Trading Day: S&P/ASX 200 sinks amid miners, bank falls; Scentre posts $3.7bn loss
Stocks close down after hitting fresh 3-week intraday low. Bitcoin tumbled, Bega profits soar, Nine sees ad rebound, Viva loss, WiseTech profit hit.
- Pandemic no brake on rise of the ultra-wealthy
- Cooking at home cheers Maggie Beer
- WiseTech takes profit hit
- Michael Hill profit jumps, despite Covid
- Bitcoin tumbles on Yellen warning
That’s all from the Trading Day blog for Wednesday, February 24. Australia’s sharemarket gave up all of the previous day’s rise, hitting a new 3-week low intraday and closing down 0.9pc. There was a volatile session on Wall Street, where the Dow ended 14 points higher, the S&P 500 added 0.1 per cent and the Nasdaq was down 0.5 per cent. Wage price index figures are released and, in another busy day for earnings, results are out from Woolworths, WiseTech, Scentre, Nine, Medibank Private, Healius and IOOF, among others.
Helen Trinca 7.17pm:KPMG pays back Covid crisis cuts
KPMG staff who took a temporary 20 per cent pay cut last year to help the big accounting firm through the crisis of COVID-19 learnt on Wednesday that they will get their money back.
At a “town hall” meeting CEO Gary Wingrove told staff — who were last December repaid 50 per cent of money foregone in the financial year of 2020-21 — that they would now get the remaining 50 per cent.
The catch-up pay, which will land with employees in March, relates to pay lost in July and August last year.
Ben Wilmot 5.39pm:Perth housing to lead the pack this year: CBRE
Perth is emerging as the pick of housing markets this year with real estate agency CBRE saying the city’s residential market is on track to record double-digit growth for the first time in 11 years.
It picked the once laggard WA capital as leading the nation’s housing recovery in 2021 with homes to soar by up to 12 per cent as the resources sector shifts back into the sun.
The CBRE report shows regional value growth outpaced metropolitan values in all states, except Western Australia, during 2020, as demand soared for homes outside cities in the wake of the coronavirus pandemic.
Ben Wilmot 5.15pm:HomeCo ramps up funds with health move
Property group Home Consortium, once known for converting former Masters stores into shopping outlets, is stepping up efforts to become a funds manager capitalising on daily shopping and medical needs.
The company spun off a supermarket owning trust last year and releasing its half year results on Wednesday flagged that it hopes to eventually grow its medical fund holdings to $2bn.
To get there it will spin off a trust of medical and government assets that could amount to about $500m, with HomeCo running a dual track process that could see either a float or an unlisted fund being created.
Chief executive David Di Pilla has made running funds a bigger part of its overall $1.8bn business that is backed by his own Aurrum Group, the founders of Spotlight, Chemist Warehouse and the Besen family.
High-profile banker Matthew Grounds, the Oatley family and Aussie Home Loans founder John Symond have also backed HomeCo.
4.33pm:ASX ends -0.9%; Tech weakest
Australia’s sharemarket gave up all of the previous day’s rise, hitting a new 3-week low intraday.
The S&P/ASX 200 index closed down 0.9pc to 6777.8 after falling as low as 6762.6.
While it remained above its 50-day moving average at 6739, the price action was disappointing after a strong bounce on Wall Street.
US futures wavered, with S&P 500 futures down 0.3pc in APAC trading, after the index bounced on dovish comments from Fed chief Jay Powell.
Lingering concern about the recent sharp rise in bond yields was the proximate cause, although Australian 10-year bond yields consolidated.
Playing to that tune was a further selloff in high-PE tech stocks, with Afterpay and Xero down about 3pc.
Appen dived 12pc on disappointing earnings guidance, and WiseTech finished up just 1pc after surging 10pc intraday on improved earnings guidance.
Telstra fell 3.1pc ex-dividend, while BHP and Rio Tinto fell about 3pc after recent strong gains as commodity prices surged.
Banks also struggled for traction after recent strong gains, while Woolworths rose 1pc on strong 1H results and trading so far this year.
Among other reporting stocks, Nine rose 9.7pc, IDP Education jumped 7.2pc, Blackmores gained 6.3pc, Bega Cheese rose 6.2pc and Viva Energy gained 6pc.
But Nanosonics dived 8.1pc and AP Eagers lost 7.3pc while Seek fell 7.8pc on broker downgrades.
AGL Energy, Downer, Fletcher Building and Iress fell ex-dividend.
Perry Williams 4.14pm:Transcontinental gas pipeline splits the industry
A multi-billion-dollar plan to revive a transcontinental gas pipeline between WA and the east coast has split the industry amid questions whether the project would deliver gas at affordable prices.
Western Gas and APA are conducting a feasibility study, but MST Marquee analyst Mark Samter said he could already predict the outcome.
“I can pre-write the study for them. If Equus doesn’t make economic sense into the LNG projects that are a few hundred kilometres away then it is farcical to think that it makes sense to spend $5-6 a gigajoule (plus in reality) sending it through onshore pipeline infrastructure across a bloody big country,” Mr Samter told The Australian. “There are sensible solutions to the supply shortage, in the shape of LNG imports and progressing frontier basins such as the Beetaloo, sending not wildly high quality offshore WA gas through the pipeline network is not one of them.”
Former WA Premier Colin Barnett, who has backed the pipeline concept, disagreed and said it was a big chance to boost supply to the east coast gas market.
“It’s just fundamentally a ridiculous situation for Australia to have a shortage of gas on the east coast, and yet be up there with Qatar as the world’s largest gas exporter. This is a Goldilocks project - it’s not big enough to support an LNG project, and yet it’s too big to fit in the Western Australian market by itself,” Mr Barnett said.
It’s a very high quality resource, it’s rich in liquids and it is low CO2. It’s good to see the private sector standing up and doing it. It’s important that some of the regulatory arrangements are conducive and supportive, and I just hope the Federal government doesn’t tie it up in bureaucracy.”
4.12pm:Hang Seng dives on stamp duty hike
The Hang Seng index hs tumbled 2.8pc to 29,770, with losses accelerating after lunch after Hong Kong increased the stamp duty on stock trades by 30pc to 0.13pc.
The Hong Kong Stock Exchange is among the worst off, diving as much as 12pc.
Glen Norris 3.49pm:Athlete’s Foot operator to open 90 new stores across Accent Group
Accent Group, the operator of Athlete’s Foot, Trybe and Platypus shoe outlets, will open 90 new stores this year after reporting its seventh consecutive half year of record profit.
Melbourne-based Accent said profit for the six months to the end of December climbed 57.3 per cent to $52.8m as sales rose 6.6 per cent to $541.3m.
Accent chief executive Daniel Agostinelli said the company had opened 50 new stores during the first half helping it lift sales and profit margins, with strong performances in the lead up to Christmas and the Back-to-School period. Five stores had been closed bringing the total number of outlets in the group to 565.
Mr Agostinelli said the management team remained focused on driving online growth and innovation with digital sales reaching $108.1m in the first half.
The shares climbed 3.1 per cent to $2.33 at 3.40pm AEDT.
Looking ahead, Mr Agostinelli said trading at its key brands including Athlete’s Foot and The Trybe were well ahead of expectations.
Like-for-like retail sales in the first eight weeks of the second half of the financial year were up 10.7 per cent. That included the impact of mandated stores closures during four snap lockdowns in Brisbane, Western Australia, Victoria and Auckland.
Digital sales climbed 65.4 per cent at the start of the second half and continued to track above 20 per cent of total sales.
Mr Agostinelli said the company was expected to open at least 90 new stores this financial year across all its brands, including 15 Pivot stores and four Stylerunner outlets.
He said given the ongoing uncertainty over the impact of COVID-19, the company would not provide a full year forward sales or profit guidance.
3.22pm:Woolies ‘well positioned’ for drinks split: Moody’s
Woolies first half results support its strong credit profile with “significant rating headroom” and the company is “well positioned” to spin off its drinks division, according to Moddy’s Investors Service
“The key area of uncertainty from a credit perspective remains the Endeavour Group separation, which is likely to take place in June 2021 via a demerger,” says Moody’s VP, Ian Chitterer.
“However, management has highlighted that Woolworths and Endeavour Group will have the same shareholders immediately after the demerger, and reaffirmed the company’s commitment to a strong investment-grade rating.
We therefore expect that Woolworths’ credit profile will remain well positioned, with reasonable headroom after the separation.”
3.16pm:Scentre Group results highlight retail landlords’ difficulties: Moody’s
Scentre Group’s 2020 full-year results are credit negative and highlight retail landlords’ difficulties due to the pandemic and government restrictions, says Matthew Moore, vice president, Moody’s Investors Service.
“While overall earnings declined materially, the REIT’s performance improved in the second half as Australia and New Zealand contained the pandemic. Its cash collection rates increased, significant progress was made on lease negotiations and provisioning was lower relative to the first half. These trends highlight the potential for further earnings recovery in the coming 12-18 months.
“Scentre made strong progress working through its remaining negotiations with its tenants reaching arrangements with 94% of its retail brands. While this contributed to leasing spreads declining by around 13.1%, Scentre’s confirmation that the overall structure of its leases remain intact supports future earnings stability and recovery.
