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APN Outdoor has seen around $320m wiped off its market cap, while resources stocks remain in the firing line.

Earnings season enters its last week.

• Forrest to get $124.5m payout
• Oswals in ATO talks
• APN shares in record fall
• Fortescue shareholders in for a windfall
• Macquarie in $62.7m Amaysim block trade

Welcome to the BusinessNow blog for Monday, August 22. Fortescue has rewarded shareholders with a huge dividend increase, while APN Outdoor is the biggest loser of the day, with a shocking 33 per cent share price decline.

7.03pm:Macmahon eyes mining sector boost

Macmahon has added its voice to those hailing signs of recovery in the resources sector, saying “signs of a rebound” in recent months are expected to flow through to mining services in the near term.

The comments came as Macmahon swung to a full-year profit for 2016, with net profit of $1.7 million (from losses of of $209m in 2015), on revenues of $374.4 million.

6.38pm:Don’t ignore company risks

Earlier calls about risk are making all the difference to investor returns this earnings season, writes David Walker.

Among the medium to large companies of ­interest to most investors, some large shifts in risk are occurring and this is driving noticeable share price moves. It pays to understand what is ­happening, so let us review some examples. Read more.

5.55pm:US clears ChemChina’s Syngenta buy

Government-owned China National Chemical Corp, known as ChemChina, has said that a US national-security regulator had cleared its planned $US43 billion ($56.53bn) acquisition of Swiss seed company Syngenta AG, removing one of the deal’s biggest potential hurdles.

The deal, which marks the most ambitious foreign takeover attempt by a Chinese company to date, is still subject to antitrust and other regulatory reviews. Read more.

5.41pm:Dollar slips in late trade

The local unit has softened but remained above US76c, as the market looks ahead to Jackson Hole. Read more.

4.25pm:Energy sector helps pull ASX into the red

The Australian sharemarket has ended in the red, weighed down by weakness in the resources sector as investors fretted about the impact of a rising US dollar on commodities, writes Daniel Palmer.

At the closing bell, the benchmark S&P/ASX 200 index slid 11.6 points, or 0.21 per cent, to 5,515.1.

The biggest driver of the retreat was the energy sector as investors shunned Santos after positive commentary from the US Fed over the weekend raised the prospect of a pullback in crude prices.

4.02pm:APN smashed in worst day on record

APN Outdoor has watched around $321 million walk out the door today as investors savage the stock following lower earnings guidance.

With around 20 minutes remaining in the day’s trade APN shares were down 36 per cent to $5.27 in its worst day on record. The shares are now at their weakest level since February.

The market sank the boot in after APN said full-year EBITDA guidance would be in the range of $79-$84 million rather than the previously expected$84-$88 million.

The company’s comments that is has seen a “significant reduction in market activity” in recent weeks will also be worrying investors.

3.19pm:Reliance bolts into Lowe’s benefits

Plumbing supplies outfit Reliance Worldwide, a recent addition to ASX boards, has announced a deal that will see its core product hit the shelves of US hardware giant Lowe’s, but potentially at the expense of shelf space at The Home Depot, writes Daniel Palmer.

In a statement to the market this morning, Reliance said it had signed a single supplier agreement with Lowe’s to supply its SharkBite-branded push-to-connect fittings to its network of 1700 stores.
Read more

2.15pm:Forrest to get $124.5m payout

Fortescue Metals Group founder Andrew “Twiggy” Forrest is set for a $124.5 million payday after his resurgent iron ore mine revealed a dramatic hike in dividends, writes Michael Roddan.

Fortescue today booked a net profit of $US984 million for the year through June, a 210 per cent increase on year-on-year, reflecting the miner’s stringent cost-cutting program and a recovery in the iron ore price.
Read more

1.53pm:A testament to Fortescue’s grit

Fortescue has intelligently addressed its debt burden PHOTO: STAFF/REUTERS

The big increase in Fortescue’s (FMG) dividends says something about the group’s confidence in its prospects despite the continuing uncertainty about future iron ore prices, writes Stephen Bartholomeusz.

It also says something about the transformation in quality of the group’s underlying performance and condition.

The two key variables that have driven Fortescue’s performance over the past five years have been costs and debt.
Read more

1.35pm:Energy producers on the back foot

Australian energy producers are on the back foot today as the conversation again shifts from price to supply. After rising as much as 23 per cent since early August, Brent crude futures have fallen 1.5 per cent to $US50.13 today.

