BusinessNow: Live coverage of financial markets and companies, plus analysis and opinion
Wesfarmers and Woolworths took the edge off a rough session for most market heavyweights, while Kerr Neilson has a warning for investors.
- Kerr Neilson’s warning to investors
- Legal sagas cost Nine $7m
- Supermarkets shore up market
- Citi slams banks on rates
- Miners stumble as stocks slip
- Woolworths shares hit 10-month high
- BHP is running hot and cold
Welcome to the BusinessNow blog for Thursday, August 25. Investors cheered Woolworths and Metcash, while the miners lost ground and the big banks’ attempts to justify holding back part of the RBA’s rate cut have been dealt a blow.
8.39pm:Gold falls as Fed eyed
Gold fell to a fresh one-month low in London, as investors awaited further clues on the timing of a rate hike from this week’s Federal Reserve meeting.
Spot gold traded down 0.13 per cent at $US1,324.20 in midmorning European trade Thursday, its lowest price since July 26, continuing a fall that began last Friday.
The US Federal Reserve will begin its annual meeting later on Thursday in Jackson Hole, Wyoming. Federal reserve chairwoman Janet Yellen will speak on Friday. Dow Jones
8.01pm: Woolies’ trolley wheels in motion
The ability to spot a corporate turnaround story is highly prized among fund managers, more so now that the price-to-earnings valuation of the Australian sharemarket has been stretched to a decade high by record low interest rates and value is increasingly hard to find, writes David Rogers.
Perpetual looked to be on a winner with its Woolworths stake on Thursday, as shares in the struggling supermarkets giant surged to a 10-month high. There seemed to be some opportunistic profit-taking as the stock pared almost half of a 7.6 per cent intraday rise to close up 3.9 per cent at $25.17, but those betting on a turnaround won’t be shaken. Read more.
7.33pm:Pepper Group spices up Italian connection
Pepper Group has revealed it is close to securing a long-desired beachhead in Italy, as the non-bank lender shot down suspicions a recent deal with Spain’s Banco Popular would eventually lead to a full takeover.
Reporting a 41 per cent jump in first-half adjusted profit to $23.6 million, Pepper co-chief Mike Culhane said the 50-50 joint venture with Banco to grow in the Spanish unsecured consumer finance market was a strategic play and had no takeover agenda. Read more.
7.10pm:China gears up in AI race
The acquisition this month by ride-hailing company Didi Chuxing Technology of Uber Technologies’ China operation was a reminder of how strong Chinese tech companies have become domestically at outmanoeuvring foreign rivals.
But the biggest buzz in China’s internet industry isn’t about besting global tech giants by better adapting existing business models for the Chinese market. Rather, it’s about competing head-to-head with the US and other tech powerhouses in the hottest area of technological innovation: artificial intelligence.
Venture capitalists have been pouring money into start-ups focused on AI, which broadly refers to efforts to make computers emulate human cognitive functions such as recognising speech or images. Chinese tech companies such as search giant Baidu have been investing heavily in the technology, and poaching high-level talent from foreign rivals. Read more.
6.29pm: What earnings season reveals
In this odd market, investors are pricing stocks for perfection – and really punishing those that disappoint,writes stephen bartholomeusz.
At face value the latest earnings season has been no different to its predecessors. Overall it modestly disappointed relative to market expectations, as reporting seasons tend to do. It does need to be seen in context, however, and the context isn’t normal.
It’s an odd market, driven by the historically peculiar negligible-to-negative official interest rate environment prevailing in the major jurisdictions, which has driven financial asset prices to unusually inflated levels and which has placed a premium on income over risk.
It is also a nervous environment, where disappointment – as occurred when the market responded, not to CSL’s guidance, which it met, but to its not out-performing it – creates an exaggerated response.Read more.
6.01pm:Mortgage stress still lurking
Indicators of mortgage stress may not be heading skyward, but low interest rates haven’t made the problem go away, a new survey shows.
Roy Morgan Research chief executive Michele Levine says the average level of mortgage stress has not risen much in the past few years as rising housing prices and loan sizes have been offset by falling interest rates “So the mortgage stress numbers are not showing massive increases,” she said on Thursday at the launch of a new report on financial stress.