“Scentre increased its liquidity and prefunded its debt maturities in 2020, supporting its credit profile. Its strong liquidity profile provides a good buffer to absorb further downside risks.”
3.12pm:Latest wage data ‘encouraging’: CommSec
Clearly workers would love to be getting paid more, notes CommSec chief economist Craig James.
“But when you consider the amount of spare capacity in the jobs market, the latest wage data is encouraging. Economists thought wages would have grown by only 0.3 per cent in the December quarter, but the actual result was double predictions.
“The Bureau of Statistics puts much of the gain in private sector wages to employers adjusting hourly earnings back to pre-pandemic levels. So the wage data is yet another sign of the economy gradually getting back to ‘normal’.
“It is always important to compare wage growth to growth in prices (or ‘real’ wages growth). In every state, annual wage growth was at least level with or above the growth of prices in the December quarter. Also encouraging was the fact that quarterly wage growth was the fastest in 18 months.”
The wage data will be greeted positively by the Reserve Bank, says james.
“But wages will need to grow at a much faster pace than current to change the view that cash rates are on hold until 2024. Long-run average wage growth is 3.1 per cent.”
3.04pm:More Aussies in cryptos than gold: BTC Markets
More Australians now invest in cryptocurrencies than precious metals, fixed income or annuities, according to independent research commissioned by cryptocurrency exchange, BTC Markets.
The survey of more than 2,000 Australian investors last month found that 12.6pc have stakes in Bitcoin or other cryptocurrencies versus 12.1pc who were invested in precious metals.
Direct shares were the most popular investment at 63.6pc, followed by managed funds and ETFs at 28.8pc, investment property at 25.8pc, cash at 25.6pc and collectibles at 18.8pc.
Together with precious metals, fixed income and annuities were behind cryptocurrencies, at just 9.9pc and 7.7pc respectively.
The survey also found that a third of crypto investors made their first investment after the COVID stock market crash in March 2000.
Despite a 1390pc rise in Bitcoin to a record high of $US58,350.41 since then, the survey found that 51pc of investors were not planning to sell their Bitcoin.
Moreover, 23pc of those surveyed planned to hold their investment in the cryptocurrency for more than three years.
Over 63pc of the cryptocurrency investors are male, and 25pc were “high” income earners earning over $100,000 a year.
The largest cohort of crypto investors fell within the age group of 25-34 years, making up 36.3pc, followed by 35-44 year olds at 30.1pc.
“Digital assets and cryptocurrencies are becoming increasingly popular among Australian investors of all ages,” BTC Markets CEO Caroline Bowler said.
“In the last 12 months we have seen a shift from 25-45-year-old males to a much broader age group, particularly early retirees who are interested in diversifying their investment portfolio and are catching up with this fastest growing asset class.”
Bitcoin was last trading around US51,000, up about 6pc from late New York levels.
Perry Williams 2.35pm:Transcontinental gas pipeline being revived
A multi-billion-dollar transcontinental gas pipeline linking Australia’s west and east coasts has been revived to ease projected shortfalls in NSW and Victoria.
The privately-owned Perth company Western Gas - which owns the Equus gas venture offshore WA - has teamed up with pipeline giant APA Group for a joint feasibility study as it seeks to develop a new source of supply for domestic markets.
The Equus resource could supply 350 terajoules a day of gas for more than 15 years marking the equivalent of 35 per cent of WA gas demand, three-quarters of NSW gas demand or just over a third of the combined gas demand of NSW and Victoria.
It didn’t include a timeline for the study but said it could meet market needs by the mid-2020s.
The long-mooted plan, originally costing $6bn, has been heavily promoted by former WA premier Colin Barnett and backed by ex-Dow boss Andrew Liveris in an early National COVID Coordination Commission report.
A 2019 study found that while the $5.8bn pipeline was technically feasible, “commercial and market risks present major challenges for the project”.
Western Gas said the scope of the study “comprises a detailed assessment of development, commercial, marketing and regulatory aspects of the project, which will form the basis of an integrated bankable feasibility study.”
Under the plan, gas from the offshore Equus fields would be piped 210km to Ashburton, just south of Onslow, with gas then sent to the east coast through a transcontinental pipeline. A route for the pipeline was not provided.
The plan may clash with the WA government after it declared in August 2020 a transcontinental gas pipeline will not proceed after it banned local gas being sent to the nation’s east coast amid concern insufficient supplies would be available for the state’s users.
Lachlan Moffet Gray 2.16pm:Retail Food Group maintains profit despite lockdowns
Retail Food Group has managed to maintain a profit in its first half results despite the COVID-19 pandemic impacting some of its shopping mall-based franchises - like Gloria Jean’s or Donut King.
Total revenues fell 52.4 per cent to $85.1m while net profit fell 72.2 per cent to $3.86m.
No dividend was declared and the group received $4m in Jobkeeper payments through the period.
Brumby’s Bakery sales increased 11.7 per cent while the Crust Gourmet Pizza and Pizza Capers brands grew sales by 6.7 per cent for the quick service division, which benefited from home delivery sales.
But brands anchored to shopping centres suffered with total network sales for Donut King, Michel’s Patisserie and Gloria Jean’s declining 13.2 per cent to $244m.
The Di Bella Coffee brand and international network also saw a decline in sales and earnings due to the pandemic.
John Durie 2.13pm:Medibank on mend after Drummond treatment
Craig Drummond chose a strong result to announce his exit from Medibank Private after what will be five years at the helm of the health insurer.
The stock market returns, with an underperformance of 38 per cent, are not flattering and do not reflect on the marked change he has made on the company.
This is better shown by the fact member numbers are growing by some 2.7 per cent overall, and by 1.32 per cent for the Medibank brand, which are the first increases since 2013.
The last 12 months has seen a marked improvement for health funds with the pandemic increasing awareness of health risks. For Drummond, customer focus has been the hallmark of his time at Medibank.
The former banker stemmed sharp losses in market share by installing a customer-first metric.
When the company’s stock price was on Wednesday down 1.9 per cent at $2.83 a share, after a result which surprised on the upside, that tells you the market is concerned at the uncertainty caused by Drummond’s planned departure in June.
2.01pm:Wages surprise hides weak trend: economists
A much stronger than expected rise in the wage price index in the December quarter was driven by the unwind of temporary pay cuts for mostly senior staff back to pre-COVID levels, economists say.
The unwind of those pay cuts contributed 0.2 percentage points in the quarter and excluding this, wages growth would have been close to consensus, notes NAB’s director of economics, Tapas Strickland.
Moreover, annual wages growth remains subdued at 1.4pc year-on- year and well below rates of 3pc or more that the RBA states is needed to have inflation sustainably within its 2-3 per cent target band.
While the better than expected outcome should also be a surprise for the RBA, given its most recent forecast of 1.25 per cent year on year, Mr Strickland says the RBA is unlikely to change its assessment of the outlook for wages growth.
He points to the RBA’s most recent Business Liaison program which found that “The proportion of firms reporting they had wage freezes in place or intended to implement wage freezes this year increased further in the December quarter”.
The RBA’s forecasts last month therefore saw wages growth recovering gradually and remaining below the rate of at least 3 per cent needed for target inflation by the end of its forecast horizon.
“That profile puts the emphasis on the labour market continuing to tighten and here we note the underutilisation rate has recovered strongly, led by a rebound in underemployment to pre-pandemic levels,” Mr Strickland says.
“We continue to highlight the risk of the unemployment rate falling more quickly than the RBA expects, though it is unclear whether this would translate into a greater pickup in wages growth given NAIRU (non-inflation accelerating rate of unemployment) uncertainties.”
Similarly, RBC’s head of ANZ fixed income and commodity strategy, Su-Lin Ong, says the “anaemic pace of underlying wages growth incorporates both cyclical and structural headwinds and is underpinning the RBA’s dovish stance.”
“Despite an economy and labour market that is proving stronger with ongoing upside risk as the vaccine roll out is executed faster, considerable slack remains and full employment is not on the horizon,” she says.
“Structural headwinds including productivity and sectoral adjustment add to the wages challenge even when NAIRU is eventually reached.
In addition, we think the RBA has lifted the bar for wages and inflation suggesting annual wages growth of 3.25-4 per cent is needed for sustainable within target inflation, a pace we have not witnessed since 2012.”
Mr Ong says the wage/inflation dynamics will likely keep pressure on the RBA to err on the side of more, rather than less accommodation.
But it’s immediate focus will be on 3 year bond yield curve control after an “underwhelming” purchase on Monday, with April 2024s still trading well above 10 basis points.
“The RBA appears to have missed a window yesterday and today to use the element of surprise on non QE/semi buying only days and will need to deliver at least $2bn of YCC tomorrow to credibly defend their YCC target with further buying likely next week,” she said.
Lachlan Moffet Gray 1.47pm:Myanmar Metals seeks project status clarification
Myanmar Metals has applied for a third extension to its voluntary suspension of shares and issued an update on its operations as the political situation in Myanmar shows little sign of resolving itself.
Although the company has not been impacted by a new round of sanctions, the miner has silver, lead, zinc and gold interests in the country’s expansive Shan State, which is home to armed separatist movements that have an uneasy relationship with the country’s official military, which has re-asserted control of the government.
“In recent weeks there has been an escalation of civil unrest in the Northern Shan Region. As a result of the conflict, villagers have been displaced and have sought refuge in safe locations,” the company said.
