Wild ride for investors with missed expectations and overachievers

With another week of the reporting season wrapped up, plenty of shares finished in the red but it wasn’t all bad news. Here's a recap of what moved the market.

Endeavour Group, JB Hi-fi and Cochlear were three of the big companies reporting over the past week

Investors were taken on a wild ride this week as a number of company results announcements fell short of market expectations.

Concerns about interest rates in Australian and the US as well as the health of the Chinese economy also weighed on the share market which fell more than 2.62 per cent over the week.

However, Baker Young managed portfolio analyst Toby Grimm said on aggregate the results were slightly better than initially feared.

“There were some exceptions to that and there were stocks marked down with disappointing results but on numbers, in terms of positive responses, investors seemed to be pleased,” he said. “There have been significant negative revisions going into the reporting season and hopefully we can end up with a positive earnings for 2023. In 2024 I’m not quite so sure and in fact I think there will be negative revisions there.

“The outlook for a lot of companies was probably 2 to 3 per cent below what the market was looking at on average so I wouldn’t be surprised to see cuts in 2024 but at least 2023 is looking reasonably healthy at the moment.

Market loved it

Cochlear shares have rallied more than 12 per cent since chief executive Dig Howitt told the market on Tuesday that the company had posted a 4 per cent jump in annual profit to $300.5m, largely due to clearing the pandemic-fuelled backlog of elective surgeries. The hearing implant titan is forecasting a further 16-23 per cent gain in net profit in the year ahead. But Mr Howitt said the gains won’t be from a repeat of delayed surgeries.

“We are certainly in our growth outlook for ‘24 not anticipating a repeat of those catch up surgeries.” he said. Overall revenue leapt 17 per cent to $1.94bn, well ahead of analyst estimates of $1.2bn.

What a shocker

● Temple & Webster was one of the biggest losers on the bourse with its shares tumbling more than 10 per cent since Tuesday when the online retailer reported a 7.2 per cent decline in full-year revenue to $395.5m and a net profit slump of nearly 31 per cent to $8.3m. The profit fall was blamed on a one-off tax benefit in the previous year. CEO Mark Coulter’s remuneration also took a hit, tumbling to $6.15m, from $11.2m.

● Online employment firm Seek also disappointed the market, its stock is off almost 10 per cent since Tuesday after it flagged a weakening economy is likely to result in a further moderation in its profit throughout the 2024 financial year. It reported a 1 per cent decline in adjusted profit from continuing operations to $255m for the 12 months to June 30, from $256.8m a year earlier.

● Pubs group Endeavour has celebrated more patrons being back at its pubs but investors felt there was little to celebrate with shares off almost 8 per cent since posting its results on Wednesday. The owner of liquor outlets Dan Murphy’s and BWS as well as a portfolio of 354 pubs and hotels – reported a full-year net profit of $529m, up 6.9 per cent but below market expectations of $543m.

Carsales CEO Cameron McIntyre

Bringing home the bacon

Cameron McIntrye at Carsales.com reported a bumper year with net profit jumping 301 per cent to $645.6m as revenue rocketed 53 per cent to $781.2m. And he was handsomely rewarded with a total renumeration package of $6m, up from $3.4m a year ago, thanks in large part to $1.9m in long term incentive performance rights.

That’s got to hurt

Former ASX Ltd boss Dominic Stevens was stripped of more than $3.14m in long-term bonus payments his former executive team also took a haircut after the botched CHESS technology upgrade. Stevens lost 52,175 long-term performance rights he was issued between 2018 and 2021, worth $3.14m at current market rates and also forfeited his all of his short-term variable payments for 2019 and 2020. Other executives still at ASX and directly accountable for the CHESS program before November 2022 had their bonus payments slashed or cut entirely.

ASX reported a 38 per cent fall in its net profit after tax to $317.3m for the year ended June 30, in line with expectations.

What they said

“The heightened uncertainty is around how does it continue to play out through financial 2023 and there is uncertainty about what interest rates might do and continue to do, and how that may continue to affect household budgets,” JB Hi-Fi CEO Terry Smart said.

“We see major growth opportunities in Central Australia, with 2500 kilometres of rail infrastructure and a line that runs directly into the Port of Darwin,” Aurizon chief executive Andrew Harding said.

“Everyone expected that it may abate, but it hasn’t. We’re continuing to see net migration and that is creating issues in regional Australia by way of housing shortages,” Bendigo and Adelaide Bank CEO Marnie Baker said.

“We are planning to sell more Penfolds in the second half versus the first half of fiscal 2024 and we’re doing that strategically to give us the flexibility of a potential change to the (wine) tariffs in China,” Treasury Wine chief executive Tim Ford said.

“We are pretty close to what we would consider to be a pre-Covid labour market albeit a little above that. Companies are having a much easier time finding workers currently than as recently as six months ago,” says Seek chief executive Ian Narev.

Who else reported

Lendlease falls to $232m loss

Ansell flags another down year

Beach Energy net profit falls 24pc

GPT Group blames rising interest rates for $1.1m loss in 1H

CSL’s annual net profit dipped 3 per cent to $US2.19bn

Challenger expects increased demand from retiring Baby Boomers to drive growth

Vicinity Centres after tax profit fell to $271.5m in 2022-23

Amcor is tipping a return to earnings growth

Telstra rules out the sale of its prized $15bn InfraCo Fixed business unit

Origin Energy says Australia will need to develop plans to smoothly manage the exit of coal

Super Retail Groupreported a 9 per cent rise in annual net profit

Goodman Group gets on the AI bandwagon

Mirvac reported a statutory loss of $165m for the full year

Dexus swung to a $752.7m full year loss

Magellan Financial Group surged over 13 per cent on Friday as investors looked to the future

What to watch out for next week

● Monday: Ampol, BlueScope, Adairs, IAG, McGrath.

● Tuesday: BHP, Scentre Group, Woodside, Viva Energy, Coles

● Wednesday: APA Group, Santos, Woolworths, Iluka, Wooley

● Thursday: Ansell, Medibank, Qantas, Stockland, Tabcorp

● Friday: Wesfarmers, Ardent Leisure, Accent Group, Michael Hill, Australian Clinical Labs