Having surged 85 per cent from the February low, the oil price is laying out the welcome mat for previously squeezed-out operators to move back into the market, adding more supply and hurting the price. Per the Wall Street Journal:

“As the price of US crude marches back toward $50-a-barrel territory, several big shale drillers are tiptoeing back into the oil patch, and that is making some energy experts nervous.”

Together with materials, energy is the worst performing sector on the Australian sharemarket today, down 0.7 per cent versus a 0.1 per cent rise in the S&P/ASX 200 index.

Santos, which announced record almost $1.5bn statutory loss on Friday, is down 5.8 per cent, while Beach Energy is down 5 per cent and Oil Search has fallen 2.4 per cent.

Woodside Petroleum — the biggest player in the space — is a noticeable exception, up around 2.5 per cent after announcing a big loss last week but giving an upbeat outlook on oil.

1.10pm:Spark ignites profit surge

Utility investor Spark Infrastructure has highlighted $806m in revenue gains to be recovered over the next four years by its South Australian and Victorian electricity networks after posting a near one third increase in net profit, writes Andrew White.

Interim statutory net profit was $51.6m, up 31 per cent against the previous corresponding period that was blighted by tax settlements with the ATO.
Read more

12.57pm:Earnings trends set to improve: UBS

With earnings season about halfway through, UBS equity strategists say that while absolute PE multiples look demanding, particularly in industrials ex-financials, the relative appeal of equities against very low interest rates shouldn’t be ignored, and aggregate earnings trends look set to improve, due to a revival in commodity prices.

On the negative side, they note that the revival of the Australian dollar presents something of a headwind for foreign currency earners if sustained, but the bottom-up aggregate earnings picture for market-cap-weighted EPS growth of 9 per cent for FY17 and median growth of 6 per cent “Iooks reasonable with the domestic economy still defying the naysayers”.

Ex-resources, they say, the average stock is on track for 6 per cent EPS growth in FY17 after growing about 5 per cent in FY16.

Overall, UBS strategists feels that valuation is the market’s Achilles’ heel, yet they see potential upside from valuations relative to interest rates.

“We believe it is prudent to assume single-digit total returns over the coming year — given high absolute multiples — but estimating market performance from here is complicated by estimating the appropriate P/E in regime of very low rates and moderate earnings growth.”

The S&P/ASX 200 index was last up 0.1 per cent at 5534.

12.40pm:Japara shares dive after funding warning

Japara Healthcare’s shares have taken a sharp dive after the aged care provider warned of a dip in government funding, writes Sarah-Jane Tasker.

Shares in the company (JHC) were today down more than 7 per cent to $2.41, despite the company revealing a 5.6 per cent lift in annual net profit after tax to $30.4 million and a 16.4 per cent increase in revenue to $327.3m.

Japara is the first of the three listed Australian aged care companies to report financial results since the government announced cuts to aged care funding instruments (ACFI).
Read more

12.15pm:TPG denies 2degrees talks

The ever acquisitive TPG Telecom has rejected reports it is in talks to buy New Zealand mobile phone operator 2degrees, writes Daniel Palmer.

In a brief statement to the market this morning, David Teoh’s TPG looked to distance itself from suggestions an $800 million deal was in the offing.
Read more

12.05pm:Oswals to enter ATO talks

A court has ordered the Taxation Office to enter talks with flamboyant Indian business couple Pankaj and Radhika Oswal over a multimillion-dollar tax bill that is stopping them leaving the country, writes Ben Butler.

The move this morning follows the in-principle settlement of the Oswals’ $1.5bn-plus legal stoush with the ANZ over the seizure and sale of their Burrup Fertiliser business in 2010, which is being heard before the Victorian Supreme Court.
Read more

11.50am:APN Outdoor shares in record fall

APN Outdoor shares are down 33 per cent at $5.55 — on track for their biggest fall on record — after plunging to a six-month low of $5.12 on disappointing results and a profit warning from the former market darling.

CLSA analyst Scott Hudson says Ebitda of $34.8m was 9 per cent below his expectation and NPAT of $20.5m was 3 per cent below.

“Relative to our expectations billboards were much weaker, transit in-line, and rail and transport much stronger,” he adds. “In addition, outlook commentary is weak with company noting that despite earnings being weighted to the 2H of the year they have seen a significant reduction in activity for the Sept-Nov period.”

Hudson notes that assuming the market softening stabilises, and including the impact of the recent iOM acquisition, APN are guiding to a revenue increase of 6-8 per cent vs consensus at +13 per cent and for Ebitda to be in the range of $79-84m vs previous guidance of $84-88m.