The report showed that 18.4 per cent of home buyers with a mortgage were classed as “at risk” - that is, they would have trouble paying off their mortgage as planned - with three quarters of them likely to struggle even to pay the interest.
But the level of risk is greatly affected by income, Ms Levine said. Higher income earners are less likely to be at risk, and typically have larger loans.
“By the time you get to household incomes of $150,000, mortgage stress is just not really a serious issue.” So with only 0.4 per cent of those in the higher income group classed as at risk, a large proportion of the total dollar value of loans was not seen as at risk.
However Ms Levine said there were many people at the lower income end of borrowers who were at risk, meaning “very little dollars but lots of people”. “People with under $60,000 of income - 83 per cent will be at risk of not being able to pay off their mortgage, 68 per cent are at risk of not even being able to pay the interest,” Ms Levine said.
Finance sector researcher Digital Finance Analytics updated its analysis of mortgage stress this week and came to a similar conclusion.
“Contrary to what might be thought, whilst the ultra-low mortgage rates are easing the finances of some households, mortgage stress still exists, and it’s iron hand is being felt by more than 21 per cent of households,” DFA’s Martin North said.
And the Centre for Social Impact, in conjunction with National Australia Bank, published its report on financial resilience based on Roy Morgan Research data. The CSI report found one in nine adults were suffering high or severe financial stress or vulnerability.
AAP
5.37pm:Dollar lifts in late trade
The Australian dollar retained its strength on Thursday, even as several analyst forecast that the currency is more likely to fall than rise in coming weeks.
At 5.30pm (AEST), the Australian dollar was trading at US76.29 cents, up from US76.13c at the same time on Wednesday.
Many investors appear anxious to place larger currency bets ahead of a highly anticipated appearance by US Federal Reserve Chairwoman Janet Yellen on Friday. Read more.
5.25pm:Virgin codeshare gets ACCC tick
Virgin Australia has seen the extension of its codeshare alliance with Singapore Airlines receive preliminary approval from the competition watchdog, although for a shorter time period than sought. Read more.
5.09pm:CIMIC exits Nextgen for good
CIMIC is offloading its 29 per cent stake in Nextgen to Ontario Teachers’ Pension Plan, writes Supratim Adhikari.
Construction firm CIMIC is getting out of Nextgen Group for good, with the company offloading its 29 per cent stake to Ontario Teachers’ Pension Plan (OTPP).
CIMIC, formerly known as Leighton Holdings, is hoping to net between $190 million to $210m from the sale as the company fully closes the book on its telecommunications assets. Read more.
4.29pm:Stocks wilt into the close
The Australian sharemarket has faded into the close, ending well in the red despite a $1.25 billion jump in Woolworths’ valuation, writes Daniel Palmer.
At the closing bell, the benchmark S&P/ASX 200 index backtracked 19.8 points, or 0.36 per cent, to 5,541.9, while the broader All Ordinaries index retreated 22.2 points, or 0.39 per cent, to 5,631.4.
The session may have been lacklustre, but it didn’t stop Woolworths from shining as investors seemed content in early progress on a gruelling five-year turnaround plan.
The retailer lost over $1bn for the year, but talk of an uptick in comparable sales through the first quarter of fiscal 2017 as well as the confirmed exit from the home improvement space drove its shares up 3.9 per cent to $25.17.
At its peak in morning trade, Woolworths traded up 7.5 per cent. Read more.
4.05pm:Kerr Neilson’s warning to investors
Kerr Neilson, the billionaire founder of Platinum Asset Management, has warned a turnaround in central bank behaviour could be “dramatic and painful” once unconventional monetary policy ceases, writes Michael Roddan.
Mr Neilson, who founded the fund manager in 1994, said looking after people’s money had been “unusually difficult in an environment of central bank induced distortions” as the company booked a slide in annual profit and revenue.
The high level of redemptions prompted Mr Neilson, in his annual letter to shareholders, to plead with customers to maintain their faith in his company.
Over the year Platinum saws its funds under management plunge 15.5 per cent to $22.7bn, far below where it started the year -- at $26.9bn -- as more customers redeemed money than deposited.
3.55pm:David Jones doubles profit in 3 yrs
David Jones, under the ownership of South Africa’s Woolworths Holdings, continues to outpace the otherwise flat fashion and apparel sector in Australia after it boosted sales by 8.4 per cent for fiscal 2016 as customers reacted positively to the transformation of the upmarket department store which has included a greater emphasis on private label fashions.