“MYL and its partners are actively providing food aid support to Internally Displaced Persons (IDP’s) in Namtu Township fleeing this unrest. In the meantime, travel on access routes is restricted for safety reasons.”
To manage cash, the company will pull back on drilling and exploration activities and seek further clarity on the under-development Bawdin project.
“I will re-iterate a message I expressed earlier this month, Myanmar Metals is committed to Myanmar and the Bawdwin project. We trust that in due course the situation will be resolved in the best interests of Myanmar’s people and we may continue with our investment,” CEO John Lamb said.
1.39pm:ASX 200 extends fall to 1pc
Australia’s sharemarket extended its intraday fall despite another upturn in US futures.
The S&P/ASX 200 fell as much as 1pc to an intraday low of 6774.3 even as S&P 500 futures rose 0.2pc.
But the index is at least holding above Tuesday’s low at 6765.3 and the 50-day moving average at 6738.4.
Traders have been preoccupied with corporate earnings reports with 20 of the top 200 reporting today.
Lachlan Moffet Gray 1.38pm:WA bans Crown from using junkets
West Australian regulators have banned Crown Resorts from using junkets in its Perth casino after a NSW inquiry found they were linked to organised crime and money laundering.
In a release to the ASX on Wednesday, the James Packer-backed Crown Resorts said it had been informed by WA’s Gaming and Wagering Commission to cease all participation with junkets – gambling promoters who organise jaunts of VIP clients to casinos – and to stop participating in “premium player activity or privileged player activity”.
The Australian understands that the board of the gaming and wagering commission held a meeting late into the night on Tuesday before issuing the directive.
READ MORE: Dual probes are further thorns in the Crown Resorts reform process
Ben Wilmot 1.31pm:Pandemic fails to dent rise of multi-millionaires: Knight Frank
The number of Australians classed as ultra-wealthy leapt by 10 per cent last year with the surging luxury property market and rebounding share market driving the rise.
The country’s status as a safe haven during the pandemic, which drew wealthy expats back to local shores, also helped Australia add to its population of ultra-wealthy people at four-and-a-half times the rate of the rest of the world.
Despite the worst economic downturn in Australia since the great depression, an estimated 3124 Australians accumulated net wealth of at least $US30m, according to a global report compiled by real estate agents Knight Frank.
1.10pm:Wage growth ‘stronger than expected’: CBA
Today’s data showed the wage price index (WPI) grew by 0.6% in Q4 20, notes Commonwealth Bank’s Global Markets Research team.
“This was much stronger than consensus estimates of a 0.3% lift. The annual rate of wages growth stayed at 1.4%.
“The strength this quarter was in the private sector where wages rose by 0.7%. The ABS noted that there were strong lifts in wages for some workers who had previous coronavirus pay reductions unwound this quarter. This was most apparent in the professional, scientific and technical services industry where wages lifted by 1.2% in the quarter. So it’s more likely to be a one‑off ‘pop’ in the quarterly data rather than the start of any meaningful trend higher in wages.
“Over the year private sector wages are up by 1.4%. Public sector wages lifted by 0.3% in Q4 20 to be up by 1.6% over the year.
“Looking ahead we expect to see soft wages growth over the next couple of years,” says the team.
“From a macroeconomic standpoint there will be excess slack in the labour market for some time yet, notwithstanding our view of a strong economic recovery over the next two years. The RBA has also noted in the February Statement on Monetary Policy that the number of private firms that have implemented or were planning to implement wage freezers had lifted in Q4 20.”
Wages data rebounds in Q4 after recent weakness, will add to the belief that the #RBA will need to wind back policy sooner than it has outlined but it may just be a one off #ausbizpic.twitter.com/rusyWmvGfW
— Alex Joiner (@IFM_Economist) February 24, 2021
12.55pm:Scentre retailers show resilience
Scentre’s accounts show just modest change in retailer mix across its malls even through the massive hit to the retail sector through the Covid pandemic.
For the most part the footprint of anchor retailers and department stores such as Myer, David Jones, Target and Kmart remained the same over 2020 across Scentre’s Westfield branded malls.
But other retailers saw four stores closed by Cotton On Group, four stores increase from the company behind Priceline and Soul Patts, four Country Road store closures and one Best and Less closed through the year.
There was also an increase of three H&M stores in Westfield malls through the year. Scentre shares are 1.6 per cent lower at $2.825.
Valerina Changarathil 12.47pm: China, SE Asia growth pills for Blackmores
China and markets in SE Asia made up just over half of Australian supplements giant Blackmores Group’s revenues in the first half, offsetting a negative trend at home.
The group reported total revenues of $302.6m for the period to the end of December, up four per cent.
Net profit after tax came in at $18.9 million.
The group told investors it recorded double-digit revenue growth in China, Indonesia, Malaysia and Thailand with Vietnam also a strong performer.
Of these, China alone contributed $77.3m in revenues, up 25 per cent on the previous half and the strongest interim result in three years.
Growth in Asia contrasted with a $16m, or 10 per cent, fall in revenues in the Australia and NZ markets to $148m.
Jared Lynch 12.22pm: InvoCare hit by cremations trend
Funeral home InvoCare has swung to a $9.2m full year loss as the company reels from coronavirus-fuelled restrictions and people opt for direct cremations over traditional funeral services.
As funerals were stripped back, with the number of mourners limited to curb the spread of COVID-19, InvoCare’s revenue dived 5 per cent to $466.65m in the 12 months to December 31.
Its $9.2m loss, meanwhile, represented a 115 per cent turn around on the previous year.
12.10pm: ASX -0.5% as US futures waver
Australia’s sharemarket was weaker in mixed trading at noon as US futures wavered and investors digested earnings reports.
The S&P/ASX 200 was down 0.5pc at 6804 points after bouncing between 6795.2 and 6823 following a 0.9pc jump on Tuesday.
S&P 500 futures were down 0.2pc after US benchmark recovered from a 1.8pc intraday fall on dovish comments from Fed chairman Powell.
Banks recovered somewhat intraday, but falls in the Communications, Tech, Materials and Real Estate sectors were outweighing gains in Staples, Utilities, Discretionary, Industrials and Energy sectors.
Telstra was down 2.9pc ex-dividend, Afterpay fell 3.2pc, BHP fell 1.9pc and Rio Tinto lost 1.5pc after sport iron ore slipped, Seek fell 6.4pc on broker downgrades, while Iress, Downer and AGL also fell after trading ex-dividend.
IDP Education rose 12pc. Blackmores rose 10pc , and Nine rose 7pc after reporting, while Nanosonics dived 10pc, AP Eagers lost 8pc and Deterra fell 3.5pc.
Lachlan Moffet Gray 11.39am:Cooking at home cheers Maggie Beer
Maggie Beer Holdings has seen sales growth across its private food label and dairy holdings - particularly through online channels - as cooking at home remained popular into the first half of the current financial year.
Overall sales lifted 20 per cent to 27.8m with EBITDA reaching $2.2m from near breakeven point in the last financial year.
A net loss after tax of $367,000 was recorded and no dividend was declared.
Maggie Beer Products saw a 28.6 per cent increase in sales to $14.8m while the Paris Creek Farms and St David Dairy businesses lifted sales by 11.4 per cent and 5.5 per cent respectively.
E-commerce sales increased by 167 per cent to represent 8 per cent of net sales.
CEP Chantale Millard said she was confident the brand would continue to deliver double-digit sales growth to the end of the financial year.
11.43am:Wage index exceeds estimates
Australian wages data slightly exceeded market estimates for the December quarter
The 4Q wage price index rose 0.6pc Q/Q vs 0.3pc expected, up from 0.1pc in Q3.
The year on year change remained at 1.4pc vs 1.1pc expected.
Private sector wages rose 1.4pc and public sector wages rose 1.6pc Y/Y.
Separately, construction work done fell 0.9pc Y/Y compared to an expected 1pc rise.
Eli Greenblat 11.41am: Mosaic back on track after ‘toughest period’
Mosaic Brands, whose stable of fashion chains include Millers, Rockmans, Noni B, Rivers, Katies, Autograph, W. Lane, has posted a 6 per cent rise in half-year net profit to $13 million, as revenue slipped 18 per cent to $359m.
It said that underlying earnings were up 38 per cent to $45.1m - inclusive of JobKeeper payments - with record online sales growth of 27 per cent on the previous corresponding period.
Mosaic Brands accounts show a JobKeeper benefit of $46.9m for the December half.
Mosaic chief executive Scott Evans said the result was driven by a number of initiatives to reset the group for a post-COVID economy, including a continued focus on margin growth and reducing stock levels by $92m, or 55 per cent.
“We also closed unprofitable stores and grew our online offering from 25,000 products to over 350,000 in just 12 months,” he said.
“While JobKeeper was an invaluable element in managing through the last 10 months, having now ended, Mosaic has transitioned through its toughest-ever trading period, strengthened its balance sheet and returned to its track record of profitability.”
The retailer said it was skipping its interim dividend due to the ongoing uncertainty around COVID-19, although it ended the half sitting on net cash of $65.3m.
Sales in January continued to show improvement, the company said.