11.40am:Motorists getting a raw deal

Australian motorists are getting an increasingly raw deal at the petrol pump despite prices hovering around their weakest levels in 14 years, the competition watchdog has acknowledged, writes Daniel Palmer.

The Australian Competition and Consumer Commission said its June report into the petroleum market found an average price of 121.7c a litre across Australia’s five largest cities through the 2015-16 financial year, the lowest mark since 2001-02 in inflation-adjusted terms.
Read more

11.27am:Show China more respect: Seek

Seek chief executive Andrew Bassat says Australia needs to show China more respect in business dealings between the two countries, claiming the Chinese can sometimes see it as simply a one-sided relationship, writes Damon Kitney.

Speaking in the wake of the federal government’s rejection of bids from Chinese and Hong Kong firms for NSW electricity distribution business Ausgrid, Mr Bassat said it was important for companies like Seek, which has a significant footprint in China, for Australia to provide more give and less take in the relationship.
Read more

11.20am:Boart Longyear halves loss, revenue tumbles

Troubled mining services group Boart Longyear has halved its loss for the first half, as it delivered a dire financial report that showed turbulence in the resources sector slashing its revenues by 20 per cent.

The group (BLY) most significantly warned about its ability to operate as a going concern, given a sharp rise in its liabilities, which has forced Boart to request assistance from a restructuring entity.

11.14am:Woolies relaunches rewards loyalty program

Woolworths has unveiled a reboot of its struggling rewards loyalty program, the third rejig of the troubled scheme since October, writes Eli Greenblat.

The supermarket giant (WOW) announced today that from the end of the month shoppers will be able to earn rewards on all purchases at Woolworths and BWS liquor stores.
Read more

11.00am:Medibank suffering continues

Shares in Medibank Private have been hit this morning as investors continue to punish a disappointing earnings result on Friday.

At 10:22am AEST the stock had dropped 3.9 per cent to $2.73 — its lowest level since March 21. Since Thursday’s close the insurer has tanked 8.1 per cent.

“I’m under no illusions there is a lot of work to be done to lift our performance up to, and beyond, the levels rightly expected of this company,” CEO Craig Drummond said in Friday’s update.

Analysts agree the company is not looking flash, with Credit Suisse downgrading MPL to Underperform from Neutral today.

“We believe that FY17E and FY18E offer little in the way of earnings growth, and that intense competition, an eroding value proposition for the customer and the need for MPL to invest to limit further customer attrition could all see further downside risk to our forecasts,” Credit Suisse analysts, led by Andrew Adams, said.

“We therefore view MPL as overvalued trading on 20.4x and an ~11% premium to the market.”

10.20am:ASX slips as investors eye resources

The Australian sharemarket has moved marginally lower in early trade as investors eye the risk of a rising US dollar to commodity prices, writes Daniel Palmer.

At the 10.15am (AEST) official market open, the benchmark S&P/ASX 200 index lost 4.5 points, or 0.08 per cent, to 5,522.2, while the broader All Ordinaries index gave back 2.4 points, or 0.04 per cent, to 5,622.9.

Investors weren’t taking any risks in morning deals as they pared bets on the big names in the energy and materials spaces.

Santos felt the sharpest rebuke from traders, slumping 2.9 per cent, while BHP retreated 1.6 per cent to $20.96 and Rio Tinto eased 0.56 per cent to $49.51.

Bucking the trend were Woodside, which added 0.8 per cent to $29.13, and iron ore miner Fortescue, which tacked on 0.71 per cent $4.965 after it detailed a record dividend.

In finance, the big banks were all 0.2 per cent higher aside from NAB, which backtracked 0.1 per cent.

Earnings season remained in full swing, with this week the busiest of the blockbuster month.

Bluescope Steel advanced 2.6 per cent after booking a stunning 160 per cent jump in profit, mining services group Boart Longyear slid 2.8 per cent after warning on its ability to operate as a going concern, online jobs classifieds outlet Seek lost 2.2 per cent despite reporting a record profit and engineering services company UGL bounced 4.6 per cent after narrowing its loss for the full year.

The most severe reaction was reserved for APN Outdoor, with the advertising company plunging 33 per cent after lowering its guidance.

Among blue chips, Telstra rallied 0.37 per cent to $5.50, while Qantas gained 1 per cent to $3.395.

Meanwhile, the Australian dollar stumbled below US76c as investors eyed positive commentary from the US Fed.