The decision to buy David Jones in 2014 has also proved a winner for the South African-based retailer, with David Jones profit in 2016 of just over $200m more than double the $95m profit posted by the department store in 2013, its final year before it was taken over.
But David Jones hasn’t been immune to the turbulence blowing through the Australian fashion and apparel sector as the late start to winter and sliding Australian dollar crimped the department stores’ earnings growth.
Read Eli Greenblat’s full post here
3.40pm:Banducci’s long road ahead
Given that everyone who was interested already knew that Woolworths’ 2016 results would be overwhelmed by a tide of red ink, the $1.2 billion loss it reported shouldn’t have taken anyone by surprise.
The big unknown was whether there would be any signs of life within the core supermarket business, writes Stephen Bartholomeusz.
The Brad Banducci game-plan is at such an early and disruptive stage of implementation and has so many moving parts that it isn’t possible to draw any firm conclusions. There was, however, a tiny hint of optimism that he would have gleaned from his fourth-quarter numbers.
Read Stephen Bartholomeusz’s full analysis of Woolworths’ result
3.25pm:Fantastic shares surge on result
Furniture retailer Fantastic Holdings has leapt 11 per cent in local trade as investors cheered better-than-expected profit numbers and the declaration of a special dividend.
The positive showing came on the back of a challenging year that had seen the sudden departure of its chief executive in January and a profit downgrade last month owing to an unexpected impairment charge.
For the 12 months to June 30, Fantastic booked a 13.4 per cent decline in net profit to $11.4m despite a 9.4 per cent jump in sales revenues to a record $543.7m.
More to come
3.10pm:Legal sagas cost Nine $7m
The Nine Network was stung by an extra $7m in legal costs last financial year, as it secured the release of a 60 Minutes crew detained in Lebanon, and fought court battles with Bruce Gordon’s WIN Corporation and Kerry Stokes’ Seven Network.
Nine (NEC) revealed the legal costs in its fiscal year 2016 accounts today but declined to say how much of the $7m could be attributed to the 60 Minutes child-snatching disaster, which saw reporter Tara Brown and her crew spend two weeks in a Beirut jail.
The news came as Nine unveiled a $120.3m net profit, which was down by 7.1 per cent compared to last year.
Read Jake Mitchell’s full report
2.55pm:Mortgage Choice rides property boom
Mortgage broker Mortgage Choice has reported a 10 per cent lift in cash profit despite pointing to softness in the investor lending space due to a “blunt” approach from the corporate regulator, writes Daniel Palmer.
For the 12 months to June 30, the ASX-listed group (MOC) said its cash net profit rose 10.7 per cent to $20.5 million on the back of a record settlement result of $12.2 billion as the property sector remained in a bull market.
The company’s broader net profit edged up 3.6 per cent to $19.5m, while revenue climbed 6.8 per cent to $197.4m.
Read more
2.40pm:A Star performance as shares hit record
The Star Entertainment Group has hit a share price record ahead of its annual results tomorrow.
As Sarah-Jane Tasker writes, shares in the company are up slightly to $6.09, a record high for the casino operator. Its shares are also tracking well ahead of the market for the year to date, with Star’s share price rising almost 20 per cent, compared to the local bourse, which is up around 5 per cent
The share price rise today comes as Morgans initiated coverage of the company with a $6.90 price target.
In a client note titled, “Star shining bright”, Morgans’ analyst James Lawrence said he viewed the company as “attractive” compared to its rival, the James Packer owned Crown Resorts.
Read more
2.30pm:Supermarkets shore up market
It’s all about the supermarkets today on the ASX, with healthy gains from Woolies and Wesfarmers doing their best to offset weakness from most other blue chips.
At just before 2:15pm AEST the S&P/ASX 200 was 0.2 per cent weaker for the day at 5552.7 points.
Woolworths has jumped 5.2 per cent to $25.85 as its turnaround tale strikes a chord with investors, while Wesfarmers has bounced back 2.5 per cent to $43.68 after a 2.2 per cent loss yesterday.