Patrick Commins 11.25am: Traveller complaints surge: ACCC
The ACCC chief Rod Sims, appearing at a parliamentary economics committee, says the consumer watchdog has seen a five-fold increase in consumer complaints about travel and accommodation services.
Travellers and businesses have struggled to deal with handling cancellations and refunds as COVID-19 restrictions have interrupted travel plans. Those “contacts” have reduced over the first six weeks of 2021, but are still up on a year ago. “Hopefully consumers and businesses are far better placed than they were a year ago,” Mr Sims said.
The ACCC set up a COVID taskforce, and Mr Sims said he believes the watchdog’s dealings with over a 100 companies during the pandemic would have played a big role in hundreds of thousands of Australians getting refunds.
Mr Sims also said that 28 applications for relief from competition rules - banks, medical suppliers, supermarkets have all enjoyed some relief - should not last beyond the pandemic, arguing that would undermine the “effectiveness of our market economy”.
READ MORE: Sydney Airport crashes deep into the red
11.23am:RBA buying $1bn of “semis”
The RBA will buy $1bn of long-dated semi-government securities, according to its website.
The central bank will buy semi’s with maturities from July 2028 to May 2032, excluding TCV Oct-2029 and TCV Sep 2031.
It comes amid rising expectations that the RBA would push back against the recent spike in yields by buying state government bonds on Wednesday and federal government bonds in the secondary market on Thursday.
10.50am:ASX 200 halves early decline
Australia’s share market halved its early fall as US futures turned up.
The S&P/ASX 200 was down 0.3pc at 6822 after falling 0.6pc to 6795.2.
S&P 500 futures pared an early fall of 0.3pc and NASDAQ futures rose 0.2pc.
Lisa Allen 10.40am:Sealink lifts dividend
Diversified tourism and transport group Sealink is one of few travel-related companies to pay a dividend for the half year.
It said it would pay an interim dividend of 7 cents per share up, from 6.5 cents.
The Adelaide based company which operates ferries from the Brisbane River to Sydney Harbour and recently acquired a major Singapore bus company, revealed its revenue increased $571m for the six months to December 31 while its after tax net profit grew to $32m.
Sealink has just been awarded the Sembawang-Yishun bus contract in Singapore for five years and has renewed its Palm Island and Magnetic Island ferry contracts out of Townsville for the next seven years.
David Ross 10.28am:ASIC move to encourage whistleblowers
The corporate regulator has proposed a policy that would provide immunity from both civil and criminal proceedings for individuals for serious offences such as market manipulation, insider trading and dishonest conduct.
The new policy from the Australian Securities and Investments Commission is aimed at boosting the capacity of the regulator to identify and take action against breaches of markets and financial services laws.
ASIC will not provide immunity from administrative or compensation actions.
Immunity will only be available to the first person who satisfies the criteria set out by the regulator.
Those who do not pass the criteria are still encouraged to work with ASIC and would be given credit for co-operation, but not immunity.
Under the new rules, ASIC would grant civil immunity and co-operate with the Commonwealth Director of Public Prosecutions to provide immunity to people who apply and co-operate with the regulator.
The new rules will be reviewed every two years.
10.29am:ASX opens 0.6 down as banks, miners fall
Australia’s share market more than expected in early trading as US futures weakened.
The S&P/ASX 200 fell as much as 0.6pc to 6797.1 after resign 0.9pc on Tuesday.
S&P 500 futures fell as much as 0.3pc after a large intraday rebound in the US benchmark share index on dovish comments from Fed Governor Powell.
Heavyweight banks and miners did much of the damage with BHP, Rio Tinto down 1.9pc and Westpac down 0.9pc.
Ex-dividend falls in Telstra, AGL and Downer also removed a few points from the index.
Nanosonics and Appen fell 15pc and 6pc on disappointing earnings and guidance respectively.
IDP Education jumped 15pc, WiseTech rose 8pc after their results, while IFL rose 5.5pc and Nine gained 4.5pc.
Costa rose 5.5pc after Goldman Sachs upgraded
Lisa Allen 10.22am:No improvement without border clarity: Helloworld
Retail travel agent Helloworld reported a pre-tax loss of $21.5m, adding that it does not expect a tourism improvement until there is more certainty around state border closures.
The Melbourne-based company said its total transaction values collapsed by nearly 88 per cent in the half year to $433m while its revenue dropped 85 per cent to just under $30m.
The company noted that the total numbers of incoming and outgoing passengers into and out of Australia dropped by 97 per cent between March and December, 2020.
It has closed several international offices and reduced staffing costs by around 70 per cent since the start of the pandemic.
“Helloworld received financial support from its landlords and other suppliers over the period which helped keep costs down,” the company said. “However Helloworld notes that several major suppliers to the business in relation to web and other IT services offered nothing despite the 85 per cent plus drop in revenues and total transaction values.”
Eli Greenblat 10.18am:City Chic lifts profit, growth
Women’s fashion chain owner City Chic Collective has posted double digit sales and profit growth for the December half despite COVID-19 restrictions and lockdowns hurting sales for formal and party dresses.
The retailer, which specialises in plus-sized women’s fashion and apparel in Australia and the US, said sales for the first half of $119 million were up 13.5 per cent with like for like sales growth of 20.8 per cent excluding Victorian store closures.
City Chic said net profit for the half was up 24.8 per cent to $13.1m. For the half it took in JobKeeper payments of $3.5m of which $1.3m represented top-up payments for unworked hours.
Online sales across the group was up 42 per cent.
City Chic did not declare an interim dividend and has a net cash position of $83m at the end of December. The cash balance is after the payment of $41m for the acquisition of British chain Evans.
Lachlan Moffet Gray10.12am:IOOF special dividend after profit jump
IOOF Holdings has declared a special dividend after it almost doubled its half-year profit after the company grew funds under administration and gross margin in the period.
Net profit after tax lifted 96 per cent to $54.4m after funds under administration, management and advice lifted 39 per cent to $202.4bn.
A fully franked interim dividend of 8 cents per share was declared, as well as a special dividend of 3.5 cents a share.
The company said the growth in funds under administration came in spite of a $699m outflow under the government’s COVID-19 early release of super scheme.
The company said it would complete its acquisition of MLC and implement $65m-$85m in synergies by the end of the financial year.
Jared Lynch 10.12am:Bega Cheese profits soar
Bega Cheese has more than doubled its half year net profit, citing a “successful execution of a number of key strategic initiatives” and improving its product mix, including its peanut butter range and vegemite.
Net profit soared 154 per cent to $29.7m in the six months to December 31. Excluding costs relating to its $534m acquisition of Lion Dairy & Drinks as well as legal fees from its court battles with Kraft and Fonterra, net profit increased 98 per cent to $29.7m.
The solid earnings come despite Bega’s revenue falling 5 per cent to $708m.
“Impacts on revenue included the conclusion of the milk supply guarantee arrangements at Koroit, ongoing competition for milk resulting in decreased volumes, a reduction in global commodity prices, Australian currency appreciation and the exiting of lower value contract manufacturing agreements for cheese,” Bega executive chairman Barry Irvin said.
“The business is continuing to grow its Australian and international branded business, high value nutritional powders and lactoferrin sales. The consequence of the above has been a more profitable sales mix and an increase in margin against the prior comparative period.”
Across other products, Bega maintained its leading position in spreads with a 30.9 per cent value share - a 13.6 per cent increased on the prior comparative period.
Bega will pay an interim dividend of 5c a share, fully franked, on March 26.
David Ross 10.10am:Auswide after tax profit jumps
Auswide Bank has defied the gloomy economic conditions to deliver a strong boost to after-tax profits, despite record low rates that have skimmed the room for banks to profit from the loan market.
The bank saw a $23.9 per cent growth in profits after tax, closing the half to $11.47m.
Auswide’s annualised loan book grew 13.4 per cent across the half to $3.48bn.
Auswide grew its loan book throughout the year thanks to significant business coming from the mortgage broker industry.
This was supported by a huge boost in customer deposits, which grew 10.6 per cent to $2.79bn.
Much of the bank’s lending has come from its customers’ deposits, which represent 74.4 per cent of the funding mix.
Arrears across the bank were at a record low, at only 0.26 per cent of loans, while only 1.1 per cent of home loans remained on active deferral or assistance as of December 2020.
A fully franked interim dividend of 19 cents has been declared, representing a 70.8 per cent payout ratio.
Cliona O’Dowd 9.47am:Record inflows for ethical fund
Australian Ethical’s net profit rose 17 per cent in the first half of the year as it experienced record net inflows and its funds under management tipped over the $5bn mark.
For the six months through December, the ethical superannuation and investment fund’s profit rose to $5.2m as operating revenue increased 10 per cent to $25.6m.
The result was driven by its investment performance, growth in new customers and strong net inflows, the fund said.
Funds under management increased 30 per cent to $5.05bn, including $573m that came from its investment performance, net of fees.
The ASX-listed ethical fund saw net inflows of $422m over the period, up 43 per cent on last year, and grew its customer base 22 per cent in the 12 months through December.
“Australian Ethical has seen excellent momentum in the first half of this financial year, despite the ongoing challenges of COVID-19 and uncertain economic outlook,” Australian Ethical chief executive officer, John McMurdo said.
“Like all fund managers Australian Ethical is highly leveraged to financial markets with volatility expected to continue into the second half of this financial year. However, we are in an enviable position with no debt, strong cashflows and positive momentum as Australians continue to open their eyes to the many benefits of ethical investing,” he said.
