Trading Day: live markets coverage; Earnings season game day podium; plus analysis and opinion
Investors are plonked square in the middle of a blue chip battle as the market delivers its verdict on a huge day for corporates.
And that’s the Trading Day blog for Wednesday, February 21.
Eli Greenblat 4.43pm: BWX sinks, cuts out competitors
Shares in small-cap market darling BWX collapsed by one third today after the skincare and beauty products company posted a 34.1 per cent slide in its interim net profit and warned that a decision to exit third-party representation for other businesses would trigger an unbudgeted reduction in sales of $6.5 million over the next year.
BWX, which is most known for its Sukin natural beauty range, has seen its shares more than triple over the last few years but that rally came to an abrupt and painful halt today as its shares slumped more than 31 per cent.
BWX fell $2.27 to $4.96.
The company posted a net profit of $5.4 million, down 34.1 per cent as revenue jumped 79.2 per cent to $67.2 million. Normalised net profit for the half, which excludes $5.5 million in costs linked to its acquisition of Andalou Naturals and Nourished Life and finalisation of Mineral Fusion acquisition and restructuring costs.
BWX said it was now forecasting EBITDA guidance in the range of $42 million to $46 million for fiscal 2018, an increase of 60 per cent to 74 per cent. The market had pencilled in earnings closer to $47 million for 2018.
4.23pm: Wagners books $15.7m maiden profit
Wagners has reported a maiden first-half profit of $15.7m, up 15pc on year. It has also paid an interim dividend of 1.5 cents.
Highlights include an 18pc rise in cement volume. CEO Cameron Coleman said the pipeline of opportunities “is very encouraging” and South East Queensland “continues to look very positive for the construction materials sector”.
WGN closed up 1.8 per cent on $3.90
4.21pm: Wesfarmers, Santos CEOs join Ticky
On @BizTicky @SkyBusiness 5.30pm Wesfarmer's Rob Scott and Santos' Kevin Gallagher
— Ticky Fullerton (@BizTicky) February 21, 2018
4.11pm: Stocks recover from BHP hit
The S & P/ASX200 index closes up 0.1 per cent on 5943.7 in a battle of the heavyweights with rampant Wesfamers buying on its interim result offsetting a sharp opening hit from BHP.
Robyn Ironside 4.09pm: APRA blamed for ‘units shortfall’
A prominent Brisbane developer has blamed the Australian Prudential Regulation Authority for undermining confidence in the apartment market, triggering a wave of defaults and deterring new projects.
The city’s market has been rocked by expectations that about one in five apartments sold to foreign buyers will come back on to the market in coming months due to difficulties obtaining finance.
Metro Property Development co-founder David Devine said as far as he was concerned Brisbane was heading for an undersupply in the apartment space because of a halt in new projects.
4.02pm: The Training Day ahead
Join the conversation with our Trading Day experts for breaking news and analysis in financial markets here and on Sky News Business (Ch: 602)
NOW: John Noonan — Thomson Reuters
4.15pm: Peter Strachan — Resource Analyst, StockAnalysis
4.30pm: Julia Lee — Bell Direct
5.15pm: Michael Hewson — CMC Markets UK
2.45pm: Rob Brierly — Head of Research, RM Capital
(All times in AEDT)
Samantha Bailey 3.57pm: Today’s earnings season results
Coca-Cola Amatil (+2pc @ $8.86)
Annual net profit soared 81 per cent to $445.2m — a fall in Australian beverage performance weighed on the $5bn revenue, down 3 per cent from 2016.
A2 Milk (+30pc @ $11.30)
Hits record high after unveiling a net profit up 150 per cent to $NZ98.5m compared to the previous year as it accounted a supply and sales deal with New Zealand diary company Fonterra.
Seven Group (+11.3pc @ $18.35)
Upgraded its full-year earnings outlook, as it swung to a half-year after-tax profit of $168m, up from a $41m loss in the previous corresponding period.
Fairfax (+4.6pc @ 69c)
Half-year net profit fell 54 per cent to $38.5m, on a 4 per cent revenue fall to $877m. The company announcing it will close 28 of its New Zealand print titles alongside results.
Fortescue (-5pc @ $5.10)
Half-year net profit fell 44 per cent to $US681m, weighed by falling prices for the miner’s lower-grade iron ore. Underlying earnings dropped 31 per cent to $US1.83bn.
Santos (-3.1pc @ $5.02)
Narrowed its full-year loss to $US360m in 2017 compared to the $US1.05 billion it booked a year prior.
Scentre Group (+1.4pc @ $3.88)
Booked an annual net profit rise of 41 per cent to $4.22bn, due to the higher valuation of its Australian shopping centres.
WorleyParsons (+7.2pc @ $15.22)
Swung to profit for the first half, aided by the acquisition of AFW UK Oil and Gas, booking a net profit of $1.4m compared the $2.4m loss in the first half last year.
Wesfarmers (+3.1pc @ $42.02)
Half-year net profit tumbled 81 per cent to $212m on the back of planned writedowns — operating revenue lifted 3 per cent to $36bn.