The big four banks have given up between 0.4 per cent and 1.2 per cent, while Telstra is down 0.9 per cent and CSL has dropped 0.8 per cent.
The BHP Billiton rollercoaster has continued today, with the miner heading for a movement greater than 1.5 per cent for the seventh time in ten sessions.
Shares in the world’s biggest miner are down 1.8 per cent to $21.03, while Rio Tinto has lost 1.4 per cent to $49.14.
1.38pm:Flight Centre result ‘positive’: UBS
Flight Centre’s slight fall in full-year profit should be viewed as positive, according to UBS analysts, who say the $244.6m annual figure was in line with expectations.
“Overall a tough result but in-line with expectations and commentary around improving August trade and expectation for growth in FY17 (vs. mkt +2 per cent) should be viewed as a positive in our view,” analysts led by Ben Gilbert said.
“We wouldn’t expect market numbers to move much post today.”
UBS is hanging onto its ‘buy’ rating, which sets them apart from the majority, with Bloomberg data showing three buy ratings overall, eight ‘holds’ and two ‘sells’.
Flight Centre shares are 1.7 per cent higher at 1:20pm AEST, while the ASX 200 trades flat.
1.23pm:Mesoblast narrows loss
Stem cell company Mesoblast has narrowed its annual loss as it increases cost-cutting initiatives to fund a crucial trial for its heart failure technology, writes Sarah-Jane Tasker.
The Australian-listed company reported today that its net loss was $US4.1m, or US1.14c per share, for the 12 months of 2016, compared with US29.99c per share last year.
Shares in the company traded lower today after the release of the annual results, recording a 1.8 per cent decline to $1.38.
1.05pm:No respite from high power prices
Australians are unlikely to see any respite from high power prices over the coming 18 months as the market remains exposed to violent price swings, Moody’s has warned in a report on the local utilities sector.
The ratings agency said the continued volatility would have a significant impact on the industry, with opportunities presented to the most flexible utilities, Daniel Palmer writes.
Underpinning its assessment of the sector was the expectation prices would remain elevated as baseload capacity is withdrawn, structural market changes — including the expansion of renewables — are seen and as gas prices are pressured by a focus on exports.
Read more
12.43pm:MYOB heads for record one-day fall
Investors have rushed for the exits following MYOB’s latest results, despite the software company posting a net profit of $26m for the six months to June 30, compared to a loss of $65m in the same period last year.
MYOB’s results were broadly in line with Macquarie’s estimates and the broker is warning clients not to overpay.
“We believe MYOB is a high-quality, well managed company that deserves to trade at a premium to the market,” Macquarie says.
“However current valuation multiples largely reflect that premium, in our view.”
The stock is currently heading for its biggest one-day fall on record, after hitting a record high of $4.09 this week.
Macquarie has a neutral rating and $3.70 target price.
MYOB shares were last down 6.6 per cent at $3.80.
12.20pm:Amcor results get tick from UBS
UBS analysts sound upbeat on Amcor, despite full-year profit dropping 64.1 per cent to $US244.1m due to an accounting change for its Venezuelan business. Excluding significant items, profit was steady at $US671.1m.
“Good solid result in somewhat challenging conditions with operating margins higher across all divisions,” UBS says.
“Outlook commentary appears slightly better than expected.”
The broker currently has a neutral rating on the stock. Amcor shares were last up 5.6 per cent at $16.00 after earlier hitting a two-and-a-half month high of $16.14.
12.03pm:Blackmores shares sink further
Vitamin maker Blackmores continues to be hit on the Australian sharemarket as analysts warn the company’s outlook pointed to a “severe deceleration”, writes Sarah-Jane Tasker.
Despite the company yesterday recording an annual net profit of $100m, a 115 per cent increase on the previous year, investors have punished the stock on concerns about Chinese sales.
Shares in the company lost $31.25 to close at $129.50 yesterday and the share slide continued today, with the loss of a further 2.3 per cent to $126.48.
Goldman Sachs has responded to Blackmores’ annual results by slashing its 12 month price target on the company from $164.50 to $120.
Read more
11.47am:Banks slammed for keeping half rate cut
The big banks’ attempts to justify holding back half the Reserve Bank’s rate cut have been dealt a blow after new research claimed their overall cost of funding was “very similar” to the cash rate, writes Michael Bennet.
