The Australian June 30 profit reporting season takes centre stage this week, with 23 major companies reporting including the Commonwealth Bank, News Corp, Cochlear, Fairfax Media and Telstra among the reporters.
Offshore the US, European and Asian June 30 reporting season continues, although reports will be dominated for the most part by lower level companies.
The US though will see a group of reports from major department store chains which will tell us if the downturn seen in the first quarter has continued.
The CBA’s report and dividend decision on Wednesday morning will go a long way to determining investor attitudes to the reporting season, along with the report later today from the Bendigo and Adelaide Bank.
The banks are the most important sector of the market for investors of all sizes, and as the largest the CBA’s results, dividend decision, commentary and outlook are critical.
After the downgrades since the last reporting season back in February the hurdle to avoid disappointment is now relatively low.
Consensus expectations for 2015-16 earnings are for an 8% decline in profits driven by a 50% fall in resources earnings and a 2% fall in bank profits leaving profits in the rest of the market up just 1%.
Key themes are likely to be: improved conditions for resources companies following a stabilisation in the iron ore and oil price; constrained revenue growth for industrials although improved business conditions according the NAB business survey may help; ongoing cost cutting; continuing headwinds for the banks; and an ongoing focus on dividends.
Sectors likely to see good profit growth are discretionary retail, industrials, gaming and healthcare.
Reporting this week are, Argo Investments, News Corp, REA Group, IOOF, Cochlear, Bendigo and Adelaide Bank, Bell Financial, Fairfax Media, Bradken, Boom Logistics, Greencross, Telstra, Transurban, Goodman Group, James Hardie, AGL, Computershare, OZ Minerals (half year), Magellan Financial and Nick Scali.
In the US, with around 90% of the S&P 500 companies having reported second-quarter results (more than 437 out of 505), aggregate earnings-per-share for the group are on course to decline 3.5% from a year ago, according to FactSet data.
Attention focuses this week department stores and clothing retailers, Dillard’s, Ralph Lauren, JC Penney’s, Coach, Macy’s, Nordstrom, Kohl’s and Michael Kors.
Other companies reporting in the US, Europe and Asia include: Dean Foods, Tyson Foods, Thyssen Krupp, Wilmar International, Noble Group, Zurich Insurance, Alibaba, Altice, Adecco, Echostar, Hertz, News Corp, Sotheby’s, Coach, Disney, Shake Shack, Charter Communications, Singtel/Optus and Prudential.