WiseTech Global (-23pc @ $11.28)
Delivered an 8 per cent net profit lift to $15.6 million for the first half, on track to meet its full year guidance, the company said.
3.42pm: LME cobalt robust at $US82,000?
Cobalt is hitting historically high prices fuelled by the car industry, which needs the rare metal to make light and durable electric batteries.
The price per tonne of cobalt rose to $US82,000 on the London Metal Exchange in mid-February, its highest level since it began tracking the commodity in 2010, and has almost tripled in value since the beginning of 2016.
However, the rapidly growing demand has not yet peaked, according to Darton Commodities, which specialises in the sale of cobalt.
“The market is expected to remain in surplus supply until forecasts of exponential growth in electric vehicle sales materialise around 2020,” said its annual report.
“During 2017, lithium-ion batteries used in portable consumer electronics still consumed around 72 per cent of total cobalt consumed in (lithium-ion batteries),” Darton Commodities said, adding however that this share was likely to decline because of growth in the auto sector.
“Electric cars came of age in 2017, with sales rising 51 per cent,” said analysts at Macquarie, noting that the halting of state subsidies for sales in China could slightly slow this growth in 2018.
In the rest of the world, more and more countries are planning to phase out petrol and diesel cars, prompting manufacturers to devise strategies to meet the demand for electric vehicles.
Another reason for market interest is that cobalt is largely produced as a by-product of copper and nickel mines.
The amount of cobalt in every tonne of ore mined is so small that it takes a high concentration to make the activity profitable.
Some believe the daily price set by the LME may have over-estimated cobalt’s potential.
The LME price only reflects part of the true value of the metal, since cobalt exchanges are largely outside the public market.
Financial investors, seduced by the potential for electric vehicles, may have induced a market fever, argued Darton Commodities.
“In 2017, average annual cobalt prices more than doubled, owing to strong demand from consumers, limited availability of cobalt on the spot market and an increase in metal purchases by investors,” the US Geological Survey said in its annual report
AFP
3.28pm: WATCH: Coke CEO on 81pc profit jump
3.16pm: Heng Seng healthy at lunch
Hong Kong stocks ended the morning session well up on Wednesday, in line with broad gains across Asian markets as investors await the release of minutes from the Federal Reserve’s latest policy meeting.
The Hang Seng index rose 0.91 per cent, or 279.76 points, to 31,153.39.
AFP
2.58pm: Why wage growth is still cosmetic
Annual wages rose 2.1 per cent according to today’s ABS data release, the strongest pace of growth in 18 months on show between the most recent December quarters.
But is it really all that flash? In real terms, that is, minus the rate of inflation, wages only rose 0.1 per cent over the period, signalling perhaps more than a few employers managed to sneak in a clever rebranding of a simple “cost of living increase” increase.
Given its significance to broader economic growth, investment houses have their own take on the pace of wages, consensus remaining we’re far from having a Wall Street-like fright over the potential for our central bank to pick up the pace of rate hikes: a generally accepted relationship between heightened wage growth and monetary policy.
“Underlying wages growth may be bottoming, but its premature to conclude that its starting to lift as the stronger than expected December quarter gain likely reflects a continuing flow through of last year’s minimum wage rise,” said AMP Capital’s Dr. Shane Oliver.
“Adjusting for the minimum wage rise leaves underlying wages growth still stuck around its low of just 1.9pc year on year; and the acceleration in quarterly wages growth was only driven by the public sector with private wages growth stuck at 0.5pc quarter on quarter.”
From Westpac’s Justin Smirk: “while the slight uptick may give the RBA, and some market analysts, some heart to call a turnaround in wages given that wage outcomes from new enterprise agreements continue to lag behind the agreements they are replacing, this will continue to be a drag on broader wages and portends a continuation of the subdued wages environment despite the lift in minimum wages and slightly higher public sector wage outcomes.”
Stephen Bartholomeusz 2.36pm: Cost curve no shelter for Fortescue
The contrast between Fortescue Metals’ interim result and those produced by BHP yesterday and Rio Tinto a fortnight ago is profound and telling. Whether the underlying influences on the disparate results are a permanent feature of the iron ore landscape or not will be a big driver of Fortescue’s medium-term fortunes.
Fortescue’s new chief executive Elizabeth Gaines had the unfortunate task, in her inaugural earnings announcement, of revealing a 44 per cent decline in the group’s earnings, from $US1.22 billion to $US681 million on revenues that slumped 18 per cent to $US3.7bn.
It’s unfortunate because, in terms of the things its management can control, Fortescue continues to deliver. Its C1 cash costs of $US12.11 a tonne -- $US12.08 in the second quarter — put it at the bottom of the industry cost curve. That’s a remarkable, and continuing, story.
But cruelling what was a continuation of the operational excellence that has characterised Fortescue in recent years, along with the dramatic deleveraging of its balance sheet, has been an unusual trend in ore prices.
2.14pm: $1m in fish just Huon’dering about
Fish farmer Huon Aquaculture lost $1 million worth of yellowtail kingfish in the Providence Bay piscine escape that occurred during January’s severe NSW weather. Huon (HUO) says the loss of the fish was not due to the design or integrity of the fortress pen, but to “operational shortcomings” that have since been addressed.
