Profit misses drag ASX lower, despite Woolies bounce
The August reporting season has hit warp speed, with more than 50 companies trotting out either full or half year results.
- Disappointments dominate the busiest day of reporting season
- ASX200 results biggest profit: Woolworths $1.5bn biggest loss: Vocus $1.5 billion
- ASX200 results biggest gain: A2 Milk +5pc Biggest loser: Healthscope -15pc
Woolworths delivered the biggest profit of $1.5 billion after bouncing back from last year’s heavy loss.
Despite on-going problems with Big W and disappointing underlying earnings, investors liked the cash generation and dividend, bidding the stock up.
While the ASX started positively, the weight of disappointing results saw the market roll over to be down 0.4 per cent at 1:00pm (AEST).
“The local market is taking a very bipolar view towards earnings results, with very few success stories so far this season,” ASR Wealth Advisers’ Gary Huxtable said.
“While many investors would have been hoping for reporting season to provide the catalyst to break out of our three-month trading range, this hasn’t eventuated, and earnings announcements continue to have a relatively muted result on the overall index,” Mr Huxtable noted.
IAG shares tumble
Big general insurer IAG reported its full-year net profit was up almost 50 per cent to $929 million.
However, it was driven largely by investment income, with revenues falling 1.6 per cent to $16.5 billion.
Insurance profit was up 8 per cent, while the all important insurance margin narrowed more than expected.
The full-year dividend was held flat at 33 cents per share.
Investors bailed on the result with shares falling 7 per cent to $6.29 at 1pm (AEST).
Worley Parsons running out gas, while APA isn’t
With the big construction boom in gas all but done, these are not the best of times for Worley Parsons.
The global designer and contractor of oil and gas plants reported a narrow $35 million profit on revenues of $5.2 billion.
Overall net profit edged up, but underlying profit was down 13 per cent. It could have been worse; revenues were down 33 per cent.
At the other end of the gas pipeline, so to speak, APA enjoyed a 32 per cent rise in profit to $237 million.
The pipeline owner and operator’s revenues were up by 14 per cent to $1.9 billion.
APA pumped upped its full-year distribution by 5 per cent to 43.5 cents.
Investors gave Worley Parson the benefit of the doubt, with its shares up 2.7 per cent at 1pm (AEST), while APA was pretty steady, up just 0.2 per cent.
Healthscope falls out of bed
Private hospital operator Healthscope posted one of the bigger misses of the day.
Net profit fell almost 40 per cent to $110 million, although that was flagged with the announcement last week of a $55 million impairment taken on the sale of its medical centres.
Underlying profit was down 6 per cent to $180 million.
The recently appointed chief executive and former boss of Telstra’s retail division Gordon Ballantyne said there were a number of challenges facing Healthscope’s most important business in private hospitals.
“This reflected softer private hospital market conditions and variability in patient case mix, combined with margin pressure, where costs have increased greater than health fund price increases in some areas of the business,” Mr Ballantyne said.
Investors were not sympathetic, sending shares tumbling almost 15 per cent to $1.88 by 1:00pm (AEST) — the biggest fall on the ASX 200.
Vocus deeply in the red after buying spree
The acquisitive telco, and one-time takeover target, Vocus chalked up the biggest loss of the day — an eye-watering $1.5 billion.
The number lacked some shock value given it had announced impairment charges of around the same size last week on the goodwill of a number of companies it had picked up recently.
Underlying profit was healthier, up 50 per cent to $152 million.
The past few days have not been kind to Vocus.
Apart from the big write-down from the messy integration of various acquisitions, the two private equity forms who had expressed interest in the company got feet and backed out and today long-standing chairman David Spence he would be leaving at the AGM in October.
Despite all that, shares were up 4 per cent to $2.72 at 1:00pm (AEST), but still way short of the $3.50 the private equiteers had bid.
Coca-Cola Amatil still flat
Beverage maker Coca-Cola Amatil is still having difficulty flogging its fizzy drinks.
Net profit fell 29 per cent in the first half to $40 million, after booking a $50 million restructuring cost in its Australian beverage business.
Underlying first-half earnings were down 4 per cent to $190 million.
The forecast for the second half was fairly flat and the interim dividend was flat as well.
While earnings in Australia were down, the damage was limited to a large extent by growth in the developing markets of Indonesia and Papua New Guinea, while alcohol and coffee also fired up the top line.
Shares were not flat though. They were down the gurgler to $8.23, a fall of 2.8 per cent, near a one-year low.