BHP share slide knocks 33 points off ASX200, sharemarket closes barely changed amid earnings report torrent

The ASX closed barely changed but would have ended in the green without BHP’s share price slump.

The Australian sharemarket closed marginally lower as investors digested a torrent of company earnings results and the mega-merger between BHP and Woodside, with a plunge in the miner’s stock wiping 33 points from the S&P/ASX200.

The benchmark index finished just 8.9 points or 0.12 per cent lower at 7502.1, while the All Ordinaries Index dipped 2.6 points to 7770.7.

It was the third straight day in the red following a stellar recent run.

CommSec analyst Tom Piotrowski said the ASX clawed back much of its early losses after a negative opening, predicted by futures markets.

“Not a bad outcome given the circumstances … a lot of positive news is already factored into prices and those expectations, at least that mindset, may be challenged over the course of coming weeks from time to time,” Mr Piotrowski said.

Materials and healthcare weighed on the local bourse, he said.

Fresh from announcing its merger with BHP’s petroleum business after the ASX closed on Tuesday, Woodside booked a more than doubling in full-year net profit, buoyed by higher realised prices driven by the recovery in demand for LNG and oil, and declared an interim dividend of 30 US cents per share.

Woodside shares dropped 2.12 per cent to $20.29 while BHP – which also announced a 42 per cent surge in full-year net profit and a record final dividend – slumped 7.07 per cent to $47.70.

Mega-deals like the BHP-Woodside merger tend to be met with mixed reactions.

For BHP, it was positive to cut carbon-intensive projects from its portfolio of assets “and indeed from an ESG (economic, social and governance) perspective, which are vital in these circumstances,” Mr Piotrowski said.

“But the market is not enamoured with the idea that an important lever for growth and earnings is now being removed … into this vehicle that will be majority-owned by Woodside.”

RBC Capital Markets said Woodside had “boxed itself into a corner” by targeting a final investment decision on the large $US12bn Scarborough project in coming months “with a less than enthusiastic partner”.

OMG chief executive Ivan Tchourilov said announcements such as the mega-merger were commonly met with a mixed reaction from investors, with extreme diversity between age groups.

“BHP also decided to say bye to the Brits, announcing plans to end its FTSE listing to simplify its share structure, greasing the wheels for slicker mergers and acquisitions,” he said.

“This move is expected to bring instability to both listings in the short term. The news wasn’t received well (in London) overnight and the drop in price has followed through to the ASX.”

Rio Tinto backtracked 2.3 per cent to $113.69 and Fortescue eased 0.6 per cent to $21.45.

Market heavyweight and biotech giant CSL reported a 10 per cent rise in full-year net profit on a constant currency basis, saying its influenza vaccines business Seqirus delivered an exceptionally strong performance, with revenue up 30 per cent.

Prime Minister Scott Morrison visiting the CSL vaccine manufacturing facility in February. The pharmaceutical company CSL is making AstraZeneca Covid-19 vaccines. Picture: David Caird / Getty Images

Shares in CSL declined 1.47 per cent to $293.56.

Pro Medicus soared 15.66 per cent to $65.35 after booking a 33.7 per cent jump in full-year net profit.

“Pro Medicus made a motza selling medical imaging software to US healthcare companies this year,” Mr Tchourilov said.

“The huge sales results were given a tailwind in the past few months from the flailing Australian dollar, which is adding extra bang to every buck made from selling in USD.”

Coles booked a 7.5 per cent rise in full-year net profit, with supermarkets comparable sales growth over the three months to June 30 just 2.1 per cent, but an impressive 9.6 per cent over two years.

Credit Suisse noted that growth had accelerated further in the current quarter so far and was running ahead of forecast, while Moody’s Investors Service vice-president Ian Chitterer applauded the retailer, saying its solid earnings for fiscal 2021 strengthened its robust credit profile.

Shares in Coles inched one cent higher to $18.34.

Domino’s Pizza was a strong performer, surging 7.13 per cent to $136.02 after posting a near 33 per cent rise in full-year net profit.

Domino’s shot the lights out with its full-year result.

It also declared a final dividend of 85.1 cents per share, representing a payout ratio of 70 per cent of net profit, which is being raised to 80 per cent – all while opening more new stores than it had previously planned.

“Societal restrictions remain in place in most markets, which continue to affect carry-out sales, while delivery orders remain strong,” group chief executive and managing director Don Meij said.

“In every market, our fortressing strategy demonstrates that more stores allow for increased marketing investment and increased customer demand, needing more stores to meet this demand,” Mr Meij said.

Mr Tchourilov said Domino’s’ business model made a lot of sense right now.

“Inexpensive storefronts and cheap delivery pizza while everyone is locked inside. It’s no surprise they’re making so much dough,” he said.

ANZ added 0.18 per cent to $28.47, Commonwealth Bank firmed 0.78 per cent to $99.77, National Australia Bank gained 0.66 per cent to $27.63 and Westpac improved 1.42 per cent to $25.81.

The Aussie dollar was fetching 72.61 US cents, 52.8 British pence and 61.92 Euro cents in afternoon trade.

Originally published as BHP share slide knocks 33 points off ASX200, sharemarket closes barely changed amid earnings report torrent