Huon on Wednesday reported a 12.3 per cent drop in net profit for the six months to December 31 to $27.6 million, after accounting adjustments of biological assets increased by $12.3m during the half — compared to a $31.6 increase a year earlier — AAP
HUO last up $4.76
2.03pm: The Trading Day ahead
Join the conversation with our Trading Day experts for breaking news and analysis in financial markets here and on Sky News Business (Ch: 602)
NOW: Mark Steinert — CEO, Stockland
2.20pm: Live cross — FIIG Securities
2.45pm: Live cross — AMP Capital
3.00pm: Craig Sideny — Shaw and Partners
3.05pm: James Taylor — Morphia Asset Management
(All times in AEDT)
Matt Chambers 1.53pm: Behind today’s BHP share slump
BHP Billiton shares have slumped in early trading after higher than expected costs weighed on the dual-listed miner’s first-half profit.
BHP last night said full-year underlying profit jumped 25 per cent to $US4.05 billion because of higher oil and copper prices.
But the profit missed consensus expectations of $US4.25bn because of increased costs, including a $US493m “negative productivity movement” due to maintenance at the Olympic Dam copper and uranium mine in South Australia and its Queensland coal operations — read more
BHP last down 4.7 per cent on $29.83
1.32pm: Jihadis convert crypto boom
Brett Forrest writes:
When a group that says it provides financial assistance “relating to the jihad” sought to improve conditions for fighters in a squalid, sandbag-fortified trench in Syria late last year, it turned to a new funding conduit: bitcoin.
“There is currently no shelter to protect the food and ammunition from the rain,” the group, called al Sadaqah (“charity” in Arabic), lamented in a post on the messaging app Telegram. The group’s Twitter feed contains a video showing a dirt floor strewn with blankets, bags of pita bread and hand grenades along with a message — “Donate anonymously with Cryptocurrency” — followed by a bitcoin address. So far, according to an online ledger, the group has received about $1,000.
The soliciting of digital currency by jihadist groups like al Sadaqah has only recently come under scrutiny from US officials. In January, Rep. Ted Budd (R., N.C.) introduced a bill to establish a financial-technology task force to combat terrorists’ use of cryptocurrency. Treasury Secretary Steven Mnuchin told the Senate Banking Committee that the agency is also planning to investigate.
Meanwhile, cryptocurrency has become an increasingly discussed topic among jihadist groups in the Middle East. Earlier this month, an issue of al-Haqiqa, a pro-al Qa’ida ezine, included a “Tech Talk” section that outlines bitcoin basics.
12.54pm: Market rallies against BHP bears
Australia’s S & P/ASX 200 has turned slightly positive after erasing an early fall of 0.4 per cent. Earnings are the main focus despite the bearish leads from offshore equities and commodities overnight.
Some of the biggest gains and losses are in companies that have reported in the past two days. Among the biggest gainers today, A2 Milk is up 23pc, Seven Group is up 15pc and Wesfarmers is up 3.7pc.
On the downside, Wisetech Global is down 19pc, Vocus is down 5.5pc and BHP down 4.8pc. BHP is detracting 17 points from the index, but that’s outweighed by gains elsewhere.
Gains in Wesfarmers, A2 Milk, LendLease, Woolworths, Scentre, Aristocrat, Woodside, IAG Treasury Wine and Seven Group are more than offsetting the fall in BHP.
12.47pm: WATCH: a2 Milk CEO on Fonterra, profit
12.29pm: ASX recovers from heavy-handed BHP
The S & P/ASX200 index last traded near flat on 5941 after BHP served the market a firm blow in the form of a 5 per cent opening plunge, the largest stock on the index by market capitalisation a heavy weight on trading sentiment.
Meanwhile, Wesfarmers shares clamber back ground and tracks its best session in five years after grocery arm Coles smashed through depressed expectations on its interim results.
More to come.
12.08pm: The Trading Day ahead
Join the conversation with our Trading Day experts for breaking news and analysis in financial markets here and on Sky News Business (Ch: 602)
12.15pm: Martin Earp — CEO, Invocare
12.30pm: James King — AFEX Australia
12.45pm: Peter Bradford — CEO, Independence Group
1.00pm: Alsion Watkins — CEO, Coca-Cola Amatil
(All times in AEDT)
John Durie 12.01pm: Take morning report with grain of salt
Today’s profit reports are showing pleasing strength in the economy but also underline how investors should always be cautious when reading analyst notes from investment banks.
Case in point, UBS retail analyst Ben Gilbert who trumpeted in a note, which subsequently featured elsewhere with a front page exclusive report, that Coles was going down the gurgler.
Coles numbers were not great, with return on capital down from 11.1 per cent to nine per cent but there are clear signs of life from Coles, with second-quarter comparable food and liquor sales up 1.4 per cent compared to 0.5 per cent in the first quarter, the best result for five quarters and continuing a run of 41 straight quarters of positive growth.
So, how did Gilbert report the fact he got it wrong?
“Good result with Coles nine per cent ahead of UBS estimates.”