The fund manager declared an interim dividend of 3c per share, fully franked.
9.39am:ASX expected to slip amid earnings reports
Australia’s share market is expected to slip at the open, based on offshore leads.
Overnight futures relative to fair value suggest the S&P/ASX 200 index will start down about 0.4pc near 6812.
Reporting season is still the main focus though with 20 of the top 200 companies reporting Wednesday.
The bond market is potentially also a driver with the market primed for stronger RBA buying to defend its 3-year bond target.
Fed Governor Powell’s dovish comments and tacit endorsement of the recent surge in US bond yields pushed the US 10-year yield down 1.5bps to 1.35pc overnight.
In his semiannual report to Congress, Mr Powell noted that “the economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved”.
He also noted that “for some of the sectors that have been most adversely affected by the pandemic, prices remain particularly soft”.
QE will continue at its current pace “until substantial further progress has been made toward our goals”, Mr Powell said.
In Q&A he tacitly backed the rise in yields, saying: “In a way, it’s a statement on confidence on the part of markets that we will have a robust and ultimately complete recovery”.
Overall the bounce in the S&P 500 from -1.8pc intraday to +0.1pc at the close suggests the US benchmark may retest its record high from here, supporting the Australian market.
The S&P 500 ended a 5-day losing streak - the longest in 12 months - and formed a bullish “hammer pattern” on candlestick charts after approaching its 50-day moving average.
Domestically, quarterly wages and construction data are due for release at 11.30am (AEDT).
Telstra, APA Group, Iress, Fletcher Building and Downer trade ex-dividend today.
David Swan 9.27am:Appen profit lifts in ‘breakout year’
Machine learning and artificial intelligence training provider Appen has lifted its revenue by 12 per cent to $599.9m and its full year profit 21.4 per cent to $50.5m, declaring a “breakout year” for new sales and customers.
In its FY results ending December 31 2020, Appen posted underlying EBITDA of $108.6m, up 8 per cent, with statutory EBITDA up 23 per cent.
“2020 was a breakout year for new sales, new projects, committed revenue and our entry into China, but it was not without its challenges” Appen chief executive officer Mark Brayan said.
“I am extremely proud of our team’s efforts to support our customers and growth strategy, and deliver for our shareholders, in such a difficult year.”
The company said revenue in China grew 60 per cent each quarter in 2020, while the pandemic reduced online advertising mid-2020, impacting Appen’s major customers and resulting in less spending on advertising-related AI programs.
It declared a final dividend of 5.5 cents per share, up 10 per cent year-on-year, payable on March 19.
Lilly Vitorovich 9.21am:HT&E losses grow amid ads hit
HT&E, which owns a string of radio stations including KIIS, Pure Gold and The Edge, has seen its losses swell to $42.5m last year as companies halted advertising spending during the coronavirus crisis.
That compares to a net loss of $14.2m in 2019.
The group’s annual revenue dropped 22 per cent to $197.3m (-29 per cent in 1H vs -14 per cent in 2H).
Its underlying earnings dropped 35 per cent to $49.3m. However, conditions have started to improve with the group recording a 20 per cent drop in earnings in the final six months of 2020 from a 49 per cent drop in the first half.
The group cut costs by 16 per cent to $156m from $186.2m.
HT&E said its first-quarter revenue outlook continues to strengthen with current pacing for March indicating revenue could finish flat on the prior year.
Its revenue in January was down 6.9 per cent, which has improved in February, helped by ongoing improvements in its broadcast radio performance and growth across its digital assets.
HT&E said it is “ encouraged by early briefing activity” for April and second-quarter campaigns.
HT&E has suspended its final dividend to preserve capital, citing the “inherent uncertainty attributable to the ongoing COVID-19 pandemic”.
Lachlan Moffet Gray 9.35am:WA tells Crown to ditch junkets
Crown Resorts has advised the ASX that it has been ordered not to deal with international gambling promoters - or “junkets” - by the gaming regulator.
“The Gaming and Wagering Commission of Western Australia has issued directions to Crown Perth under the Casino Control Act 1984 (WA) which provide that Crown Perth shall not participate in the conduct of junkets, premium player activity or privileged player activity,” the company said.
Crown said its Crown Perth casino would comply and not deal with junkets or participate in:
“table games activity with patrons who are non-residents of Australia with whom Crown Perth has an arrangement to pay the patron a commission, or provide transport, accommodation, food, drink or entertainment, based on the patron’s turnover or otherwise calculated by reference to such play.”
Perry Williams 9.33am:Viva tumbles to a loss
Fuels retailer Viva Energy has sunk into the red for the 2020 financial year after its Geelong refinery crashed to a $95m loss and has launched a business recovery plan to boost the company’s earnings.
Viva fell to a loss of $36m with underlying profit after tax declining from a $136m profit a year ago, and against a loss of $17m-$47m guided to by the company in December.
Geelong refinery earnings fell to a loss of $95.1m compared with a loss of $89m-$99m forecast by the company and against a profit of $117m in 2019. It will not pay a dividend for the last six month period.
The big loss for its Geelong refinery underlined torrid market conditions which has sparked decisions by BP and ExxonMobil to shut down their plants, hiking fears over the nation’s energy security with Viva and Ampol the only remaining facilities operating.
Eli Greenblat 9.29am: Woolies presses on with Endeavour float
Woolworths is pressing ahead with the $10 billion demerger of its drinks and hotels business Endeavour Group after the COVID-19 pandemic disrupted plans to spin off the group last year, with the new company to likely list on the ASX in June unless it is grabbed first by private equity.
Endeavour Group will come to the market, and its new investors, with the strong tailwinds of the first half of fiscal 2021 where the owner of Dan Murphy’s liquor chain and a national hotels business posted earnings growth of 24.1 per cent and a sales uplift of 19 per cent despite shuttered pubs and other challenges posed by the health crisis.
The demerger, first unveiled more than two years ago, comes as Woolworths on Wednesday posted a 10.6 per cent increase in half-year revenue to $35.845 billion as profit rose 28 per cent to $1.135bn. The retailer declared an interim dividend of 53 cents per share, up from 46 cents per share last year, and payable on April 14.
Woolworths mirrored the strong performance of other key retailers which saw their sales, and especially online sales, boom during months of lockdowns and other restrictions due to the COVID-19 pandemic, although chief executive Brad Banducci has cautioned that the retailer expects sales to moderate into 2021 as it laps the extraordinary sales bonanza booked in the six months to Christmas.
David Swan 9.09am:WiseTech takes hit to profit
Listed logistic software maker WiseTech Global has reported a first-half net profit hit of 26 per cent, to $44.4m for the first half, though the company has lifted its full-year EBITDA guidance by $10m, to between $165m and $190m.
WiseTech reported a revenue rise of 16 per cent of the half, to $238.7m, while EBITDA was up 43 per cent to $89.2m. Underlying net profit after tax was up 61 per cent to $43.6m.
The company, which has weathered numerous short attacks over the last two years, declared an interim dividend of 2.7 cents per share, payable on April 9.
“Notwithstanding the subsequent waves of COVID-19 in major markets, our business has continued to deliver solid revenue and EBITDA growth in 1H21,” CEO and founder Richard White said.
Ben Wilmot 9.07am: Scentre crashes to $3.7bn loss
Local Westfield owner the Scentre Group has fallen to a $3.73bn loss as the coronavirus pandemic ripped through its portfolio, which was written down by $4.25bn as it was hit by the consumer shift away from malls.
Scentre said its operating profit was $763.4m, which equated to 14.71c per security, and Funds From Operations for the year was $766.1m, equating to 14.76c per security.
Scentre said it had gross operating cash inflow of $2.36bn and net operating cashflows grew by 95.7 per cent in the second half of the year resulting in $771m for the 12-month period.
The group collected $2.06bn in gross rent collections, including $641m during the last quarter, equivalent to 100 per cent of gross billings.
Scentre chief executive Peter Allen said that business fundamentals remained strong and the company’s strategy, focused on the customer, positioned the group for long-term growth.
Scentre did not receive funds under the JobKeeper program and gave guidance on its distribution.
“While uncertainty remains in 2021, subject to no material change in conditions, the group expects to distribute at least 14 cents per security for 2021. The distribution is expected to continue to grow in future years. The group plans to retain earnings to cover operating and leasing capital expenditure, fund strategic initiatives and reduce net debt,” the company said.
9.05am:No word on new Nine CEO
Nine’s interim results are silent on the search for a new chief executive after Hugh Marks flagged his intention to retire late last year.
Two internal candidates are seen in the running - Stan boss Mike Sneesby and publishing boss Chris Janz. The company is also looking at outside candidates.
It comes as Nine posts a 69 per cent lift in net profit for the December half to $178m, with group earnings of $355m up 42 per cent and in line with earlier guidance of more than 40 per cent growth.
Meanwhile Nine says it intends to repay $2m in JobKeeper benefits received during the December half, during the Covid downturn. It notes its part owned-Domain has received $6.5m, which Domain last week said it does not expect to repay.
Nine says the advertising market “clearly turned” positive in late September, earlier and more sharply than it had anticipated, and this was led by television, both free to air and broadcast video on demand.
