Life business,” Mr Howes said.
“We are now continuing to build on our strong foundations to capture the opportunities the high growth retirement market presents.”
Mr Howes said that, when completed, the acquisition of MyLife MyFinance bank will be a key focus for the business as it creates an opportunity to further diversify the product offering for customers and accelerate Challenger’s strategy to build direct customer relationships.
Mr Howes said: “As the clear leader in retirement income, Challenger has a real opportunity to play a more meaningful role in the lives of our customers.”
“Through our complementary businesses, including the bank, we will be able to provide Australian retirees with a range of products that support their financial security for a better retirement.”
To underpin Challenger’s growth strategy, the group has revised its target capital range to 1.3 times to 1.7 times the APRA Prescribed Capital Amount (PCA), extending the upper end of the range and outlining an intention to operate at around 1.6 times.
“Our strategy to grow sees us building further on our already strong retirement brand and customer franchise. It’s essential we protect this valuable asset to support our long-term growth and success. To this end, we are enhancing our risk settings, reflecting our commitment to maintain our strong capital position.”
Consistent with Challenger’s higher capital levels, the group has also revised its pre-tax return on equity target to the RBA cash rate plus 12% (making the target 12.1%).
“This approach provides an outcome for shareholders that better balances their exposure to market shocks on one hand and returns on the other,” he said.
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Shares in NSW coal miner Whitehaven Coal fell more than 13% at one stage yesterday after it revealed its 4th production downgrade this year.
Up to the opening of trade, Whitehaven shares had enjoyed a very happy June, 2021 with a 30% jump to $2.04 at the close on Wednesday thanks to a surge in global thermal coal and soft coking coal prices which confirmed the negative impact of China’s bans on Australian coal imports had vanished for the time being.
But out came the update, or rather downgrade and down went the shares to a day’s low of $1.77 before they steadied and edged higher to close down more than 11% at $1.805.
Whitehaven told the ASX on Thursday morning that the new estimate for the year to June 30 is 20.4 million tonnes – down from a range of 20.6 to 21.4 million tonnes previously thanks to a disrupted performance at the Narrabri mine in NSW, and a softer performance at Gunnedah
But Whitehaven reaffirmed guidance for total managed coal sales and unit costs.
The miner said the trim was the result of downtime as it completes engineering works at Narrabri to support the longwall operation, following a recent geological event (which triggered the earlier cut).
Overhaul works on the longwall and machinery repairs are expected to be completed in the next week, according to the company.
Overall though a stronger-than-expected production performance at its Maules Creek mine should see output around 12.5 million tonnes.
Combined with production output of 3.8 million tonnes at the Gunnedah Open Cuts – down from a range of 3.9 to 4.1 million – total open cut production is expected to deliver 16.3 million tonnes in the year to June 30.
The strong rise in thermal coal prices this year – will offset the impact of the lower production guidance. The current Australian thermal coal price is around $107 a tonne, up 16% from $92.22 last month and 104% from the Covid-hit $52.50 one year ago.