Stephen Bartholomeusz 11.48am: Cold sausages: a Wesfarmers story
The foreshadowed tide of impairment-driven red ink poured through Wesfarmers’ interim results, highlight the challenges, and obscure the strengths, that new chief executive Rob Scott has inherited.
Given that Scott had foreshadowed the massive non-cash writedowns of the Bunnings UK business ($931 million) and Target ($306m) earlier this month, it wasn’t any surprise that the group’s earnings collapsed, from $1.58 billion to $212m.
Excluding the significant items, however, the result was still less than impressive, down 2.7 per cent to $1.54bn as $165m of operating losses in the UK and a 14 per cent fall in Coles’ earnings offset the continuing excellence of the local Bunnings business, a strong result from the now-combined Kmart and Target department store division, another robust Officeworks contribution and strong growth in the industrial division.
11.33am: Aussie spikes on wage growth beat
The Australian dollar shoots higher in a knee-jerk reaction to December quarter wages data showing a 0.6 per cent increase in wages on the quarter prior, or 2.1 per cent on the same period a year prior.
More conservative forecasts by economists predicted 0.5 per cent quarterly wage growth for the period.
Alongside the ABS data release were those showing a sharp 19 per cent rise in construction work completed over the period, a read above market forecasts — read more
AUD/USD last up 0.2 per cent on US78.96c
11.23am: Santos exercises dividend restraint
Robb M. Stewart writes:
Santos has continued to hold off paying a dividend but raised the prospect of returning capital to shareholders if it can hit its debt-cutting target ahead of schedule.
The Australian energy company narrowed its loss over the past year and continued to eat away at its debt pile as cash flow rose following stronger sales volumes and improved prices — read more
STO last down 2.1 per cent on $5.07
11.15am: Wages data due 11:30am AEDT
The Australian Bureau of Statistics releases December quarter wages data at 11.30am (AEDT). Economists expect a 0.5 per cent increase in wages nationwide on the quarter prior, equivalently a 2 per cent increase on the same quarter a year prior.
The ABS constructs its Wage Price Index using a representative sample of individuals, subject to rotation, from both private and public sectors surveyed over the time period.
AUD/USD last US78.83c
David Swan 11.13am: Telstra hit with iMessage outage
Telstra (TLS) customers across the country are currently unable to send or receive iMessages, with an outage affecting iPhone users across the East Coast.
The telco, which in 2016 was plagued by a range of nationwide outages, said the issue is ongoing.
“Some customers may be experiencing an issue with Apple iMessage and FaceTime.,” a spokesman told The Australian.
11.03am: Materials heavy on local stocks
Australian shares are marginally lower in early trade as investors take cues from a decline on Wall Street and local corporate earnings weigh on sentiment.
The benchmark S & P/ASX200 stock index was last traded down 0.04 per cent on 5937.9.
Patersons strategist Tony Farnham says the indications are the market will continue its negative momentum throughout today’s session.
“It’s a mix of a selldown in the US and reaction to a round of weaker profit results,” he said.
“We are also awaiting quarterly data on wages and construction, but that is unlikely to offer strength.” Overnight, major indices on Wall Street fell, snapping a six-session winning streak, as a sharp decline in Walmart weighed heavily.
Locally, the materials sector was the biggest drag, led by losses in the major miners.
REPORTERS BY THE NUMBERS
BHP: -4.4 per cent
Fortescue: -4 per cent
a2 Milk: +19 per cent
Wesfarmers: +3 per cent w
Coca-Cola Amatil: +4 per cent
Fairfax Media: +3 per cent
The local currency was trading at $US78.78c ahead of wage price index data due 11.30am (AEDT)
with AAP
10.55am: Coke all pop no fizzle on result
Mike Cherney writes:
Coca-Cola Amatil shares (CCL) rise 3.6 per cent to $9.01 after announcing 2017 net profit growth of 81 per cent, however it said the increase stemmed from one-off writedowns in the prior year and the company continued to struggle with declining revenue in its main Australia beverages unit.
Coca-Cola Amatil said its annual net profit was $445.2 million, compared to $246.1 million in 2016. But underlying net profit, which strips out one-off items such as 2016 writedowns on plants and equipment, fell by 0.4 per cent to $416.2 million.
The company previously said it expected underlying net profit to be broadly in line with the 2016 result.
Andrew White 10.33am: Seven Group shares soar 12pc
Shares in Kerry Stokes resource and industrial services arm Seven Group Holdings (SVW) have soared over 12 per cent to $18.58 after it upgraded its full year earnings outlook on a surprisingly strong first half result driven by strong demand from mining operations and infrastrcutre development.
SGH posted $168m in after tax profit, up from a $41m loss in the previous corresponding period, overcoming a busy period on the mergers and acquisitions front, including the sale of Westrac China, a $335m capital raising and the mop up of Coates Hire.
SGH also increased its stake in Beach Energy to 26.5 per cent via underwriting a capital raising to support its purchase of upstream oil and gas company Lattice Energy from Origin Energy.