8.58am:GameStop seeks new CFO after share frenzy
GameStop Corp said it has begun a search for a new chief financial officer after Jim Bell said he would resign, effective March 26.
The video game, consumer electronics, and gaming merchandise retailer said it has begun a search for a permanent CFO to replace Mr Bell “with the capabilities and qualifications to help accelerate GameStop’s transformation.”
The company, which has recently been rocked by a Reddit-led frenzy, said that on the chance that it doesn’t find a suitable replacement by the time Mr Bell departs, it will appoint current Senior Vice President and chief accounting officer Diana Jajeh to the role.
Lachlan Moffet Gray 8.54am:Early ad rebound boosts Nine
Nine Entertainment has managed to maintain its interim dividend and boost its profit as revenue staged an almost full recovery, as the advertising market turned towards recovery “earlier and more sharply than we had anticipated”.
Revenue for the six months to December 31 was down two per cent to $1.16bn while net profit increased 64 per cent to $177m.
A dividend of five cents per share was declared.
The company said the advertising market through the half was “a tale of two quarters” with the metro free to air ad market falling 14.3 per cent in the September quarter, then growing 16.6 per cent in the December quarter.
Earnings grew across all categories broadcast, publishing, Stan and Domain, with the company saying advertising momentum remains strong.
“The advertising market continues to show strength, with television in particular benefiting from a shift to ‘brand’ by major advertisers. At this stage, March quarter FTA revenues for the metro market are expected to be up in the low-to-mid single digits, notwithstanding the timing of Easter,” the company said.
David Ross 8.46am:Shine sees more growth ahead
It’s a good year to be a lawyer, with ASX-listed Shine Justice growing its net profit after tax far faster than revenues.
The legal group delivered $10.05m for the half year to December 2020, up 13 per cent on the same time the year earlier.
Three big wins in the Federal Court by the legal group sent gross operating cash flow soaring, up 324.4 per cent, with Shine Justice noting the appeal outcome of another case may further sweeten the result.
The group will declare a 2 cent unfranked dividend, representing a $4.76m payout.
Shine Justice CEO Simon Morison said he expected a continued growth in earnings for the group in the coming year “in the order of a high single digit percentage, subject to any material or unforeseen future impacts of the COVID-19 pandemic”.
Jared Lynch 8.47am:Bega brand name ruling looms
First there was the peanut butter war with Kraft, now the world’s biggest dairy exporter Fonterra is seeking orders in the Victorian Supreme Court to ban Bega Cheese using its own brand name on some of its products.
The Supreme Court is set to hand down its decision on Thursday after a four-year legal battle between Fonterra and Bega.
The stoush centres on a licencing deal struck between the two companies in 2001. Under the agreement, Bega Cheese granted an exclusive licence to Fonterra to use the Bega trade marks in Australia on natural cheddar cheese, processed cheddar cheese, string cheese and butter.
Bega has sought to overturn the 20-year-old deal, saying “as owner of the trade marks, has opposed Fonterra’s position and asserted its rights to use its trademarks in Australia”.
“Bega Cheese has also made various counter claims in respect of alleged breaches of the licence by Fonterra,” the company said on Wednesday.
But Fonterra has flexed its muscle in fierce disagreement, seeking orders including declarations that Bega Cheese cannot use the Bega trademarks in Australia on products outside of the licensed products without Fonterra’s consent, as well as damages.
“The Supreme Court of Victoria has informed Bega Cheese that a judgment in the proceedings will be delivered on Thursday February, 25 2021,” Bega said in a statement to the ASX.
“Bega Cheese will promptly review and seek legal advice to assess the judgment and make any further market announcement in accordance with its continuous disclosure obligations.”
Lachlan Moffet Gray 8.44am:Sydney Airport posts loss, no payout forecast
Sydney Airport says it can’t provide distribution guidance for the 2021 financial year “given the uncertainty that remains with respect to the recovery.”
CEO Geoff Culbert said the vaccine should see a return to recovery for international travel.
“With the vaccine rolling out, we are cautiously optimistic that 2021 will see the industry begin to recover.
“We take great confidence from our financial and operational response to COVID-19, which puts us in a strong position to manage through to the recovery and make the most of it when it arrives.”
The comments come as the airport reported a full year loss after tax of $107.5m, while revenue halved to $803.7m.
The number of passengers fell 74.7 per cent to 11.2m for the year.
No dividend was declared.
Lachlan Moffet Gray 8.40am: Vocus profit up, eyes NZ float
Vocus Group says its plan for an IPO on the New Zealand stock exchange is progressing well, with a dual listing on track to occur by the end of 2021.
The update comes as the company announced a half-year net profit after tax of $19.1m, up 49.2 per cent on the prior comparable period, while revenue dipped just half a per cent to $897.4m.
An interim dividend was not declared.
The company said that although its retail data sales declined six per cent, small business was the hardest hit, declining 30 per cent.
This decline was offset by an 8 per cent growth in high margin data network revenues.
Earnings from the New Zealand business grew five per cent.
Eli Greenblat 8.40am:Woolworths half-year profit surges 28pc
Woolworths has posted a 10.6 per cent increase in half-year revenue to $35.845 billion as profit rose 28 per cent to $1.135bn.
The retailer declared an interim dividend of 53 cents per share, up from 46 cents per share last year, and payable on April 14.
More to come
Lachlan Moffet Gray 8.29am:IDP keeps payout despite profit drop
IDP Education has maintained an interim payout to shareholders despite its profit halving as Australia’s border closures hit on revenue from international students.
Overall revenue fell 29 per cent to $269.1m while the company’s net profit fell 45 per cent to $30.4m on an adjusted basis.
A dividend of 8 cents a share was declared.
“Australia revenue declined 40 per cent as international borders were closed and all students that were not already onshore were required to commence their course online,” the company said.
“UK revenue declined 21 per cent as borders remained open but on campus activities were restricted and concerns over the spread of COVID-19 impacted enrolments.
“Revenue from Canadian placements declined 41 per cent as borders were largely closed to international students until late October”
CEO Andrew Barkla said that a recovery was already underway, with a strong pipeline of work in the near future.
8.21am:What’s impressing analysts?
APA Group raised to Outperform: CS
APA Group raised to Overweight: JPM
Adairs restarted at Accumulate: Ord Minnett
Adbri raised to Hold: Jefferies
Austal raised to Neutral: JPM
Costa raised to Buy: GS
Elanor raised to Buy: Moelis
Flight Centre cut to Hold: Morningstar
Harvey Norman cut to Neutral: CS
Hub24 raised to Add: Morgans Financial
Iress raised to Buy: Morningstar
Macquarie Group cut to Sell: Morningstar
Quickstep cut to Hold: Canaccord
Seek cut to Underperform: Jefferies
Seek cut to Neutral: Evans & Partners
Spark Infrastructure cut to Underweight: MS
Worley raised to Buy: Jefferies
Adore Beauty raised to Buy: UBS
Index started at Outperform: $2.10 target price: Macquarie
Seek raised to Buy: UBS
Western Areas raised to Outperform: Macquarie
Lachlan Moffet Gray 8.19am:Medibank CEO Drummond to retire
Medibank Private has announced CEO Craig Drummond will retire from his position on June 20 after almost five years at the company.
Chairman Mike Wilkins thanked Mr Drummond for his time in the role and said a search for a new CEO would still begin.
“The board will now begin the process of appointing a new CEO. This will include consideration of both internal and external candidates,” he said.
“While Craig will remain as CEO until 30 June, I would like to take this opportunity on behalf of the Medibank Board, our shareholders, our people and our customers to extend my thanks to Craig for his stewardship of the company, overseeing a period of change, and transition in the sector.”
The announcement came as the private health insurer announced its interim results, with profit rising 27.3 per cent on the prior comparable period to $226.4m.
An interim dividend of 5.8 cents per share was declared
The company said the result was underpinned by a strong growth in policyholders with a lower level of claims growth.
“This was largely due to a $30.4 million or 13.6 per cent increase in Health Insurance operating profit, a $5.5 million or 41.4 per cent increase in Medibank Health operating profit, and an increase in net investment income of $33.3 million or 86.5 per cent to $71.8 million,” the company said.
8.20am:ASX set for lower start
Australian stocks are set to open lower despite a bounce on Wall Street after testimony by Fed chair Jerome Powell.
At about 8am (AEDT) the SPI futures index was down 25 points, or 0.4 per cent.
Yesterday, Australian stocks rose strongly after a boost to the dole.
The Australian dollar is lower at US79.03c.
Iron ore is 1.6 per cent lower at $US172.75 a tonne. Brent oil is 0.2 per cent lower at $US65.37 a barrel.
8.10am:US stocks rebound as Fed looks dovish
Stocks rebounded after Federal Reserve Chairman Jerome Powell signalled that an interest-rate increase from the central bank isn’t imminent, easing some concern over rising bond yields.
Mr. Powell told lawmakers that inflation remains soft, tamping down recent fears of a policy shift by the central bank following a spike in bond yields.
The tech-heavy Nasdaq Composite Index was down 0.5pc as of the 4pm close of trading in New York. The S&P 500, which was down as much as 1.8pc, was up by about 0.1pc. The broad stock market index was earlier on course for its sixth consecutive session of declines, which would mark its longest losing streak in a year.