9.55am:Fortescue shareholders in for a windfall

Andrew “Twiggy” Forrest’s Fortescue Metals Group has rewarded patient shareholders with a huge increase in dividends following the stellar recovery in the iron ore price and the miner’s profit after a stringent cost-cutting program, writes Michael Roddan.

Fortescue today booked a net profit of $US984m for the year through June, a 210 per cent increase on year-on-year.

The bumper profit came despite a 17 per cent slide in annual revenue to $US7.08 billion.
Read more

9.44am:Earnings season scoreboard

As we continue to slog through earnings season let’s stop for a moment and have a look at the scoreboard.

With 45 per cent of companies having reported, and 70 per cent by market cap (prior to this morning’s numbers) the “picture looks quite reasonable”, according to Deutsche Bank.

The beat-to-miss ratio for the June half profits is 54 per cent, slightly above the 52 per cent five-year average.

Source: Deutsche Bank

Here are four observations from Deutsche Bank:

1. Resources have done well so far — upgrades to forecasts, and share prices have outperformed.

2. Strong housing activity is boosting company earnings. A number of companies that have reported have benefited, including Fletcher Building, Stockland and Mirvac.

3. Consumer exposure has done well (eg, JB Hi-Fi). Though it’s worth noting that the pace of spending hasn’t improved — it simply hasn’t slowed as much as had been feared.

4. Yield stocks have been under pressure even with okay results. A few high PE stocks that disappointed have sold off (CSL, REA, Medibank), while some value names have done well (Ansell, Computershare).

In terms of the actual ASX tally, here’s UBS strategist David Cassidy’s take on the winners and losers so far:

“In our view the strongest overall large cap results have been Orora, JB Hi-Fi and Ansell, while most disappointing were Aurizon Holdings, QBE Insurance Group, CSL and Medibank Private.”

9.35am:Seek profit rises 27%

Online jobs market operator Seek has seen its profit rise by more than a quarter for the full year despite mixed market conditions, writes Daniel Palmer.

For the year to June 30, Seek booked a record profit of $357.1m, up 27 per cent on the prior year.

The group’s underlying profit gain was more subdued, however, rising a modest 3 per cent to $198.1m on a revenue advance of 11 per cent to $950.4m.
Read more

9.24am:UGL narrows FY loss

Engineering services group UGL says the reinstatement of dividend payments will depend on the group’s balance sheet and outlook, after narrowing its full-year loss to a little over $100m, writes Michael Roddan.

UGL today booked a loss of $106.3m for the year through June, a solid improvement on last year’s loss of $236.4 million.
Read more

9:04am:Macquarie in $62.7m Amaysim block trade
Bridget Carter, Gretchen Friemann

Macquarie Capital is launching a $62.7 million block trade for shares out of Amaysim this morning.

The 31.34 million shares have been sold at $2 each and are being sold down to institutional investors.

It comes after 59 million shares in the SIM card operator recently were released from escrow.

Amaysim floated on the Australian Securities Exchange more than a year ago, and at the time, the shares of the vendors were subject to escrow until after the company’s annual results.

As first flagged by DataRoom, Macquarie and Investec have been working with Amaysim amid earlier speculation that the company could be on the radar of Optus.

Last week, the company delivered a statutory gross profit of $85.4m, up 43.5 per cent on the previous corresponding financial year.

Shares on Friday closed at $2.09.

8.57am:ASX tipped to dip, all eyes on earnings

Stocks are expected to ease into the week, with the SPI200 pointing to a minor fall at the open while fair value suggests no change is more likely.

Earnings reports will remain front of mind today and throughout the week, with Coca-Cola Amatil and Fortescue Metals of particular interest today. Fortescue shares have surged almost 170 per cent in the year to date.

BHP Billiton looks set to head south after shooting up over 5 per cent in the last three sessions following a better-than-expected (but still ugly) full-year result last week. Shares in the world’s biggest miner are expected to fall 1.1 per cent at the open, according to its ADRs, despite a 0.4 per cent rise in iron ore. Traders could also be looking at crude oil, which has slipped around 1 per cent this morning.

Elsewhere, don’t be surprised if you see Domino’s Pizza finally slide back a bit — it trades ex-dividend today.

8.52am:Macquarie launches $66m block trade for Amaysim

More to come

8.46am:Broker rating changes

Medibank Private cut to Neutral vs Outperform — Macquarie

Medibank Private cut to Underperform vs Neutral — Credit Suisse

IAG cut to Neutral vs Outperform — Credit Suisse

Woodside Petroleum raised to Sector Perform — RBC

Charter Hall Retail cut to Sell vs Underperform — CLSA

Duet cut to Sell vs Underperform — CLSA

IAG cut to Sell vs Buy — CLSA

Bellamy’s raised to Outperform vs Underperform — CLSA

8.38am:Central bank scrutiny at Jackson Hole

The annual meeting of the world’s central bankers takes place this week in Jackson Hole, Wyoming, but don’t expect much of a market reaction… It’ll focus more on the big-picture, according to IG analyst Angus Nicholson.