Revenue increased by 31 per cent to $1.4bn, including the consolidation of the Coates industrial hire business, which was completed in October a week before SGH sold its WesTrac China business — read more
10.26am: ASX clambers back after early hit
The S & P/ASX200 attempts to brush itself off after a steep opening fall, last 0.1 per cent in the red on 5936.1 and recovering losses from an early hit courtesy of a 5 per cent fall in BHP following an interim result by the world’s biggest miner below market expectations.
Second-best year-to-date ASX200 performer a2 Milk is on track to seal session honours with a jump over 18 per cent following its earnings report amid a slew of corporates confessing today.
Read: Wesfarmers profit sinks 87 per cent
Read: Fortescue profit falls, cuts dividend
Read: Fairfax hit by Domain parting
10.15am: The Trading Day ahead
Join the conversation with our Trading Day experts for breaking news and analysis in financial markets here and on Sky News Business (Ch: 602)
NOW: Peter Nathan — CEO, a2 Milk
10.30pm: Evan Lucas — The Lucas Report
11.00am: Live cross — Morgans
11.15pm: Ric Spooner — CMC Markets
(All times in AEDT)
10.13am: Lendlease skies on $500m buyback, profit
Lendlease shares (LLC) rocket nearly 8 per cent to $17.25 following its interim result and a declaration of a $500m share buyback scheme.
10.08am: Wesfarmers shares up at the open
Wesfarmers shares (WES) jump 2.4pc at the open to $41.73 after revealing a 87 per cent fall in profit on provisions from its UK hardware division and Target.
10.03am: a2 Milk shares rocket 17pc
a2 Milk shares (A2M) soar over 17 per cent to a record high of $10.25 at the open after it unveiled a sharp increase in interim net profit and supply deal with Fonterra.
10.02am: BHP sinks 5pc at the open
BHP shares fall 4.9pc per cent to $29.75 at the open as the first shares trade hands after its interim results missed more optimistic market forecasts.
9.52am: Seven Group ‘strong beat’: Macquarie
Seven Group’s interim result featured a “strong beat across all divisions” and a “strengthening outlook across resources and infrastructure”, Macquarie says.
The group’s underlying net-profit-after-tax of $159.8m beat Macqurie’s $103m estimate, as did a 42 per cent increase in underlying earnings (EBIT) to $223.5m.
“We upgraded the stock to outperform in December with a view that the stock is in an earnings upgrade cycle, driven by supportive conditions across the WesTrac, Coates and Energy divisions,” Macquarie adds.
“We remain attracted to SVW’s core assets and the positive outlook across resources, infrastructure and energy while a stronger media result is incrementally positive.”
SVW last $16.49
9.43am: Odds stack up against ASX200
Australia’s S & P/ASX 200 shares index faces a weak open today after offshore falls and disappointing results from BHP.
Overnight SPI 200 futures versus estimated fair value imply the index should fall about 0.5pc to 5912.
Monday’s low at 5890 is initial chart support and if it breaks the index could retest the 200-DMA at 5845.
Falls on Wall Street were magnified by a 10pc dive in Walmart after disappointing online sales, but all S & P 500 sector except Tech lost ground.
Rising bond yields appeared to be a factor given the weakness in telcos, utilities and real estate, though the US 10-year yield only rose 1.5 bps to 2.89pc.
The other concern is that the US dollar index rose 0.7pc to 89.70 potentially weighing on Emerging Markets and the risk appetite in general.
Commodities mostly lost ground as the US dollar fell with copper down 0.9pc, nickel down 1.1pc, gold down 0.8pc and WTI crude down 1pc to $US61.77.
BHP fell 4.7pc in London and its ADR’s close at $29.66 equates to a potential 5.3pc fall in its Australian listing.
But while Citi has cut its rating to Neutral, UBS, Macquarie, Morgans and Shaw have kept their Buy/Outperform/Add ratings.
And UBS has raised its target price 6.1pc to $33.50 after noting that BHP’s free cash flow beat its expectations and could rise further.
Wage price data are due at 1130 AEDT but the focus will otherwise be on results again today.
Index last 5940
9.38am: Fortescue profit falls, cuts dividend
Fortescue interim net profit declined 44 per cent to $681m, above a more conservative consensus forecast by Bloomberg’s analyst survey of $657.2m.
Revenue for the period fell 18 per cent to $3.7bn, while the miner slashed its interim dividend 45 per cent to 11c per share full-franked.
Net debt rose $656m from the previous quarter to $3.3bn.
Read: Fortescue snips $US80m in debt costs
FMG last $5.36
9.27am: Fairfax ditching 28 NZ papers
Paul McBeth writes:
Media giant Fairfax will close or sell 35 per cent of its New Zealand print titles as the Australian group pursues a digital strategy for the kiwi unit, now rebranded Stuff.
Group chief executive Greg Hywood, who recently oversaw the demerger of the Domain real estate listing website in Australia, on Wednesday said the Sydney- based company will exit just over a third of its New Zealand suit of print publications, which includes Wellington’s Dominion Post, Christchurch’s Press, Hamilton’s Waikato Times, and the Sunday Star Times.
