'Pretty Good' Reporting Moves To Next Cycle
Retail Food Group ended the December half year reporting season with a welter of red ink, write downs, no dividend and some tough times ahead.
Wirth Harvey Norman and its dairy write downs and surprise news of a slowing in sales growth at the start of 2018, the reporting season ended with something of a whimper. BlueScope did well, QBE reported the expected big loss for the full year to December and Bega Cheese surprised with good news on milk and its non dairy business, but disappointed on the outlook, sending the shares lower.
We now wait for the few January and February balancing companies such as Brickworks, Soul Pattinson, TPG, New Hope, Sigma Healthcare and the company everyone is talking about Myer, the struggling department store chain.
Myer and its antagonist, Solomon Lew’s Premier Investments are due to report half year earnings figures in a couple of weeks.
We already know Myer’s will be rotten, Premier’s won’t be a solid either is the performance of other clothing chains is any guide.
Myer shares fell nearly 6% on Friday and more than 15% last week and are down more than 39% so far in 2018
The AMP’s Chief Economist, Dr Shane Oliver reckons that on the whole it was a solid season. He said at the weekend the December half profit reporting season “is now done and has been pretty good.”
“46% of results have exceeded expectations (against a norm of 44%), 74% of companies have seen profits rise from a year ago (compared to a norm of 65%) which is the strongest since the GFC and 66% have increased dividends from a year ago with 26% keeping them flat which is a sign of ongoing confidence in the outlook,” Dr Oliver wrote.
“Reflecting the reasonable quality of results 59% of companies saw their share price outperform the market the day results were released (against a norm of 54%).
“Consensus profit growth expectations for this financial year remain around 7%, with resources upgraded slightly to 16% and the rest of the market downgraded to 5% (from 6%) owing to a downgrade to banks.
"Profit growth expectations for 2018-19 have been upgraded to 5% (from 4%) thanks to resources. This is good news and will underpin a rising trend in the Australian share market. That said local profit growth continues to lag that globally where it is running around 14%,” Dr Oliver wrote.
Source: AMP Capital
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.