Four major corporates held AGMs around Australia yesterday and the contrast was quite amazing between three and one, property manager and developer, Lend Lease.
Shareholders at the Lend Lease AGM got lots of words, but no hard figures or forecasts.
"Lend Lease does not provide specific short term earnings guidance, however we continue to be positive about the Group’s operating outlook and remain focused on optimising total security holder return," chairman David Crawford told the meeting.
It’s a usual stance, but in complete contrast to the other AGMs where Fairfax provided some guidance, Mirvac (a 10% rise mentioned) and at BlueScope Steel which warned of a tough first half and told shareholders to expect a "break-even interim", which would mean a loss after tax
They were far more informative than the upbeat pitch to Lend Lease shareholders.
Shareholders in BlueScope Steel were told that tough trading conditions caused by flat prices for steel, high raw material costs, the high value of the Australian dollar and softer demand were combining to dampen performance expectations for the first half.
Speaking at the company’s AGM in Melbourne, BlueScope Steel Chairman, Graham Kraehe told shareholders to expect the first half FY2011 to be challenging.
"Export hot rolled coil prices have remained flat while raw material costs have increased to very high levels and we have a stronger A$, " he said.
"The cumulative negative effect of these factors extends across our export revenue, Australian commodity product sales and the translation of overseas earnings back into A$.
"This has been exacerbated by softer demand in our Australian markets, particularly the industrial segment.
"In contrast, our China and ASEAN operations contributed record profits in 2010. We will continue to expand in these fast growth economies, where we already have an enviable footprint, and expect to see another solid performance from this region in FY2011," Mr Kraehe said.
Despite the warning, BlueScope shares perked up, rising to $1.965, up 9c, or nearly 5% on the day, despite the gloomy outlook.
CEO Paul O’Malley also told the meeting that flat steel prices were continuing to hit the company.
"We are unlikely to see a sustained recovery until we see improved economic conditions in the developed economies of the US and Europe. We need to see global steel capacity utilisation exceed 80% compared to 75% at the end of September, to achieve higher pricing, reflecting the real cost base of producing steel."
The company was having to deal with high raw material costs (mostly coking coal and iron ore) because of the boom internationally: "The move to quarterly pricing and significant price increases has largely been driven by the demand for raw materials that results from increased Chinese steel production. Raw material prices have increased fivefold since 2002 and now account for 65% of our Australian steelmaking cost base, up from 40% six years ago."
The stronger Australian dollar was hurting: "The A$ has appreciated by approximately 20% since July 1, reflecting the continued commodity boom in Australia and the weakness of the US dollar".
And weak demand: "We have seen a recent softening in Australian domestic demand, particularly in the industrial market segment. However, we are still seeing some positive momentum in our building markets".
Mr O’Malley said that when the company released the 2010 results in mid-August he spoke about the impact of these issues in the first quarter.
"These factors have continued to impact the second quarter.
"The Company now expects a breakeven Net Profit After Tax (NPAT) for the first half, before any potential inventory Net Realisable Value (NRV) adjustments.
"The potential NRV adjustment is being driven by steel margins, the stronger A$ and softer domestic demand in Australia, and may lead to a small reported Net Loss After Tax for 1HFY2011.
"It is too early to provide an assessment for 2HFY2011 and we will update the market when we release our 1HFY2011 results," Mr O’Malley told the meeting.
Contrast that upfront commentary with the platitudes handed out at Lend Lease’s AGM.
Shareholders were told the outlook for the current financial year was "very positive" after the property developer had secured a "significant pipeline of opportunities" in 2009/10.
Lend Lease says it enjoyed its most successful year for some time in 2010, winning several major projects.
"We now have an enviable global pipeline of opportunities which will allow the group to deliver growth over the medium term," chairman David Crawford told the AGM in Sydney.
"This includes the major urban regeneration opportunities in Australia and the UK as well as a highly sought after mixed use opportunity in Singapore."
Chief executive Steve McCann said Lend Lease would focus on delivering on those projects in the current financial year.
"The outlook for Lend Lease is very positive