Slated for closure or sale are 28 regional giveaway newspapers and agricultural publications. Its major metropolitan and regional city newspapers are not in the extensive list of small-scale publications that Fairfax wishes to quit — SCOOP
FXJ last 66 cents
9.22am: Fairfax hit by Domain parting
Fairfax Media’s first-half net profit, hit by impairments and restructuring costs relating to its spin-off of Domain, has come in less than half it was a year ago at $38.5 million.
The impairments, restructuring and redundancy charges and other costs were responsible for a significant items hit of $38.7 million, Fairfax says, while revenue for the six months to December 24 fell 3.9 per cent to $877.1 million. The company has declared a fully franked interim dividend of 1.1 cents, down from a partially franked two cents a year ago — AAP
FXJ last 66 cents
Matt Chambers 9.19am: BHP surges on oil, copper
BHP has boosted underlying first-half net profit by 25 per cent to $US4.05 billion ($5.11bn) as oil and copper prices surged, paving the way for a higher than expected interim dividend.
But the profit fell short of expectations because of higher costs, including at the Olympic Dam copper and uranium mine in South Australia and its Queensland coal operations, leading to a 4.6 per cent fall in the big miner’s shares in London trading last night.
The company is reaping the benefits of high prices and the strongest global growth outlook in years —read more
BHP last $31.30
9.14am: Analyst rating changes
BHP cut to Neutral — Citi
BHP target price raised 6.3pc to $33.50; Buy rating kept — UBS
Ingenia Communities raised to Buy — CLSA
Monadelphous raised to Outperform — CLSA
Super Retail Group target price cut 10pc to $9;00; Buy rating kept — CLSA
Virtus Health raised to Buy — CLSA
Altium raised to Buy — Bell Potter
Over the Wire raised to Buy — Bell Potter
IPH cut to Neutral — Macquarie
Blue Sky cut to Hold — Shaw & Partners
Super Retail cut to EqualWeight; target price cut 30pc to $7.00 — Morgan Stanley
Ben Wilmot 9.13am: ASIC queries Unibail-Westfield deal
Intervention by Australia’s corporate regulator has prompted French giant Unibail-Rodamco to clarify its position on its bid for Westfield as the value of the once $32 billion deal drops as due to bond and share market volatility.
Unibail chief executive Christophe Cuvillier on Monday appeared to rule out sweetening the deal, saying that the offer remains “full and fair” and noting that Westfield’s stock would be significantly lower without the French bid.
But in a statement to the French stock exchange last night, Unibail-Rodamco said it “has been asked by the Australian Securities and Investments Commission (ASIC) to clarify its position on the transaction terms” — read more
WFD last $8.58
8.59am: a2 Milk shares hit NZ record
Sophie Boot writes:
A2 Milk shares have spiked 16 per cent to a record after the company announced it had more than doubled first-half profit on strong infant formula sales and has aligned itself with Fonterra which will see the two companies partner up on a range of products.
Net profit rose to $NZ98.5 million in the six months ended December 31 from $NZ39.4m a year earlier as sales climbed to $NZ434.6m from $NZ256m, it said on Wednesday. The shares jumped to a record $NZ10.80 in the first two minutes of trading on the New Zeleand stock exchange this morning.
SCOOP
8.54am: WATCH: Wesfarmers profits sinks 87pc
.@wesfarmers' first half profit has fallen by 87 per cent to $212M, while revenue rose by 3 per cent. It is expected to have a dramatic effect on a number of owned retail and supermarket chain's profits, including @Coles.
— Sky News Business (@SkyBusiness) February 20, 2018
MORE: https://t.co/o1SyGXhGic pic.twitter.com/vpcQgBv65V
8.46am: Fortescue snips $US80m in debt costs
Rhiannon Hoyle writes:
Fortescue Metals said it has completed a US$1.4 billion term loan that will be used to redeem some of its existing debt.
Fortescue, the world’s No. 4 iron-ore exporter, said the syndicated facility has been set up with unnamed Chinese, Australian and European financial groups, and will be used to pay back part of its 2022 senior secured debt, lowering annual borrowing costs by roughly US$80 million.
The loan has a term of four years, plus an option to extend a further year, with a principal repayment of 1pc a year, Fortescue said.
FMG last $5.36
8.39am: Downer swings to first-half loss
Rhiannon Hoyle writes:
Engineering contractor and train builder Downer EDI swung to a half-year loss as it recorded one-time charges including an impairment of goodwill in its mining business and writedowns linked to a freight rail divestment.
The company reported a net loss of $11.1 million for the six months through December. That compared with a profit of A$78.2 million in the year-earlier period.
Downer said it’s bottom line was weighed by $126.3 million in significant items.
Still, Downer lifted its interim dividend to 13 cents a share, from 12 cents a year ago, as it recorded a 79pc jump in underlying earnings before interest and taxes — read more
DOW last $6.70
8.33am: Lendlease in $500m buyback
Lendlease has announced a $500m on-market share buyback scheme alongside its interim results reaving a 7.8 per cent increase in after-tax profit $425.6m and a 9.4 per cent increase in revenue to $8.7bn.
LLC last $15.96
8.32am: Bricks & mortar hit to Wall St mood
Wall Street stocks dropped Tuesday, with retailers falling especially hard following disappointing results from Dow-member Walmart.