The Dow Jones Industrial Average, meanwhile, was up 14 points after falling as much as 363 points earlier.
Earlier in the session, the tech-heavy Nasdaq dropped as much as 4pc and investor favourites including Tesla and Moderna logged double-digit losses. Portfolio managers said the moves marked a rotation out of the high-growth favourites of the past year and into more economically sensitive stocks such as banks and manufacturers.
“The economy is a long way from our employment and inflation goals,” Mr. Powell said at a hearing of the Senate Banking Committee Tuesday morning. He reiterated that the Fed will continue to support the economy with near-zero interest rates and asset purchases until substantial progress is made.
Mr. Powell added that level of recovery “is likely to take some time.”
A sharp rise in yields on U.S. government bonds in recent days has sapped investors’ appetite for riskier assets, including stocks. Shares in technology companies, which have powered the broader market higher for much of the past year, are seen as particularly vulnerable, thanks to high valuations. Their profits become less valuable in today’s terms when investors apply a higher discount rate, thanks to rising 10-year Treasury yields.
The rise in bond yields “naturally does cause investors and cause markets to re-examine the view on equities,” said Paul Jackson, global head of asset allocation research at Invesco. Investing in government bonds is beginning to look more attractive for the first time in months, he said.
Dow Jones
Eli Greenblat 8.00am:Michael Hill profit jumps, despite Covid
The excitement over buying a new engagement ring or anniversary necklace wasn't disrupted by COVID-19, with jewellery retailer Michael Hill International reporting an 82.1 per cent rise in first-half profit to $39m.
However revenue was slightly weaker for the period, down 2.9 per cent to $319.88m as stores were partly closed due to the pandemic.
The retailer said same-store sales growth was up 6.3 per cent to $312.1m as shoppers also increasingly switched to online to make their purchases with the company’s digital sales up by 102 per cent to $18.5m, representing 5.8 per cent of total sales.
Michael Hill said on Wednesday that the COVID-19 impact of 3709 lost store trading days, equating to lost sales of around $23m, and the closure of 15 underperforming stores, led to group operating revenues reducing by almost 3 per cent.
It declared an interim dividend of 1.5 cents per share, in line with last year, and payable on March 26.
“I’m particularly pleased with our results given the challenging environment for our business - continuous store closures throughout the half, significant decline in foot traffic in all markets, the material impact of 3,709 lost trading days, and not a single day of all stores open,” said Michael Hill chief executive Daniel Bracken.
“In spite of all these obstacles, to deliver this significant performance improvement is truly outstanding. Our comparable profits increased by 41 per cent, due to the focus and energy of our team and the transformational change agenda at Michael Hill.”
At its Australian stores, same-store sales were up by 12 per cent to $174.2m, in New Zealand same store sales were up 2.8 per cent to $68.4m and in Canada its same-store sales were higher by 3.6 per cent to $70.3m.
The retailer received government total grants and wages subsidies from Australian, New Zealand and Canadian governments of $14.729m for the half.
7.18am: Tech stocks pare losses after morning swoon
US technology stocks rebounded from an early-morning rout after Federal Reserve Chairman Jerome Powell signalled that an interest-rate increase from the central bank isn’t imminent, easing some concern over rising bond yields.
Major stock indexes recouped a significant chunk of their losses after Mr. Powell told lawmakers that inflation remains soft, tamping down recent fears of a policy shift by the central bank following a spike in bond yields.
Earlier in the session, the tech-heavy Nasdaq Composite Index dropped as much as 4% and investor favourites including Tesla and Moderna logged double-digit losses. Portfolio managers said the moves marked a rotation out of the high-growth favourites of the past year and into more economically sensitive stocks such as banks and manufacturers.
“The economy is a long way from our employment and inflation goals,” Mr. Powell said at a hearing of the Senate Banking Committee Tuesday morning. He reiterated that the Fed will continue to support the economy with near-zero interest rates and asset purchases until substantial progress is made.
Mr. Powell added that level of recovery “is likely to take some time.”
Still, the Nasdaq remained down 0.6pc in recent trading. The S&P 500, which was down as much as 1.8pc, was off by about 0.1%. The broad stock market index is on course for its sixth consecutive session of declines, which would mark its longest losing streak in a year.
The Dow Jones Industrial Average, meanwhile, traded near the flatline after falling as much as 363 points earlier.
Dow Jones
Eli Greenblat 7.02am:Fantastic Furniture float plan revived
Greenlit Brands, the owner of a stable of retail brands including Fantastic Furniture, Freedom and Snooze, is eyeing a sharemarket float this year for its Fantastic Furniture chain.
It came as the group bounced back to a small profit of $13.585 million following a massive restructure and divestment of some of its businesses.
Greenlit is the second largest furniture retailer in Australia after Ikea and could list Fantastic Furniture on the ASX in 2021 after postponing a planned float last year that was ultimately sidelined by the emerging COVID-19 pandemic.
Now the company can go to the market with a much more positive story to tell after its 2020 accounts, lodged with ASIC, show a return to profit on continuing operations of more than $13.5m, from a loss of $163.958m. Revenue for the year to September was just under $1.2 billion from $1.072bn in 2019. It is believed a sizeable portion of that performance came from the Fantastic Furniture division. Greenlit also received JobKeeper in 2020.
Underlying earnings for the company from continued operations doubled to $103m.
Now with its unwanted businesses shed and it posting solid profits, Greenlit is once again considering an IPO of its Fantastic Furniture arm.
“In November 2020, the group decided not proceed with the proposed initial public offering of Fantastic Furniture at that time,” the Greenlit financial report lodged with ASIC said.
“Despite demonstrating a track record of growth in sales and market share, and receiving positive feedback from potential investors as to the quality of the business and management team, it was determined that the IPO should be postponed until later in 2021 when it is expected that investors will be less cautious about the market dynamic beyond the prospectus forecast period.”
6.55am:Meridian to build new wind farm
Meridian Energy Ltd. said it will build a 176 megawatt wind farm in New Zealand’s Hawke’s Bay region that will generate power for the equivalent of 70,000 homes.
The company said construction of the $NZ395 million Harapaki wind farm, which will be Meridian’s sixth and the country’s second largest, will take about three years.
More than 80pc of New Zealand’s electricity is generated from renewable sources such as hydro dams, geothermal plants that use the earth’s internal heat and wind farms. The government wants to move to 100pc renewable energy over time to help meet targets for reductions in climate-warming emissions.
Meridian said changes in the value of hedges drove a 19pc increase in its first-half net profit to $NZ227 million. Underlying earnings fell 9.0pc from a year earlier on lower hydro generation.
Dow Jones Newswires
6.20am:What Australia deal mans for Facebook investors
Facebook said it will restore news content to its platform in Australia. The company had suspended news sharing last week amid a dispute over a proposed Australian law requiring tech platforms to pay publishers.
Tech stocks experienced broad weakness in US trading, though Facebook was a bright spot, advancing 1.3 per cent to $US263.62 by the early afternoon. The Nasdaq Composite index fell 1.1 per cent, while the S&P 500 index retreated just 0.3 per cent.
Australia’s pioneering legislation would force large tech platforms such as Facebook and Alphabet to pay local publishers for news content, and require binding arbitration if the parties can’t cut a deal. The law could have significant implications for publishers, consumers, and tech giants if adopted by more governments.
Forcing tech platforms to pay for news is an idea that has been gathering support around the world. According to The Wall Street Journal, a Canadian government minister said his government would move forward with similar legislation. Microsoft, which operates the Bing search engine, has said it supports legislative efforts in the U.S., the European Union -- which has already taken steps to do so through copyright law -- and elsewhere.
For Facebook, the impact of news is likely muted versus rivals such as Alphabet, which runs the Google search engine. Facebook has been de-emphasising news content in its members’ feeds for years, and has further prioritised content that the company says helps create more meaningful interactions among its users. Facebook’s managing director for Australia and New Zealand, William Easton, said last week that news makes up less than 4pc of the overall content people see in their News Feed.
To wit, Facebook was willing to shut off news sharing in Australia for five days, though it was wildly unpopular in Australia, and could have been aimed at pressuring Australia into a more favourable negotiating position. Regardless, Facebook’s decision also had unintended consequences, such as removing pages belonging to government agencies such as the country’s weather service, along with those of some local health agencies, according to the Journal.
Alphabet subsidiary Google, which also opposes the Australia law, agreed to pay some publishers for content, including News Corp, which owns Dow Jones, publisher of Barron’s.
Facebook stock has advanced 25pc in the past year, as the S&P 500 rose 16pc.
Dow Jones Newswires
5.10am:Powell sees easy-money policies staying in place
Federal Reserve Chairman Jerome Powell reaffirmed the central bank’s commitment to maintaining easy-money policies until the economy has recovered further from the effects of the coronavirus pandemic.
“The economy is a long way from our employment and inflation goals,” Mr. Powell said in testimony to the Senate Banking Committee, a statement he has repeated in recent weeks. The Fed will therefore continue to support the economy with near-zero interest rates and large-scale asset purchases until “substantial further progress has been made,” a standard that Mr. Powell said “is likely to take some time” to achieve.
Mr. Powell delivered the Fed’s semiannual monetary-policy report to members of the committee Tuesday and is set to do the same Wednesday at a hearing of the House Financial Services Committee.
