Bonuses axed, profit targets missed, shares tumble
There were plenty of hits and even more misses among the top ASX companies that reported this week.
AMP head of investment strategy Shane Oliver said the results this week have softened compared to the first two weeks of the reporting season.
“Reporting season has this habit of starting off quite solid and then it weakens as we go through the month and that’s what happened this week,” he said.
“It’s certainly softened and corporate guidance has been quite poor.”
Dr Oliver said the cost of living pressures were kicking and impacting on consumer spending
“Profits in general have been up but up as much as had been expected and expectations for the current financial year has been revised down,” he said.
“There a bit of concern and certainly caution coming through.”
Market loved it
For Alan Joyce’s swan song as CEO, Qantas posted its biggest full-year result (ASX: QAN) on record, a $1.74bn net profit, thanks to high airfares and a brutal cost-cutting program. Vanessa Hudson who replaces Joyce in November is confident Qantas can do better. “We are expecting the future earnings potential of our business is going to continue to grow,” she said. The underlying profit of $2.47bn represented a $4.3bn improvement on the 2022 result, setting another new benchmark for the 103-year-old carrier. Qantas shares firmed 5c to $6.22 on Thursday and were up almost 30 per cent since this time last year.
Premier Investments (ASX: PMV) shares surged over 12 per cent on Monday after billionaire Solomon Lew announced the shock resignation of its chief executive of only two years. Former JB Hi-Fi boss Richard Murray was exited after he failed to move the dial on earnings growth during his tenure with Mr Lew also now considering a break up of his $3.5bn fashion and apparel empire. And for good measure Breville (ASX: BRG) shares rallied 20 per cent on Monday before closing nearly 9 per cent higher after announcing a full-year net profit of $110.2m, up 4.2 per cent and slightly ahead of market expectations of $106m.
Breville’s biggest shareholder is Lew, whose combined Premier Investments arm and private interests control 31.96 per cent of the company. For the year so far Premier Investments shares hardly moved while Breville’s are up around 35 per cent.
Shares in multinational software giant Altium (ASX: ALU) rocketed almost 30 per cent since the company delivered a hefty profit and dividend hike at the start of the week. The electronic design software company reported a drop in operating expenses which helped it lift profit after tax to $US66.3m ($A103.6m), up 19.6 per cent from the previous year. It lifted its final dividend of US29c, fully franked, up from US26c a year ago. And the company vowed to ‘vigorously defend’ a multimillion dollar legal dispute with the Australian Taxation Office.
Domino’s (ASX: DMP) reported on Wednesday a net profit plunge of 74.4 per cent to $40.6m, with earnings as much as 5 per cent below analyst expectations, as a year of inflationary pressures and customers revolting against price rises and delivery charges smashed earnings growth. However chief executive Don Meij believes his pizza chain is already back on the path to the type of premium growth the former market darling was famous for. On Wednesday Domino’s share closed 11.8 per cent higher but for the year to date they are down 22 per cent.
What a shocker
Coles shares (ASX: COL) slumped 7 per cent on Tuesday after it posted an annual profit of $1.098bn result - which was up 4.8 per cent - but missed market expectations and was described as “messy” by analysts. Revenue for the period rose 5.2pc to $41.825bn and the company declared a flat final dividend of 30c a share.
The chasm between the nation’s two largest supermarket chains has begun to widen across profits, earnings and dividend growth and now share price. Since the beginning of the year Woolworths shares (ASX: WOW) have easily outperformed Coles, rising about 12 per cent against a 5 per cent fall for Coles.
Trading technology company Iress (ASX: IRE) has been one of the biggest disappointments on the market this week, with a third of its market value wiped out. The tech firm posted an almost $140m interim loss while revenue rose 2 per cent on the previous corresponding period to $315m. It suspended dividend payments to reduce debt on the back of high transformation plan costs.
There is no doubt the traditional media is doing it tough but Nine Entertainment (ASX: NEC) has taken a big hit pretty much across all parts of the business with its full-year net profit slumped 38 per cent to $194m, as costs increased and advertising revenue took a hit. Nine chief executive Mike Sneesby admitted it was a “generally softer economic environment” and noted the advertising falls across the business. “The advertising market remained subdued, particularly in free-to-air, digital display and print publishing,” he said.
Bringing home the bacon
Billionaire Solomon Lew is in line for a potential $500m payday as part of a wider $1.3bn wealth uplift for Premier Investments shareholders if a break-up of his fashion empire is forged to unleash the superior growth potential of its potent retail brands Peter Alexander and Smiggle. Mr Lew, the chairman of Premier Investments and also its largest shareholder, dangled the prospect of a historic demerger of his ASX-listed empire into three or four parts that could see a number of new companies emerge. The strategic review, which has brought on board UBS and Arnold Bloch Leibler as advisers, will have a fertile field of retail assets, cash and equity stakes to dish out to shareholders.