The world’s biggest retailer plunged 10.2 per cent after reporting a 42.1 per cent drop in fourth-quarter earnings to $2.2 billion in results that revealed growing pains in the company’s e-commerce build out.
The Dow Jones Industrial Average finished down 1.0 per cent at 24,964.75. The broadbased S & P 500 fell 0.6 per cent to 2,716.26, while the tech-rich Nasdaq Composite Index slipped 0.1 per cent to 7,234.31.
US stocks were a bit choppy throughout the day, with the Nasdaq positive much of the session before fading late.
Analysts said investors remain uneasy following the volatility of recent weeks. US stocks rallied last week after suffering deep losses the week earlier due to worries about tightening US monetary policy.
“I would say investors are derisking in a quiet market,” said Karl Haeling, vice president of LBBW.
Other large retailers also declined following the disappointment over Walmart’s results, with Target losing 3.8 per cent and Costco Wholesale down 1.8 per cent.
NXP Semiconductors shot up 6.0 per cent after US mobile chipmaker Qualcomm boosted its bid for the Dutch company to $43 billion. Qualcomm fell 1.3 per cent.
Dow Jones Newswires
8.25am: Downer books $11.1m loss
Downer EDI booked an interim loss of $11.1m after a $78.2m net profit in the same period a year prior.
Revenue from ordinary activities rose 74 per cent to $5.8bn, above more a more conservative consensus forecast by Bloomberg’s analyst collation of $5.6bn.
DOW last $6.70
8.14am: a2 seals Fonterra deal, profit growth
Ben Collins writes:
Increases in its market share in Australia and China have seen The A2 Milk Company’s first-half profit rise sharply, and it has also unveiled a new supply deal with the world’s largest dairy exporter.
However the company restated that its earnings growth in the second half will be tempered by a higher marketing expense, with a half-on-half increase now likely to be in the range of $NZ35 million and $NZ40 million given the timing and scope of marketing programs in China and the U.S.
The company said its profit for the six months to December 31 was $NZ98.5 million, a 150 per cent increase compared with the same period last year as growth continued at a strong rate in the company’s infant formula business, and liquid milk sales were again higher in each of its core markets.
Meanwhile, the company also announced the formation of a strategic relationship with the world’s largest dairy exporter, New Zealand’s Fonterra Co-Operative Group Ltd — read more
A2M last $8.71
8.10am: Wesfarmers profit slumps on UK, Target
Wesfarmers’ first-half profit has fallen 86.6 per cent to $212 million due to writedowns on its UK hardware business and Target department stores — AAP
WES last $40.76
8.03am: Building losses drag on Fletcher’s 1H
Jonathon Underhill writes:
Fletcher Building has reported a first-half loss, reflecting losses at its Building + Interiors unit and says profit was down at its other construction businesses and in building products.
The loss was $273 million in the six months ended December 31, from a profit of $176m a year earlier, the Auckland-based company said in a statement. Sales rose 6 per cent to $4.89 billion. The results show a loss of $322m on an operating earnings basis, which included B+I losses of $631m, from a profit of $294 million a year earlier.
The company unveiled further provisions at B+I last week, which amount to two- year losses of $952m for a business that has some of New Zealand’s most complex and expensive vertical construction projects on its books, on which it has faced significant cost blowouts.
It signalled its withdrawal from that sector and won’t bid for new contracts. But Wednesday’s results show weaker earnings in building products, its biggest business, its panel and roofing tile international division, and in construction outside of B+I — SCOOP
FBU last $6.45
7.40am: US to drag ASX down
The Australian share market looks set to open firmly in the red after Wall Street’s negative sentiment appears ready to swamp the local bourse.
At 7.45am (AEDT) on Wednesday, the share price futures index was down 37 points.
In the US, Wall Street’s winning streak has come to an end with a steep fall in Walmart fulling down the Dow and the S & P500, while the likes of Amazon and technology stocks failed to keep the Nasdaq in positive territory.
In late trading, the Dow Jones Industrial Average was down 1.23 per cent at 24,909.18, the S & P 500 was down 0.65 per cent at 2,714.33, and the Nasdaq Composite was down 0.33 per cent at 7,226.49 despite support from tech heavyweights Apple, Nvidia and Microsoft.
Locally, in economic news today, the Australian Bureau of Statistics is due to release the wage price index for the December quarter and construction work done data, for the same quarter.
In equities news, Fairfax Media, Sydney Airport, Fortescue Metals, Santos, Downer EDI, Sirtex Medical Stockland, Lendlease, Coca-Cola Amatil, Wesfarmers, SeaLink Travel, The A2 Milk Company, and The Reject Shop are among companies reporting results.
The Australian market yesterday closed flat with a no-surprises line-up of company profit results failing to fire investor action in the absence of major overseas leads.
The benchmark S & P/ASX200 index fell 0.7 points, or 0.01 per cent, at 5,940.9, while the broader All Ordinaries index was up 1.6 points, or 0.03 per cent, at 6,045.6 points.
AAP
7.00am: Dollar down
The Australian dollar is firmly back below US79 cents.