Weighing into the heated debate surrounding the banks’ response to the RBA cut, analysts at investment bank Citi today warned clients the banks were battling to explain their re-pricing of mortgages, which saw them hold back around half the official 25 basis point reduction.
While claiming the banks’ profitability was their “Achilles’ heel” in the debate, analyst Craig Williams said attempts to explain they they are intermediaries passing on higher input costs to borrowers was “also not offering much strength to the argument”.
Read more
11.28am:Is the uptrend over for Southern Cross?
Southern Cross Media shares surged as much as 16 per cent to an 18-month high of $1.42 in early trade, before paring much of the rise.
It looks to be forming a “gravestone doji” pattern on candlestick charts. If sustained by the close of trading today, this pattern will warn that the uptrend is finished. Southern Cross shares were last up 5.7 per cent at $1.30.
11.15am:Woolworths credit rating at risk - UBS
The 0.3 per cent lift in Woolworths’ same-store food sales in the first eight weeks of FY17 is “pleasing”, according to UBS, but consensus estimates for FY17 are too high and FY16 results weren’t good enough to alleviate the risk of a credit rating downgrade.
“We continue to believe consensus is too high for FY17 but expect the market to like the fact the FY17 year-to-date like-for-like sales of food has turned positive,” says UBS analyst Brad Gilbert, who has a ‘sell’ rating on the stock.
“Not a good result, in our view, but in line with UBS estimates. We continue to see risk to FY17 consensus and will seek clarity on measures to strengthen balance with our concern this result heightens risk to credit ratings.”
Woolworths shares were last up 6.9 per cent at $25.90.
Read the full news story on Woolworths’ $1.23 billion loss.
11.05am:Investors cheer Woolies CEO comments
Woolworths CEO Brad Banducci told investors in a conference call that his firm’s recent sales gain “isn’t a flash in the pan” and “we’re starting to get consistency”.
This will be music to the ears of investors, such as Perpetual, who are betting on a turnaround in the supermarkets giant. WOW shares were last up 7 per cent at $25.90.
10.55am:Miners stumble as stocks slip
The Australian sharemarket has stumbled in early deals as a stunning rise in Woolworths’ share price was offset by weakness on global markets overnight as commodities backtracked.
At 10.20am (AEST), the benchmark S&P/ASX 200 index eased 13.2 points, or 0.24 per cent, to 5,548.5, while the broader All Ordinaries index weakened 15.2 points, or 0.27 per cent, to 5,638.4.
BHP Billiton slid 2.1 per cent to $20.98 at the open, Fortescue gave back 3 per cent from a two-year peak to $4.88 and Rio Tinto skidded 2.2 per cent to $48.74.
The energy sector endured similar losses, with Santos off 2 per cent to $4.45.
Woodside was the exception in rising 0.1 per cent to $29.47.
The standout in morning trade was troubled retailer Woolworths, with its confirmed exit from the home improvement space and in-line trading result helping drive its shares up 7.5 per cent to $26.05.
It was not alone in benefitting from its home improvement moves yesterday, with Metcash also surging 7 per cent after a trading halt was lifted following its purchase of Woolies’ Home Timber and Hardware operation.
The retail focus was obvious as earnings season neared an end, with Breville’s shares plunging 9 per cent, Fantastic bounding 9 per cent and The Shaver Shop adding 3 per cent in the wake of their respective earnings results.
Media was also in the spotlight as Southern Cross soared 14 per cent after delivering better-than-expected guidance and Nine Entertainment leaping 5 per cent as it rid itself of a costly content agreement with Warner Bros.
In finance, investors turned wary on the big banks as ANZ lost 0.6 per cent, Commonwealth Bank gave back 0.2 per cent, NAB inched down 0.4 per cent and Westpac eased 0.4 per cent.
Among blue chips, Telstra slipped 0.6 per cent to $5.27, while Qantas edged up 0.3 per cent to $3.46.
10.45am:Woolies shares jump to 10-month high
Woolworths shares have surged 7.5 per cent to a 10-month high of $26.05, and the stock is heading for its biggest one-day rise since July, after CEO Brad Banducci emphasised the turnaround potential of the struggling supermarkets giant.