That’s got to hurt
Richlister Richard White’s stake in WiseTech (ASX: WTC) took an almost $2bn hit on Wednesday after the firm lost a fifth of its market value following disappointing earnings guidance. The tech company upped its dividend to shareholders after reporting profit growth of 9 per cent to $212.2m, on the back of higher logistics revenue. However, its share price tumbled by 19.2 per cent on the day of the results and recovered some ground but were still off 17 per cent from Wednesday to Friday. The problem was that there was some concern regarding the company’s FY24 EBITDA guidance which fell short of expectations. .
Australia’s biggest health insurer Medibank (ASX: MPL) axed bonuses for its executive leadership team as a consequence of last year’s cyber attack that involved Russian hackers stealing and publishing sensitive health information of more than 9 million customers. CEO David Koczkar also will receive no pay rise, with his base pay remaining at $1.55m, despite the company’s annual profit vaulting 29.8 per cent to $511.1m and signing record policyholders. Medibank junked short-term bonuses payments for Mr Koczkar, chief financial officer Mark Rogers, chief customer officer Milosh Milisavljevic and Andrew Wilson, who is the boss of its health services division a direct result of the cyber attack.
Best CEO quotes
“I have made the decision to step aside from the role of managing director and CEO, allowing me to fully concentrate on the positions of co-chief investment officer and co-portfolio manager of our Global and Asia strategies,” Platinum Asset Management’s Andrew Clifford said amid pressure for the fund’s biggest shareholder Kerr Neilson and as the firm reported a 20 per cent fall in full-year net profit.
“The cyber crime was a serious event and had a serious impact to our customers, our people and our business, so there needs to be serious consequences,” Medibank CEO David Koczkar on the board’s decision to axe executive bonuses.
BHP (ASX: BHP) boss Mike Henry has played down the prospect that cuts to Chinese steel production could send iron ore prices into free fall amid concern over an economic slowdown, saying prices were unlikely to fall below $US80 a tonne for any length of time. “There have been some reports of potential for mandated steel cuts later in the year – but the depth of the cut, or the longevity of that, we have no real sense for that yet,” he said.
Coles chief executive Leah Weckert said the said the growing influence of organised crime in store robberies that was a major reason for the 20 per cent lift in stock losses that also includes waste, damage and markdowns. “We are definitely seeing a trend of organised crime rising and we work quite closely with police in each different state and they tell us the number of reports that they have has significantly gone up over the last year,” she said.
Woolworths chief executive Brad Banducci has pledged to push food and grocery prices lower this year given the pressure households are under. He said there was always a balancing act between the needs of customers and shareholders, adding “we don’t always get the balance right in any one year”, but he was “acutely aware of the pressure our customers are under”.
Who else reported
Westpac shares (ASX: WBC) plunged 3 per cent after posting a third-quarter unaudited net profit of $1.8bn
BlueScope Steel (ASX: BSL) approves a $1.15bn extension of the life of its Port Kembla steelworks
Nib’s profit (ASX: NHF) soars 45 per cent to $197m
Ampol (ASX: ALD) reported a 26 per cent fall in half-year profits indicating the boom may be over
Charter Hall (ASX: CHC) says its real estate empire can keep growing despite the tough conditions
Scentre Group (ASX: SCG) reports a 10 per cent increase in visitors to it Westfield shopping centres
Woodside Energy (ASX: WDS) had branded global gas markets “fragile”
Corporate Travel Management (ASX: CTD) profits from UK asylum seeker deal
Stockland (ASX: SGP) will tilt its portfolio towards more affordable housing.
Tabcorp (ASX: TAH) suffers a double digit slide in online betting
Wesfarmers (ASX: WES) records a 4.8 per cent rise in profit says inflation and interest rates are hurting
Ardent Leisure (ASX: ALG) returns to profit as punters return to Dreamworld
Accent Group’s full year profit sprints ahead
What to watch out for next week
● Monday: Appen, Fortescue, Liberty Financial, NEXT DC
● Tuesday: Adbri, Cooper Energy, Star Entertainment, Tyro Payments
● Wednesday: Brambles, City Chic, Healius, Flight Centre
● Thursday: Atlas Arteria HY, Cromwell, Harvey Norman, Sandfire
Looking back
Results wrap Friday, August 11
Results wrap Friday, August 18
Transurban defends lucrative toll contracts
The $40bn heavyweight has defended its lucrative contracts in Sydney as it continues talks with the NSW government over reforms to the state’s toll road charging regime.
Audio-visual specialist Audinate shelves its target
Audio-visual company Audinate has told investors it’s had weaker-than-expected demand from customers and that’s led to revised financial targets.