We are now just over 50% of the way through the December half profit reporting season in Australia.
The coming week will see most of the rest released, good and bad, from Woolworths down.
While there were a few more disappointments over the last week, the general impression remains strong.
Energy groups like Santos did it tough, Qantas’ results were a surprise and miserable, Wesfarmers surprised on the upside as Coles and Bunnings did very well, and property groups such as Mirvac and Stockland showed improvement.
The AMP’s chief economist, Dr Shane Oliver says that of the 40 of the 69 major companies to have reported so far, 58% have seen their results beat expectations, compared to a long term norm of 47%.
Dividends have been increasing again and 65% of companies have seen their earnings rise over the year to the December half (compared to an expectation of just 50%).
Outlook statements have generally been positive consistent with a continuing recovery.
As a result, there has been a modest upgrade to consensus earnings estimates of around 2% for each of 2009-10 and 2010-11.
Apart from the generally positive tone, key themes have been strong results for banks (with NAB being an exception), downside surprises and outlook downgrades amongst some defensive stocks (such as Telstra), and cyclical stocks starting to benefit from economic recovery although at this stage it’s still a bit mixed depending on the sector.
Overall the results so far provide confidence that profits will grow 20% or so over the year ahead.
The profit reporting season continues this week with companies such as Aristocrat, Oil Search, GPT, Suncorp Metway, Harvey Norman, Fairfax, IAG, Woodside and QBE due to report.
Also expected to report this week are Austar (full year), Caltex, UGL Ltd, Australian Worldwide, Sonic, GPT, Amcor, Boom Logistics, Asciano, APA Group, Transfield Services, Emeco, Goodman Group, Lend Lease, Toll, Origin, Downer EDI, Goodman Fielder, Tatts, Breville Group, Premier Investments, Perpetual, OZ Minerals, Origin Energy, Woolworths, AP Eager, AGL Energy, Harvey Norman, Beach Petroleum, Woodside Petroleum and Virgin Blue.
Crown and Consolidated Media are now this Friday, not last week.
Seven Network, which controls 22% of Cons Media, is also out this week.
In the US, where the reporting season is almost over, Reuters said at the weekend that of the 422 S&P 500 companies that have reported earnings as of Friday, 72% have beaten analyst expectations, 10% have matched estimates and 18% have missed estimates.
"That is well above the 61 per cent that have beaten estimates in a typical quarter since Thomson Reuters began tracking data in 1994," Reuters reported.
The reason for the sharp improvement is that the last quarter of 2008, indeed the last half of that year, saw big falls in sales and profits for a wide range of companies.
For others, much of the year (the first months) were strong, especially for resource stocks, which got hammered by the slump in prices. In Australia the fall of the Australian dollar softened the blow, and this year the sharp rise in the value of the Australian dollar has hurt companies like Fosters, Worleyparsons and CSL, to mention three.
The dollar will impact Oil Search, Beach and Woodside, as Santos revealed last week with a 70% fall in 2009 earnings.