CLSA’s Richard Barwick notes the retailer’s like-for-like sales fell 1.1 per cent in the fourth quarter, meaning it was the best quarter of the year, but it was still a long way below Coles’ reported fourth-quarter growth of 3.3 per cent.
Woolworths’ supermarkets sales fell 1.3 per cent for the year, versus Coles’ 4.3 per cent rise, while Woolworths’ adjusted FY16 NPAT of $1.558bn was 3 per cent below the consensus estimate of $1.607bn, on CLSA’s estimates.
Earnings before interest and tax, excluding, home improvement, was in line with expectations, with food, liquor and petrol combined slightly ahead and offsetting mostly misses elsewhere. Liquor - reported separately for the first time - was less profitable than expected, with a 6.4 per cent margin, though that suggests supermarkets are slightly better, Barwick notes.
10.35am:Banks forge ahead with Alinta IPO plans
Investment banks working on the prospective initial public offering of Alinta Energy are today launching plans for a series of investor education meetings on the business over the coming days.
Last week, Goldman Sachs, UBS and Macquarie Capital were appointed as joint lead co-ordinators and Credit Suisse and Morgan Stanley joint lead managers for a float as the company heads to the boards.
This follows a recently collapsed Lazard-advised sales process for the company once controlled by the failed investment bank Babcock and Brown.
The group’s private equity and hedge fund owners, which include TPG Capital, have plans to float the business in October, according to some market sources, as the non-deal road show is set to get underway. Others say the float will happen in the first quarter of next year.
Apparently, a lunch for prospective investors has been scheduled by UBS next week.
Plans for the float of the operation were exclusively revealed by The Australian’s DataRoom column this month, after a consortium including APA Group, AGL Energy and Marubeni was said to have offered $3.5bn for the entire business before being told that the asking price was closer to $5bn.
Some were tipping Monday that TPG Capital and other hedge fund owners could have aspirations to sell the operation for close to $4.5bn, with market analysts suggesting a price of closer to $3bn was more realistic, based on the trading multiples of comparables AGL Energy and Pacific Energy.
The company has annual earnings before interest, tax, depreciation, amortisation and financial instruments of $385m.
Bridget Carter, Damon Kitney
10.25am:Southern Cross dials up the profit
Media group Southern Cross Austereo has reported a sharp uplift in earnings as it spruiked the potential of its new affiliation agreement with Nine Entertainment.
For the year to June 30, Southern Cross logged a 19.1 per cent lift in net profit to $77.2 million, with a significant reduction in financing costs helping earnings growth outpace revenue expansion of 5.1 per cent.
The profit and sales performance was broadly in line with market expectations, and clearly impressed investors, who sent the stock rocketing 9 per cent at the open.
Read Daniel Palmer’s full report
10.10am:Woolworths’ turnaround potential?
After a horror result that saw Woolworths post a $1.23 billion loss for fiscal 2016, its first loss in 23 years as a public company, Woolworths CEO Brad Banducci continues to emphasise the turnaround potential of the supermarkets operator over the next three to five years, saying: “We expect the market environment to remain competitive in the year ahead but also expect to see continued progress in our turnaround following a year of significant investment in FY16.”
With the Masters debacle close to being sorted out, the promise of a turnaround will give hope to the bulls.
9.53am: Investors dump Reject Shop
The Reject Shop tumbled over 18 per cent yesterday as a 20 per cent increase in full-year profit didn’t come close to keeping investors happy.
Increased competition, particularly from Aldi, weighed on like-for-like sales and the market took that as a reason to smash the company.
As a result, Macquarie analysts have quietly downgraded their recommendation on the stock to ‘neutral’ from ‘outperform’.
“[Fiscal 2016] results demonstrate the success of improvement initiatives being implemented in driving a turnaround in the business. The combo of weakness in the second-half gross margin percentage with the subdued like-for-like sales appears largely captured in yesterday’s stock price reaction but we expect will continue to weigh on the stock ahead of the key Christmas trading period. Rating reduced to Neutral.”
Investors could simply be looking for a reason to take profit, with the shares jumping over 18 per cent from the start of August to the 22nd.
The Reject Shop last traded at $12.14, which marks its lowest closing level since July 14.
9.40am:Perpetual lifts profit, dividend
Wealth management and investment company Perpetual has lifted its dividend after a hefty increase in net profit, despite facing pressures of falling funds under management and falling equity markets.