Janet Yellen is expected to outline the Fed’s plans for raising rates (AP Photo/Manuel Balce Ceneta, File)

“Jackson Hole is a setting that is not designed for short-term market moves, in many respects, it could not be further from participants’ minds,” Mr Nicholson said.

“Much bigger questions will be debated about the efficacy of the inflation targeting regime.”

That said, Fed chair Janet Yellen is expected to outline the central bank’s plans for slowly raising interest rates, which could certainly add to market volatility.

“These arguments reflect a growing feeling that the experiments with negative interest rates in Europe and Japan have not resulted in desirable outcomes. And also the calls for higher inflation targets mesh with growing calls that the Fed should be targeting nominal GDP rather than inflation” Mr Nicholson said.

“These discussions are not set to have an impact on Fed policy in the near term, but some of their implications could well fuel some volatility in markets this week.”

Read Economics Editor David Uren’s opinion piece today for more insight: Central bankers rethink inflation

8.24am:nib profit lifts 22%

nib holdings has posted a 22 per cent jump in full-year profit for FY16 as a slowdown in claims inflation helped to offset the pressure on premiums and affordability. NPAT for the year was $91.8m, while revenue for the group lifted 14.3 per cent to $1.9bn.

The health insurer said it will look to grow its top line across the group as well as additional new business opportunities to create shareholder value. It is forecasting statutory operating profit of $122m to $132m for FY17.
Read more

8.07am:Bluescope FY profit surges 160%
Bluescope Steel (BSL) has kicked off today’s earnings reports, posting a $353.8m net profit for FY16, a $217.5m increase on last year.

The company is also forecasting a surge in earnings, saying it expects underlying EBIT for 1H17 to be 50 per cent higher than the $340m earned in 2H16.

Investors will receive a fully franked full-year dividend of 3c per share.
Read more

8.05am:Australian dollar dips on US rate talk

The Australian dollar has slipped against its US counterpart as investors continue to price in a US Federal Reserve interest rate rise this year.

At 7am (AEST), the local unit was trading at US76.04c, down from US76.44c on Friday.

Westpac strategist Imre Speizer said investors were still mulling comments by New York Fed president William Dudley, who last week highlighted two months of jobs growth, and San Francisco Fed chief John Williams, who suggested the country’s inflation target should be increased.
AAP
Read more

7.55am:The battle of the supermarket giants rages on

Australia’s leading supermarkets, Woolworths and Coles, are expected to reflect the intense ­competition and price deflation running rampant through the food retailing sector when they ­report full-year results this week, writes Eli Greenblat.

Woolworths is expected to unveil its first loss in 23 years..

Analysts say both are likely to post slowing like-for-like ­grocery sales in the final quarter of 2016.

For Coles, it will mark the 28th consecutive quarter it has beaten archrival Woolworths in terms of comparable sales growth if, as expected, it records faster growth than Woolworths in the fourth quarter, while for Woolworths, the embarrassment will run deeper as it unveils its first loss in 23 years as a public company.
Read more

7.15am: Stocks tipped to dip at the open

The Australian market looks set to open lower following Wall Street’s slide as investors weighed the prospect of a Federal Reserve interest rate rise.

At 6.45am (AEST), the share price index was down six points at 5,490.

In Australia on Friday, the benchmark S & P/ASX200 index closed up 18.9 points, or 0.34 per cent, at 5,526.7 points. The broader All Ordinaries index was up 18.1 points, or 0.32 per cent, at 5,625.4 points.

Market set to defy trends

7.05am: Dollar falls on Fed rate expectations

The Australian dollar is lower, with the US dollar strengthening as investors begin to price in a greater likelihood that the Federal Reserve will raise interest rates this year.

At 6.35am (AEST), the local unit was trading at US76.05 cents, down from US76.44 cents on Friday.

7.00am: Iron ore holds above $US60

The iron ore price has inched higher as the commodity continues to defy warnings that the effect of Chinese stimulus spending so far this year may not last.

Iron ore added 0.3 per cent to $US61 a tonne in the most recent session, according to The Steel Index, from $US60.80 the previous day.

Read more