The highly-profitable Australian June profit reporting season heads into its final week with 100 major companies reporting their results but attention will be on the steady surge in Covid Delta cases and tightening restrictions in Sydney and Melbourne in particular.
Last week saw 90 companies report, led by BHP, plus capital position updates from Westpac and ANZ.
Results were solid to very good and extraordinary from BHP. Apart with its changes, especially the ending of its dual structure with London, the market reaction to the higher dividends and occasional buybacks was good but other factors impeded – the fall in iron ore prices, rising Covid Delta infections and weakening activity in China.
But the rising tide of Covid cases and worsening situation in Sydney and Melbourne, plus the sliding iron ore and copper prices, saw the ASX 200 sold off for its biggest weekly loss in seven months.
This week’s results include Ampol (half year), NIB, Altium and Sonic Healthcare (Monday); Ansell, Oil Search (half year), Scentre (also half year), Seek, Kogan and Boral (Tuesday). Wednesday sees results from APA, Nine, Seven Group, Lovisa, WiseTech and Worley; Thursday sees figures from A2 Milk, Aspen, Eagers (half year), Flight Centre, Qantas, Ramsay and Woolworths. Wesfarmers, BWX, Peter Warren and Village Roadshow report on Friday.
Outlook statements are likely to remain cautious given the uncertainty posed by lockdowns.
While the lockdowns are weighing on outlook statements with many companies providing no guidance, the results have been strong.
The AMP’s chief economist Shane Oliver says that so far 44% of results have surprised on the upside, which is about normal, but 80% have seen earnings up on a year ago and 75% have increased dividends.
“The return of capital to shareholders will be big with dividend payments on track for a record $30bn which will exceed the August 2019 record of $27bn and adding to this is about $18bn in buybacks.
“Consensus earnings growth expectations for the last financial year have now increased to +50.5% from +49.1% at the start of the reporting season and those for the current financial year have only fallen from +8.6% to +8.2%.
“Resources are seeing a doubling in earnings and bank profits are expected to be up by nearly 60%. Dividend growth is coming in at around 57%,” Dr Oliver wrote in his weekend note.