Perpetual today booked a net profit of $132m for the year through June, an 8 per cent increase year-on-year
Average funds under administration per Perpetual Private client, usually high net wealth, fell to $3.6m compared to $4.5m a year ago, but the group added 100 new clients to the advice business. Still, funds under administration dipped 3 per cent to $12.7bn.
Perpetual declared a fully franked final dividend of $1.30, bringing the year’s total payout to $2.55 -- up 6 per cent on the prior year.
Read Michael Roddan’s full report
9.31am:Billabong swings to loss
Surfwear brand Billabong International has swung to a full-year loss after a tax credit it benefited from last year was not repeated,writes Elizabeth Redman.
Billabong reported a net loss of $23.7m in fiscal 2016, compared to a profit of $4.2m in the previous year.
The group attributed more than two thirds of the decline to a higher tax expense, booking a tax expense of $7.8m this year compared to a $12.2m tax credit in the prior year.
Read more
9.24am:Broker rating changes
Equal numbers of upgrades and downgrades today as follows:
Qantas raised to Buy vs Underperform - APP Securities
Metcash raised to Overweight vs Neutral - JP Morgan
Link Administration raised to Hold vs Sell - Morningstar
ISentia raised to Buy vs Hold - Morningstar
Boral cut to Neutral vs Outperform - Credit Suisse
Boral raised to Sector Perform - RBC
Blackmores cut to Neutral vs Overweight - JP Morgan
Bega Cheese raised to Buy vs Hold - Baillieu Holst
Ardent Leisure cut to Neutral vs Buy - UBS
Ardent Leisure cut to Neutral vs Buy - Goldman Sachs
APA cut to Underperform vs Outperform - CLSA
WorleyParsons raised to Buy vs Neutral - Citi
Evolution Mining raised to Neutral vs Sell - Citi
McMillan Shakespeare cut to Neutral vs Buy - Citi
Metcash cut to Neutral vs Buy - Citi
Westfield cut to Underperform vs Neutral - Macquarie
The Reject Shop cut to Neutral vs Outperform - Macquarie
McMillan Shakespeare cut to Neutral vs Outperform - Macquarie
SpeedCast International raised to Outperform vs Neutral - Macquarie
9.15am:Fresh hope for dairy farmers
New Zealand dairy giant Fonterra has raised hopes Australian farmers could soon be on the receiving end of a much needed price hike after a year of tumult for the sector, writes Daniel Palmer.
In an announcement across the Tasman, the dairy co-op said it would raise the price offered to its farmers by NZ50 cents to $NZ4.75 ($4.56) per kilogram of milk solids. The number brings it almost in line with the opening milk price of $4.75 in Australia, but more significantly points to the prospect beaten-down Australian farmers could see higher prices of their own before the year is out.
Read more
9.06am:Woolies posts loss of $1.2bn
Woolworths has slumped to a loss of $1.23bn, its first loss in 23 years as a public company, as more than $3bn in impairments flowing from its disastrous expansion into hardware and mounting losses at its Big W chain overwhelmed early signs of a progress in the transformation of its flagship supermarkets business.
In what Woolworths chief executive Brad Banducci has described as a year of “unprecedented change’’ for the retailer, its once mighty supermarkets arm – the biggest supermarket chain in the country – saw its earnings slide by more than 40 per cent.
And shareholders will feel that pain, with Woolworths final dividend to investors has been crunched by more than 50 per cent. It is the lowest dividend payout in 10 years.
Read Eli Greenblat’s full report
8.50am:Flight Centre stalls on tourism trouble
Flight Centre has reported a slight fall in full-year profit as it grapples with the effects on tourism of the Zika virus and the Brexit vote, writes Elizabeth Redman.
Net profit after tax slipped 4.7 per cent to $244.6 million in the year to June 30, compared with $256.6m in the previous year.
Conditions remain volatile is some markets, after Britain’s vote to leave the European Union weighed on demand for corporate and leisure travel late in fiscal 2016 and early in the current fiscal year, Flight Centre said.
Read more
8.40am:South32 loses more ground
BHP Billiton spin-off South32 has seen its full-year loss blow out as it continues to grapple with an ongoing downturn in world commodity markets, Michael Roddan writes.