At 6.35am (AEDT), the Australian dollar was worth US78.85 cents, down from US79.18 cents yesterday.
Westpac’s Imre Speizer says the US dollar has extended its multi-day recovery. “The USD index is 0.7 per cent higher on the day, further extending Friday’s rebound from a fresh three-year low,” he said in a morning note on Wednesday. “The AUD fell from 0.7934 to 0.7880.” Domestically, the main event risks for the local currency today would be Australian Bureau of Statistics data on December wages and construction. “The fourth quarter Wage Price Index is expected to rise 0.5 per cent. “Last quarter’s release surprised to the downside at 0.5 per cent vs. expectations for 0.7 per cent (associated with the higher than usual 3.3 per cent increase in the minimum wage).
“Fourth quarter construction work done is expected to fall back 10 per cent after Q2’s +9.8 per cent and Q3’s +15.7 per cent.
“(However,) the survey has been an unreliable partial indicator lately due to the treatment of imported LNG platforms.”
Today, he thought the local currency “should remain under downward pressure today, 0.7880 vulnerable, given the recently firmer US dollar”. Meanwhile, the Aussie dollar is hardly changed against either the yen or the euro.
AAP
6.50am: Dow loses steam
Falling shares of Walmart pulled the Dow Jones Industrial Average lower overnight, putting the blue-chip index on track for its first loss in seven trading sessions.
Shares of Walmart tumbled more than 9 per cent after the retailer reported slowing online sales growth, indicating its difficulty in fending off competition from Amazon.com. That drop, Walmart’s biggest slide in more than two years, took roughly 67 points off Dow industrials and contributed to a 1.9 per cent decline among shares of consumer-staple stocks in the S & P 500.
“For a company the size of Walmart to drop as much as it did, it sends a shudder through everybody in retail,” said Jeffrey Lancaster, a principal with Bingham, Osborn & Scarborough, a San Francisco-based investment firm with $US4.2 billion in assets under management. “It’s a tough world out there for everybody competing with Amazon.”
In afternoon trade the Dow fell 154 points, or 0.6 per cent, to 25,064, while the S & P 500 was down 0.2 per cent after paring a bigger decline suffered earlier in the session. The Nasdaq Composite edged 0.5 per cent higher, buoyed by rising shares of technology companies.
Australian stocks are set to follow Wall Street lower. At 7am (AEDT) the SPI futures index was down 24 points.
Gap also weighed on the S & P 500, with shares down 4.5 per cent after the company said it would replace the president and chief executive of its flagship Gap brand as it looks to boost sales.
Despite the overnight struggles, stocks were on firmer footing after having recovered much of the value shed earlier this month, as companies report mostly upbeat corporate earnings and boost expectations for the remainder of the year.
About three-quarters of S & P 500 companies that reported earnings through Friday exceeded profit and sales expectations, according to S & P Dow Jones Indices. And more than a fifth of the broad index has issued positive earnings guidance for 2018, according to FactSet, the highest number ever since the data provider began tracking guidance data in 2007.
That helped the Dow recover roughly half of its more than 10 per cent decline from its January peak. Still, investors are reacquainting themselves with a market force that was absent for much of last year: volatility.
“What we’re seeing now is more normal market behaviour,” said Cooper Abbott, president and chairman of Carillon Tower Advisers, a $US64 billion asset-management firm, of the increased volatility. “It’s frankly healthy for markets to have this kind of adjustment.”
Meanwhile, US Treasury yields continued to climb. The yield on the benchmark 10-year US Treasury note was recently up to 2.906 per cent, according to Tradweb, from last week’s closing level of 2.877 per cent, which marked a four-year high. Bond yields move inversely to prices.
Dow Jones
6.40am: Eurozone stocks firm
Key eurozone stock markets posted gains overnight as a weaker euro gave exporters a boost, while London underperformed because of sharp falls in banking giant HSBC and other major companies following earnings updates.
“The FTSE 100 was held back by mixed results from HSBC, (miner) BHP Billiton and (hotels group) IHG,” said Jasper Lawler, head of research at London Capital Group.
Results for both HSBC and BHP “were characterised by missed estimates mixed in with signs turnaround plans are nearly complete,” he said.
In closing trade, HSBC and BHP were both down 4.5 per cent.
Market talk that the EU parliament is likely to urge the EU to give Britain privileged single-market access after Brexit underpinned the pound for most of the session, adding pressure on stocks in export-driven multinationals.
But the real force in forex markets was the dollar, which rose against the euro and yen, sparking a debate over whether the currency has finally embarked on a sustained recovery on the back of strong US growth.
“Could this be the start of an incredible rally or another dead cat bounce?,” asked Lukman Otunuga, analyst at FXTM.
London vlosed 0.01 per cent, Frankfurt closed up 0.8 per cent and Paris ended up 0.6 per cent.
In Asia, the Tokyo stock market closed down yesterday more than one per cent, snapping a three-day winning streak as investors locked in profits after the recent gains.
Hong Kong shed 0.8 per cent as traders returned to work after the Lunar New Year holiday marking the start of the Year of the Dog.
AFP
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