Didn’t see that one coming, did you, Mr Lew? In fact, it seems no-one did.
Has the struggling Myer department store chain stymied Solomon Lew’s attempt to grab control on the cheap by revealing to the ASX on Thursday that it now expects to post a second-half profit for the first time since 2017?
In what was an unexpectedly buoyant trading update yesterday, the embattled chain put some results on the board that will make it harder for Lew to unseat the board, as he is currently trying to do and elect his nominees.
Myer says its second-half net profit after tax would be between $4 million and $7 million, though this does not consider any individual once-off costs or other significant items.
This marks the first time Myer has reported a positive after-tax result across the second half since 2016-17 and means the company is set to report a full-year profit of between $47 million and $50 million, easily topping market forecasts which were around $33 million.
Myer said it saw a near 40% surge in second half sales (the size was helped by the low base a year ago when the lockdowns started as the first Covid wave hit).
That rise will see the company’s full-year sales up 5.5% to $2.6 billion, a dramatic turnaround from2019-20 when sales fell 15.8% because its outlets were shut for much of the period, especially in its biggest market in Melbourne.
Myer said its online business, saw a rise of 27.7% and now makes up 20.3% of total sales, or more than $260 million.
The question for the market now is whether this surprise update from Myer will allow the board to fight off Premier Investments and chairman Solomon Lew, who have been demanding the company update investors on its trading performance.
Lew has been pushing for the resignation of Myer’s board due to the company’s history of underperformance and acquired a larger stake in the business earlier this year in an attempt to reconstitute the board with two of his own directors and a group of new independent directors.
Based on past statements, the answer is now and Lew will continue his campaign and try stunts to divert attention away from the improvement.
Shares in Myer were up 9.5% to 51.5 cents, while Premier Investments closed up 3% to $27.15.
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Engineer and services contractor Downer EDI saw earnings bounce back in the year to June and has (as forecast) re-introduced its final dividend for the year.
The group saw a 9% slide in revenue to $12.2 billion, reflecting the sale of its mining and the Spotless laundries businesses as it refocused on urban services.
Earnings bounced back to a $181.6 million net profit compared to a $150.3 million loss the 2019-20 year, (which included $100 million of restructuring costs and a $165 million of impairments)
The board declared a final dividend of 12 cents a share which takes dividends for the year to 21 cents a share.
In its report to the ASX, Downer listed said it saw a near 13% rise in revenues from its transport revenue to $5.3 billion due to strong performance in the projects business in Australia and New Zealand, and continuing strong performance from road services in Australia.
The ending of most nbn contracts saw a 21.6% slide in utilities revenue to $2.1 billion while revenue from mining fell 29.3% to $1.1 billion as a result of contract completions and the ending of revenue from the businesses sold off.
COVID played the major part in the 14.1% slump in revenues (to $2.8 billion) in the facilities business as the virus hit hospitality and the division wore the loss of revenues from the laundries sale
“The decrease is mainly driven by lower costs due to disposal of businesses, contract completions, reduced activities in Hospitality and the benefit of restructuring activities made in FY20,” says Downer.
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Rain good, sun good, grain good for GrainCorp.
Shares in the grain handler leapt more than 12% at one stage on Thursday after a surprise upgrade to its outlook following good winter weather in major growing areas.
It was the second time GrainCorp has upgraded its earnings forecasts for the year to September 30 for the second time since May, due to booming crops and exports.
The company’s shares hit a high of $6.12 after it upgraded its range for 2021 underlying earnings to a range of $310 million to $330 million, up from a previous range of $255 million to $285 million.
Underlying net profit is now expected to be in a range of $125 million to $140 million compared to its previous upgrade in May to a range of $80 million to $105 million. GrainCorp will report its final FY21 results on November 11.
“We are pleased to upgrade our FY21 earnings guidance, which reflects the strong performance of our east coast Australian (ECA) grains business, following the bumper 2020/21 harvest,” CEO Robert Spurway said in the statement.
“We’re seeing excellent demand for high-quality Australian grain, particularly with recent weather-related crop production challenges in the northern hemisphere, and July delivered our biggest month of contracted sales on record,” Spurway says.
GrainCorp said it now expects to see total exports this year at the higher end of previous expectations of 7 million to 8 million metric tonnes.
Mr Spurway confirmed GrainCorp is preparing for the upcoming winter harvest with a strong maintenance and capital investment program. He noted that total FY21 capex was expected to be approximately $55 million, including approximately $50 million of sustaining capex.
He also confirmed that this increase, relative to the Company’s sustaining capex target of $35-45 million, is due to the additional storage capacity and other upgrades to the ECA network being made in preparation for another large crop in FY22.
“We’re hearing reports of good potential in the upcoming crop, based on factors including area planted, sub-soil moisture levels, season-to-date rainfall, and longer-term weather forecasts,” said Mr Spurway.
