These were the hits and misses as reporting season ramps up

It’s been a bumpy week for investors but plenty of companies gave shareholders cause to celebrate. See who scored top marks and those that need to try harder next year.

Reporting season ramped up this week and it was a bit of a bumpy ride for investors.

IG market analyst Tony Sycamore said there had been hits and misses so far in the earning season. “Overall the reports seem to be coming in better than expected – we obviously had a fairly low bar set,” he said. “Companies with a good ability to pass on price rises have been standouts.”

Major consumer discretionary stocks are yet to report their earnings and these had the potential to surprise – both good and bad – in the coming weeks, Mr Sycamore said. “We know that interest rate hikes are biting, and we have seen that retail sales have been softer,” he said. “But with unemployment still at low rates, people are still able to buy things, but not to the extent that they have before.”

Biggest surprise

Commonwealth Bank became the first Australian bank to cracking $10bn in full-year profit this week. Cash earnings for the year ended June 30 were up 6 per cent to $10.16bn, boosted by elevated interest rates on home and business loans and beat the $10bn result expected by the market.

But analysts don’t expect it to lift earnings this year, due to mounting wage increases, technology costs, a further squeeze in margins and bad debt charges.

CBA's CEO Matt Comyn.

Market loved it

● Boral shares were the best performer on the S & P/ASX 200 on Thursday, rallying 8.5 per cent as investors gave a thumbs up boss Vik Bansal who has cut costs, increased prices and brought home a better-than-expected full year result for the building products giant.

Boral, majority owned by Seven Group, pushed off difficult conditions in construction to produce earnings before interest and tax from continuing operations of $231.5m, 10 per cent ahead of market expectations and forecast growth to $270-$300m in the current year.

● Nick Scali shares rocketed higher on Friday after it posted a record full-year net profit of $101m, up 26.1 per cent and well ahead of market expectations. The retailer said improved delivery times to customers, the addition of its recently acquired Plush-Think Sofas business and higher margins from improving supply chain synergies had bolstered its performance.

● Cettire has bolstered its credentials as one of the hottest retail stocks on the market after posting a massive swing into profitability built on a growing army of loyal and cashed-up shoppers willing to buy luxury brands like Jimmy Choo, Dolce & Gabbana and Gucci online. Its shares rocketed almost 20 per cent higher in two days after it posted a full-year net profit of $16m for fiscal 2023, a turnaround from a loss of just over $19m in 2022. The online luxury fashion and apparel retailer now boasts 423,000 active customers and is tapping into new promising customer bases with foreign language websites catering to shoppers in emerging markets such as Japan, China and Mexico.

Customer Stephanie Bellm at Nick Scali’s store at Fortitude Valley. Picture: Liam Kidston

What a shocker

Downer EDI shares tumbled 6.4 per cent as it disappointed investors with a $385.7m loss as the contracting giant continues to struggle with the integration of its takeover of cleaner and caterer Spotless, prompting hefty write downs. The result compared with a $164.8m profit last year. Its final dividend was cut from 12c to 8c.

Bringing home the bacon

Commonwealth Bank boss Matt Comyn’s pay packet was as impressive as the banking giant’s result. His pay jumped from $6.97m to $10.42m in 2023, mainly thanks to the doubling of his long-term variable bonus from prior years.

What they said

“The optics of the CEO getting a 50 per cent pay rise are not good, and how they handle that situation is a tough question,” Baker Young portfolio analyst Toby Grimm on Comyn’s pay rise.

Finance Sector Union National secretary Julia Angrisano said the CBA posted a record profit the 17 per cent pay increase offer over four years was a “pay cut in real terms given inflation”. “Very obviously, the CBA can afford to pay more.”

“Downer has a zero-tolerance policy in respect of any dishonest or corrupt conduct,” Downer EDI boss Peter Tomkins stating the obvious after the contracting giant spent most of the year embroiled in a Independent Commission Against Corruption (ICAC) inquiry.

“While our category is less discretionary, our customers are not immune to cost-of-living pressures and we experienced sales decline towards the end of the year as consumer spending slowed,” said acting Baby Bunting chief executive Darin Hoekman who revealed a 49.5 per cent slide in full-year net profit to $9.9m.

Building sector-exposed companies reported a mixed outlook.

Who else reported

Suncorp cash earnings surged 86.4 per cent.

Coronado Global Resource’s interim dividend disappointed

News Corp records second highest year of profitability

Rea Group says sellers coming back as house prices stabilise

AGL sees little power price relief over the next two years

AMP is targeting cost savings of $120m

QBE hit by ballooning costs

Baby Bunting profit slides as spending pressures grow

James Hardie warns about US housing weakness

What to watch out for next week

● Monday: Ansell, Aurizon, GPT, JB Hi-Fi, Lendlease

● Tuesday: Cochlear, CSL, Temple & Webster, Treasury Wine Estates

● Wednesday: Endeavour Group, Mirvac, Transurban, Vicinity Centres

● Thursday: Amcor, Blackmores, Goodman Group, Origin Energy, Seven Group, Telstra, Xero

● Friday: Allkem, Magellan Financial

Originally published as These were the hits and misses as reporting season ramps up