The hearings come as steady progress on vaccinations and multiple rounds of fiscal stimulus have improved the outlook for the economy, the Fed chief noted.
Mr. Powell painted a brighter picture of the economy than the last time he appeared before lawmakers, December 1. Covid-19 cases and deaths at the time were surging, parts of the country were tightening lockdowns and public vaccination campaigns had not yet begun, prompting Mr. Powell to warn that the outlook for the economy was “extraordinarily uncertain.”
The virtual appearances come as lawmakers are negotiating President Biden’s proposed $1.9 trillion coronavirus relief package, which could prompt questions to Mr. Powell about his assessment.
Dow Jones
5.00am:Tech sell-off eases after Fed signals steady course
US tech stocks bounced back from their worst open in months, after prepared testimony from Federal Reserve Chairman Jerome Powell cooled the rate fears that have fuelled a late February rout.
Many major stocks were down, but only modestly so. Tesla Inc. had fallen 5 per cent after dropping as much as 12 per cent in early trading, while the Nasdaq Composite Index was down 2.5 per cent in early afternoon trade after an early decline of 4 per cent put it on track for its worst day since September. The index is down about 6 per cent from its peak February 12, as rising U.S. interest rates prompt a broad re-evaluation of investor growth expectations, and on track for a sixth straight decline -- its longest pullback in a year.
The Dow was down 0.5 per cent, while the S&P 500 was 0.9 per cent lower.
Tesla, whose 743 per cent surge last year highlighted the tech-led market rebound from the coronavirus sell-off, is now down for 2021 and has lost a quarter of its value since the electric-car firm said Feb. 8 that it had spent $US1.5 billion on bitcoin in a bid to boost returns on cash.
Other investor favourites were also recovering after being hit hard in early trading. Moderna Inc., the biotech maker of a major Covid vaccine, was down 8 per cent after falling as much as 13 per cent. Apple dropped 2.8 per cent and Amazon.com Inc. fell 1.5 per cent.
The tech firms have emerged as a favourite of the small investors who have piled into stock and options trading over the past year, with Nasdaq rising 44 per cent in 2020. But the scale of the rally has prompted concerns that many of the stocks are overvalued, making them vulnerable to sudden slumps.
The rise in U.S. interest rates over the past week to a recent 1.37 per cent on the 10-year Treasury note signifies expectations of faster economic growth, which investors said reduces the relative attractiveness of the tech firms compared with more economically sensitive and less highly valued investments such as banks and manufacturing firms.
“We’re seeing a nasty, violent rotation,” said Mike Bailey, director of research at FBB Capital Partners, an investment manager in Bethesda, Md. “A lot of the stratosphere stocks are getting dragged down.”
The pullback comes on the heels of dozens of record closes for major indexes in recent months. The Dow hit a recent record on Feb. 17 and the S&P 500 on Feb. 12. Investors said the gains in stock indexes was driven in part by the notion that with U.S. interest rates near all-time lows, there was no alternative to investing in shares -- a concept that came to be known by the acronym TINA.
The modest rise in U.S. rates this year hasn’t made borrowing substantially more costly or notably increased the appeal of bonds, but it has reminded investors of the risks of holding investments.
Stocks retraced some declines later Tuesday after Mr Powell signalled in prepared testimony before Congress that despite signs of recovery since the Covid pandemic began, “the economy is a long way from our employment and inflation goals.” The comment was taken by investors as a sign that any Fed interest-rate increases are “still several years away,” said Paul Ashworth of Capital Economics.
Dow Jones Newswires
4.58am:Brit pledges no underwriting for Adani mine
Brit Group, a Lloyd’s of London insurer owned by Fairfax Financial Holdings, pledged to not underwrite the controversial Carmichael coal mine in Australia, joining other insurers that have backed away from one of the world’s biggest coal projects.
“Brit does not, has never, and will not write any policies relating directly to the Adani Carmichael coal mine itself. In addition, Brit also confirms that it does not plan to renew any risks involving any other works directly associated with the project,” a spokesman for the insurer told The Wall Street Journal.
Indian conglomerate Adani Enterprises Ltd. and its subsidiary Bravus Mining & Resources, which oversees the Carmichael mine, didn’t immediately respond to requests for comment.
Adani’s Carmichael coal mine under construction in Queensland has drawn fire from activists after authorities greenlighted the project in 2019. The mine will produce some 10 million metric tons of coal a year when finished, according to Bravus’s website.
Activists said that at least 31 insurance companies have now refused to cover the mine.
Dow Jones
4.55am:Global stocks part ways
Global stock markets headed in different directions Tuesday, with inflation worries offsetting optimism over reopened economies, traders said.
Bitcoin meanwhile came off the boil following critical comments by US Treasury Secretary Janet Yellin.
After most Asian markets posted gains, European indices were mixed, with Frankfurt’s DAX 30 giving up 0.7 per cent.
January’s eurozone inflation was confirmed at 0.9 per cent compared with minus 0.3 per cent in December, official data showed, adding to concerns that price increases are picking up momentum.
London’s benchmark FTSE 100 stocks index added 0.2 per cent however, a day after British Prime Minister Boris Johnson unfolded a road map out of UK’s coronavirus lockdown from March.
But British unemployment is now near a five-year high at 5.1 per cent, and could surge further after the government ends the furlough support scheme keeping millions of workers in jobs during the lockdown.
On foreign exchange markets, the pound traded near a three-year high against the dollar.
Bitcoin stumbled in its record-breaking run, falling to around $US47,600 after Yellen pilloried the virtual currency as an inefficient means of payment that consumed a vast amount of energy per transaction.
Oil prices bobbed up and down but showed slight gains in late London trading. While there is growing hope that vaccine rollouts will help the global economy recover, nagging concern over inflation and subsequent interest rate hikes weigh on stock markets.
AFP
4.50am:Bitcoin tumbles on Yellen warning
Bitcoin tumbled from its record-breaking run after US Treasury Secretary Janet Yellen warned that the “highly speculative” unit could be used for “illicit” purposes.
The digital currency slid 12.57 per cent to $US47,946, while rival ethereum declined 15 per cent to $US1,539.
Tesla boss Elon Musk -- whose company has invested heavily in bitcoin -- tweeted Saturday that the prices of both cryptocurrencies “seem high”.
Yellen hit out over bitcoin, claiming it was inefficient and required a vast amount of energy -- and she expressed fear it was used for “illicit” reasons.
“I don’t think that bitcoin... is widely used as a transaction mechanism. To the extent it’s used, I fear it’s often for illicit finance,” she said at an event hosted by the New York Times.
“It’s an extremely inefficient way of conducting transactions. And the amount of energy that’s consumed in processing those transactions is staggering.
“But it is a highly speculative asset, and I think people should beware. It can be extremely volatile, and I do worry about potential losses that investors in it could suffer.” Tuesday’s slump came after bitcoin had blazed a record-breaking trail to peak at $US58,350 on Sunday.
The total value of all bitcoin had surpassed $US1.0 trillion on Friday. One week ago, bitcoin blasted past $US50,000 after Musk’s electric carmaker Tesla revealed it had invested $US1.5 billion in the unit.
AFP
4.45am:US consumers guardedly optimistic: survey
US consumers were slightly more confident about the economy in February, but more guarded about the coming months amid the ongoing pandemic, according to a survey.
The Conference Board’s consumer confidence index posted its second consecutive increase, rising to 91.3 from 88.9 in January.
However, the Conference Board said its latest consumer survey was completed February 11, and does not fully capture the Texas weather and power crisis, nor the plans to loosen dining restrictions in New York.
The survey showed a rebound in confidence about the present situation, but a decline in feelings about the next six months.
That shows “consumers remain cautiously optimistic, on the whole, about the outlook for the coming months,” said Lynn Franco, the Conference Board’s senior director of economic Indicators.
AFP
4.40am:HSBC ramps up Asia pivot as pandemic hammers profits
HSBC has vowed to accelerate its Asia pivot despite spiralling tensions between China and the West after it reported a 30 per cent plunge in profits for 2020 due to the coronavirus pandemic.
Reported profit after tax came in at $US6.1 billion, which the bank blamed primarily on higher-than-expected credit losses and other bad debt charges.
The results came as HSBC published a new strategy laying out plans to redouble its attempt to seize more of the Asian market -- the region of the world where Europe’s largest lender makes the vast majority of its profits.
The strategy will see the London-headquartered bank plough some $US6 billion into shoring up operations across Asia, with a particular focus on targeting wealth management in the increasingly affluent region.
The bank made specific mention of markets in Southeast Asia such as Singapore, as well as China and Hong Kong, and also the Middle East.
After “the economic impact of COVID-19 hit” profits, HSBC will invest in “markets that set us apart, while also moving the heart of the business to Asia, including leadership”, chief executive Noel Quinn said in webcast.
The global economic slowdown caused by the virus has hit financial giants hard but HSBC has a further headache -- its politically precarious position as a major business conduit between China and the West.
HSBC makes 90 per cent of its profit in Asia, with China and Hong Kong the major drivers of growth.
As a result, it has found itself more vulnerable than most to the increasingly frayed relationship between China and western powers -- especially after Beijing imposed a draconian security law on Hong Kong last year and cracked down on democracy supporters.
AFP
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