South32 today booked a loss of $US1.62 billion for the year through June, a significant deterioration of the prior year’s $US919 million loss.
Revenue for the diversified miner slumped 25 per cent to $US5.8bn over its first full year as a publically listed standalone group.
Still, the board decided to pay a US1c per share final dividend, unfranked.
Read more
8.18am:BHP is running hot and cold
BHP Billiton looks set to give up yesterday’s entire 1.6 per cent rise, and then some, as the rollercoaster continues for the world’s biggest miner.
BHP’s ADRs point to a more-than 2 per cent fall at the open, which would make it seven out of ten days with a movement greater than 1.5 per cent (four positive, three negative).
BHP Billiton last traded at $21.42, which is 20 per cent higher than where it started the year. A horror earnings report last week was expected by the market and bullish comments on iron ore prices were rewarded by investors.
Analysts remain overwhelmingly positive on the stock, with Bloomberg data showing eight ‘buy’ ratings, nine ‘holds’ and only two ‘sells’.
That seems odd considering the consensus 12-month price target is $20.78, which is 36 cents a share below where it is now. So that would mean most analysts think the share price will come down this year but that you should buy or hold anyway...
7.10am: Sharemarket set to open lower
The Australian market looks set to open lower after Wall Street retreated, pulled lower by materials and health care sectors weakness and amid nervousness over a possible upcoming interest rate rise.
At 6.45am (AEST), the share price index was down nine points at 5,534.
Locally, in economic news today, the Australian Bureau of Statistics releases Labour Force figures for July, along with Assets and Liabilities of Australian Securities for the three months to June and the private new capital expenditure and expected expenditure for the same quarter.
In Australia, the market yesterday edged higher as gains by the banks and resources giants offset falls by Wesfarmers and Telstra amid a raft of earnings reports.
The benchmark S & P/ASX200 index was up 7.9 points, or 0.14 per cent, at 5,561.7 points.
The broader All Ordinaries index was up 6.5 points, or 0.12 per cent, at 5,653,6 points.
7.05am:Oil debts reach record highs
Some of the world’s largest energy companies are saddled with their highest debt levels ever as they struggle with low crude prices, raising worries about their ability to pay dividends and find new barrels.
Exxon Mobil, Royal Dutch Shell, BP and Chevron hold a combined net debt of $US184 billion — more than double their debt levels in 2014, when oil prices began a steep descent that eventually bottomed out at $US27 a barrel earlier this year. Crude prices have rebounded since, but still hover near $US50 a barrel.
Read more
7.00am: Dollar steady
The Australian dollar has held above the US76 cent mark.
At 6.55am (AEST) today, the local unit was trading at US76.12c, unchanged from yesterday.
6.50am: New warnings on iron ore
Iron ore fell 0.2 per cent to $US61.50 overnight, according to The Steel Index, from $US61.60 the previous day.
Morgan Stanley analysts are considering the effect on the commodity of the G20 Summit, which will be held in Hangzhou in China on September 4 and 5.
“Common practice ahead of international events, China’s local governments will impose a number of restrictions on several industries to help improve air quality in the region — including the suspension of most construction activities; restrictions on ore sintering, cement, petrochemical and coke production,” Morgan Stanley said in a research note.
Read more
6.40am: Wall St pulls back as oil dips
US stocks slipped in quiet trade overnight, while the price of oil took a fresh fall.
Across the Atlantic, European shares finished mixed amid upbeat economic growth data from Germany and weak results from Glencore.
The Australian share market is set to follow the US lead and fall at this morning’s open, with ASX futures down 13 points.
The Dow Jones Industrial Average fell 66 points, or 0.4 per cent, to 18481. The S & P 500 dropped 0.5 per cent and the Nasdaq Composite declined 0.8 per cent.
Read more
Add your comment to this story
Why the great Australian dream is now a financial trap: Barefoot
A run to save $30 on a camping dunny has exposed a ‘dumb and dangerous’ move that will drive house prices even higher, writes Barefoot Investor.
From Australia’s youngest Macca’s manager to $35m tycoon
What started with frustration over faulty McDonald’s equipment has become a global business for this one-time MAFS contestant, who’s built an empire reaching 100 countries. Read how he did it
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout