That’s it for Markets Live today.
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Australia’s share market has closed at the highest since the financial crisis, despite the second biggest company on the ASX posting its biggest fall in five months.
Investors rushed to sell BHP Billiton, with dual listed miner losing about $8 billion of its market cap spread across Australia and the UK.
BHP lost $1.55 or 3.9 per cent, to close at $38.13. The broader market meanwhile finished at its highest since June 2008, with S&P ASX 200 firming 10.8 points, or 0.2 per cent, to 5634.6 points.
The BHP sell off mirrored a steep fall in London overnight, as investors reacted negatively to a controversial $14 billion demerger plan and the lack of a mooted $3 billion buyback.
Ord Minnett senior investment advisor Tony Paterno, said investors had snapped up BHP last week on the expectation that the company would launch a share buyback or some other capital management strategy.
“They bought on a rumour and sold on a fact,” Mr Paterno said after the hopes of investors failed to eventuate.
“This is second time around that they haven’t delivered in terms of capital management.”
But Macquarie Private Wealth director Martin Lakos said the absence of a buyback was prudent.
“They clearly don’t feel their balance sheet is quite in a position yet to put in place significant capital management responses at the moment… and that’s a sensible thing,” Mr Lakos said.
It was nearly the exact opposite for the company which helped keep the market in positive territory - supermarket to coal conglomerate Wesfarmers. The company added 7.7 index points to the ASX, rising 3.8 per cent to $45.66.
Patersons Securities strategist Tony Farnham said investors attracted to Westfarmers’ solid earnings growth at Coles, Bunnings and Officeworks, which would put “more money in their pocket”.
Not often you see BHP in our daily best and worst, but it's not every day one of the world's biggest miners announces a historic demerger, either.
Bunch of junior miners were among the laggers, while Transpacific finished 4.1 per cent after being down a lot further than that during the day.
QBE jumped 5.6 per cent and was the best performing name, while fellow bluechip, Wesfarmers, also appeared in the top 10.
Best and worst performing stocks in the ASX 200 today.
The benchmark ASX 200 has closed at a post-GFC high as investors are buoyed by an earnings season that has been heavy on capital returns.
Wesfarmers has been the latest in the capital management trend, and the company's share surged 3.8 per cent in response, helping push the ASX 200 and All Ords 11 points higher, or 0.2 per cent, to 5634.4 and 5629.2, respectively.
It's the highest close for the ASX 200 since June 2, 2008.
The day's gains were more impressive given market heavyweight BHP's 3.9 per cent plunge - Rio also fell 0.6 per cent and Fortescue was 1.5 per cent after releasing earnings.
Suncorp was also a big drag, down 4.7 per cent as it traded ex-dividend.
QBE surged 5.6 per cent despite announcing a capital raising as it returned to trading today after reporting results yesterday.
Telstra enjoyed a 1.3 per cent gain while CSL was up 1.1 per cent.
ANZ jumped 1.4 per cent, NAB climbed 0.9 per cent, while CBA and Westpac recorded more modest gains of 0.4 per cent and 0.3 per cent.
While the Australian newspapers are dragging down News Corp, The Australian newspaper appears to be dragging down the rest, losing $30 million in 2012-13 and more this year, Crikey is reporting.
At the same time, the average worker on the Oz is paid substantially more - $178,000 a year - than those on the more profitable metropolitan dailies.
But there have certainly been some who have done well out of News Corp – notably ABC television news finance correspondent and website vendor, Alan Kohler.
Kohler and his partners, including Crikey publisher Eric Beecher, sold the Business Spectator and Eureka Report sites to News for $30 million in 2012.
Crikey reports Business Spectator cost News $2.5 million in red ink in the next year while Eureka Report had just $671,000 in operating income.
At the end of June last year, Eureka Report had just 14,294 subscribers. No Eureka moment in that deal then for Murdoch, but a happy bailout for Kohler.
The consumer watchdog has accused big petrol station chains BP, Caltex, Coles, Woolworths and 7-Eleven of using website Informed Sources to co-ordinate fuel prices and says it is concerned the practice led to higher costs to motorists.
ACCC chairman Rod Sims said that by sharing petrol price information in close to real time, the retailers and Informed Sources reduced competition in Melbourne.
‘‘The ACCC alleges that the arrangements were likely to increase retail petrol price co-ordination and co-operation, and were likely to decrease competitive rivalry,’’ Sims said.
‘‘Given the importance of price competition in petrol retailing, the ACCC is concerned that consumers may be paying more for petrol as a result.’’
Informed Sources provides subscribers with petrol prices from the service station chains, delayed by half an hour.
Sims said the retailers used the site as a ‘‘near real-time communication device in relation to petrol pricing’’.
‘‘In particular, it is alleged that retailers can propose a price increase to their competitors and monitor the response to it,’’ he said. ‘‘If, for example, the response is not sufficient, they can quickly withdraw the proposal and may punish competitors that have not accepted the proposed increased price.’’
Woolworths said it would ‘‘strongly defend our use of Informed Sources for the benefit of our customers’’. Caltex said it ''strongly rejects the allegation that the OPW service is in any way illegal'' and will defend the action.
The consumer watchdog has begun court proceedings against petrol retailers including BP and Caltex alleging they have tipped each other off over their prices.
Goldman Sachs has retreated from its lone-wolf prediction of a cut in the cash rate this year, making it the last of the major investment banks to alter their thinking on the Reserve Bank of Australia’s next move on monetary policy.
The bank said in a note to clients today that it while it would not rule out a rate cut in the second half of this year “it seems unlikely that the RBA will ease interest rates in the near term”.
“Hence, we have removed our forecast rate cut and now do not expect the RBA to lift interest rates until the fourth quarter of 2015,” it said.
The shift follows today’s testimony by RBA Governor Glenn Stevens to the House of Representatives Standing Committee on Economics in Brisbane, where he said monetary easing had done all it could to fuel growth in Australia and help engineer the transition away from reliance on mining investment.
Goldman Sachs's head of portfolio strategy Tim Toohey said in July that wage and others pressures on household incomes, slower mining export growth and a long lag before new growth drivers kicked in could force the RBA to cut rates within months. The bank had forecast a 25 basis point cut in the cash rate to 2.25 per cent as early as next month.
Today it became the last major financial house to join the investment community consensus that the RBA’s next move will be a hike in interest rates, although there is still a range of views on the timing.
“The RBA appears reluctant to act as a further catalyst to economic growth despite forecasts for slowing economic growth, slowing inflation, and high unemployment,” Goldman said in its note
Prices of iron ore and steel continue to fall in China, with traders still worried by oversupply and unimpressed by the latest government efforts to stimulate construction demand in north-eastern regions.
"I'm just observing the market to see where I can make a profit. If there are price differences between the Dalian Commodity Exchange and the ports, for example, we can sometimes make money, but right now there isn't much of an opportunity," a trader based in Beijing told Reuters.
"Right now, the price for iron ore is going down and down, and I personally believe we need to wait until September or October before it goes up again," he said.
On Tuesday, China issued detailed new policy measures aimed at speeding up infrastructure investment in its struggling north-eastern rust belt. While new road and rail projects in the region could stimulate steel demand, the policy wasn't enough to breathe life into the stagnant iron ore market.
Benchmark 62 per cent grade iron ore for immediate delivery into China slipped 0.3 per cent on Tuesday to end at $US93 per tonne, its lowest level in two months and 33 per cent lower than at the same time last year.
"A price recovery in iron ore is being held back further by mills that are selling long-term, fixed-price cargoes into the spot market, adding to excess supply," ANZ said in a note today.
Rebar prices on the Shanghai Futures Exchange ended the morning session down 0.33 per cent at 3003 yuan ($US489) per tonne. The most active iron ore contract for September delivery on the Dalian Commodity Exchange finished at 654 yuan a tonne, up 0.31 per cent.
Melinda Moore, an analyst with Standard Bank, said the market was "still absorbing over-exuberant steel mill output in the first 10 days of August".
Analysts said the scale of the production increase in the first 10 days of the month had taken the market by surprise and suggested that China's efforts to shut down old capacity were not having as big an effect as anticipated.
China's industry ministry has set a September deadline for the closure of nearly 47 million tonnes of steel and iron smelting capacity, but the shutdowns can quickly be offset by larger mills seeking to expand market share. Despite a state crackdown, illegal production also remains a factor.
"Illegal production capacity remains too strong, and as soon as capacity is shut down, illegal capacity comes and replaces it," according to a research note from online steel trading platform GTXH.com.
A softening residential rental market will drive yields down further and could be the canary in the coal mine of a coming correction in property prices, analysts say.
Latest figures from Fairfax-owned Australian Property Monitors show gross yields fell in Perth and Canberra as rents tumbled. Yields have also fallen in Sydney, Melbourne and Brisbane, but asking rents have held up.
APM senior economist Andrew Wilson said prices and rents tended to move with the “same energy” and when out of sync, adjustments followed – as seen in Perth and Canberra.
Housing analysts SQM Research and BIS Shrapnel expect rents and rental yields to continue to soften across most markets in 2015 and beyond with vacancies rising amid a rush of new housing flowing onto the market.
While investors can take advantage of negative gearing and other tax breaks to soften the blow of reduced rental income, the need to fund a greater share of monthly mortgage repayments from back pockets could drive down appetite for investment property. That demand has fuelled much of the boom in house prices, particularly in Sydney and Melbourne.
A rise in interest rates, an economic downturn or a slowdown in population growth would accelerate the downturn and ultimately lead to price corrections, analysts said.
‘Falling rents will have an impact on investment decisions,” said SQM Research director Louis Christopher, who expects a softer rental market “for quite some time.”
“Investors who are in it for longer term capital growth may be willing to live with static or falling rents, but for others knowing that market rents are not going anywhere and that they may not being able to raise the rent immediately will give them food for thought,” said Mr Christopher.
BIS Shrapnel senior analyst Angie Zigomanis said he expected the rental market to soften further.
“Slowing rents will impact on the investor market because the investment equation becomes more adverse,” he said. “Buyers start adjusting prices they are willing to pay for investment property. If interest rates were to rise this would accelerates the process and could impact on price growth.”
Utilities giant AGL Energy has dusted off the accelerated rights issue with retail rights trading structure for its $1.23 billion equity raising.
AGL launched the one-for-five entitlement offer at $11 a share this morning, or a 20.2 per cent discount to the theoretical ex-rights price and a 23.3 per cent discount to the last close.
Brokers were calling for institutional bids by midday on Thursday, with renounced rights to be auctioned off at a book-build on Friday.
AGL’s retail shareholder base will have until September 15 to take up their rights – or can trade them on the ASX between September 1 and September 8.
The retail shortfall book-build will be held on September 18, according to a term sheet sent to investors.
The raising is to fund the purchase of Macquarie Generation’s two power stations, which AGL agreed to buy off the New South Wales government earlier this year.
AGL this morning reported underlying net profit after tax for the full year dipped to $562 million.
Here's a nice graphic which charts the corporate journey of BHP Billiton since listing in 1885 as the Broken Hill Mining Company.
BHP shares remain well down for the day, following the overnight sell-off in London. The company announced details of a demerger alongside annual results yesterday afternoon.
Some of the country’s leading fund managers are increasing their cash holdings as they try to protect investor returns against a possible market correction and take advantage of buying opportunities.
Magellan Asset Management has become the latest fund manager to reveal that it has increased the cash weighting in the company’s global equity strategy to around 10 per cent, in response to increased concerns about
“We are lifting our cash weighting to increase the defensiveness of our portfolio in response to the massive compression in risk premia across multiple asset classes over the last 18 months,” said Magellan lead portfolio manager Hamish Douglass in a note to clients.
“We believe there is an elevated probability that this risk compression will unwind over the next 12 months or so as the US Federal Reserve ends quantitative easing (QE) and investors focus on a normalisation of US interest rates.”
He added that “an unwind of the compression of risk premia combined with rising long-term interest rates could lead to a material correction in credit and equity markets.
Highly regarded fund manager John Sevior, who is the founder of the tightly held Airlie Funds Management, is also understood to have increased his cash allocation.
The amount of money sitting in cash within global portfolios is at its highest level since 2012, according to a fund manager survey by Bank of America Merrill Lynch, with double the number of investors building positions in the defensive asset class in August compared to the month before.
Woodside Petroleum’s results confirmed the company was sitting on a cash warchest – but analysts and shareholders have been left wondering exactly what the company plans to do with it.
“WPL stated it will continue to consider its capital position in capital management going forward,” Citi analysts said in a flash note to clients this morning.
“We will look for more guidance in the conference call. We expect WPL will look to hold onto most of its cash to help unlock Shell overhang at a later date, with potential for a small special dividend in the meantime.”
UBS analysts said it was too soon after the failed buyback for Woodside to provide definitive guidance on capital management.
But the analysts noted Woodside’s potential to return cash to shareholders, after the oil major’s gearing dropped to 3.9 per cent at June 30 from 9 per cent six months earlier.
Woodside also had access to $2.7 billion cash and $1.6 billion in undrawn debt facilities, UBS pointed out in a note to clients.
JPMorgan’s trading desk told clients the result was right in line with expectations.
“[The] only real area of surprise is the net debt figure of $623 million which has come in below JPM forecasts of $894 million as a result of paying debt down faster than we expected,” the broker said.
The government is failing at the limits of monetary policy, writes BusinessDay columnist Michael Pascoe:
Here’s what the Reserve Bank has effectively told us: given the balancing act of stimulating the economy with low interest rates on one hand while keeping some ammunition dry and not sparking dangerous bubbles on the other, unemployment stuck around 6.25 per cent for the next couple of years is acceptable.
Governor Stevens told the House of Representatives economics committee the economic growth outlook for the next couple of years is a little weaker in the near term than he would like, but it’s still “kind of OK”.
It follows that unemployment around 6.25 per cent is also “kind of OK”. Stevens is a decent person and certainly wouldn’t like the 6.25 per cent, wouldn’t wish its implications on his fellow citizens, but in terms of what he can and can’t responsibly do with the cash rate, it’s not unacceptable.
So barring major economic shocks of one kind or another, monetary policy isn’t moving. It’s reached its non-crisis limits. (You really shouldn’t wish for lower rates now as that would only happen if the economy substantially worsens.)
Which should leave us wondering what could/should be done on the fiscal side, whether that federal government also thinks unemployment somewhere in the mid-6s is “kind of OK”.
It turns out that the RBA deputy governor has an answer that can’t be found in the incoherent remains of Joe Hockey’s first budget.
The Senate circus means there’s not an immediate fiscal contraction and, on a short-term basis, that’s kind of OK.
Despite all the rhetoric, the coalition’s occupation of the treasury benches has meant increased spending and reduced taxes for the last and present financial years. The supposedly evil debt has been increased by policy and accident. (I think it’s fair to call the Senate an accident.)
The Reserve Bank of Australia's Governor Glenn Stevens: "kind of ok" with low economic growth. Photo: Glenn Hunt
Former Microsoft chief executive Steve Ballmer has left the software company’s board in order to spend more time on his newly acquired Los Angeles Clippers basketball team, but says he plans to hang on to his 4 per cent stake in Microsoft.
“I see a combination of the Clippers, civic contribution, teaching and study taking a lot of time,” Ballmer said in a letter to Microsoft CEO Satya Nadella made public by Microsoft overnight.
Ballmer, paid an NBA-record $US2 billion for the Clippers. On Monday he greeted several thousand fans gathered at the team’s Staples Centre home with the trademark screams that punctuated employee meetings at Microsoft.
His decision to step down from the board is not surprising after 12 months of change at the head of the 39-year old software giant. It avoids potential board tension between Microsoft’s new leader and the old regime, as Nadella attempts to move the company away from its traditional PC-focused mindset toward mobile computing.
“It removes the final ‘Ballmer overhang’ at Microsoft,” said FBR Capital Markets analyst Daniel Ives of Ballmer’s exit. “His resignation from the board represents a positive, as it leaves the company with a clean sheet of paper.”
As Gates sells shares to fund his philanthropy, Ballmer has become the biggest individual shareholder in Microsoft, owning a 4 per cent stake worth about $US15 billion.
Farewell Microsoft: Steve Ballmer leaves the software giant after 34 years with the company.
A subsidiary of US firm Bunge Limited plans to build a port terminal on Australia's east coast, boosting competition for the country's largest agribusiness, GrainCorp.
Bunge Australia said that the terminal would be built in Geelong, Victoria, with capacity to export 45,000 tonnes of grain a year.
GrainCorp has seen a wave of competition emerge across the Australian east coast, a stronghold for the bulk grain handler.
Bunge has applied for planning permission to build its second port terminal, which would have three storage silos. Bunge opened its first Australian port in Western Australia earlier this year.
"We decided on Geelong due to the capabilities of its port, complementary infrastructure and good transport access for grain supply," Chris Aucote, Bunge general manager, said in a statement.
The bulk grain terminal is expected to open at the end of 2015, a spokesman for the company said.
The development of a new port in Victoria marks yet more competition for GrainCorp, which also operates a port in Geelong, and Emerald Grain, recently wholly acquired by Japan's Sumitomo Corp.
"This is further evidence that grain exports from eastern Australia are highly competitive and contestable," said Angus Trigg, a GrainCorp spokesman.
"The regulation of our ports means that GrainCorp as an Australian-based company is increasingly disadvantaged against the much larger multinationals behind competing ports," he said, referring to rules that say GrainCorp must offer rivals access to its ports.
Logistics business Qube Holdings said in March that it had formed a joint venture with Noble Resources, a unit of Singapore's Noble Group, to develop a new port terminal at Port Kembla in Australia's New South Wales.
Cargill Group and Emerald Grain have been granted the option to acquire up to a 20 percent stake each in the new venture, Quattro Grain, which is expected to be operational by early 2016.
Graincorp shares are down 0.2 per cent to $8.79.
For the rest of the year all eyes should be on housing. It’s the key to inflation, interest rates, and the performance of Australia’s $400 billion mega-banks, Christopher Joye writes in the AFR:
Contrary to optimistic forecasts that the boom was over after a temporary seasonal blip, the market has recovered with gusto in the final two months of winter, as we anticipated.
The RBA says we should not get exercised about stonking house price appreciation because Australia’s housing credit growth rate is modest. Really?
Credit growth is only useful in the context of what it tells us about the “level” of leverage. If we had low leverage and fast credit growth, we’d be keeping an eye on how leverage was rising over time towards dangerous levels.
The issue is that leverage is already at near-record levels.
In contrast to the US and UK, Australian households hardly deleveraged during the GFC. The current household debt-to-income ratio of 150 per cent will soon exceed the 152 per cent level hit in June 2007.
Likewise the ratio of house prices relative to incomes is about to breach the records attained in 2007 and 2010, if it has not done so already.
And while Stevens reckons housing credit growth is only “slightly above trend nominal income growth”, it is running at more than twice current (not ‘trend’) income growth. Wasn’t it Stevens who told us to expect weaker income growth in the future after one-off events boosted it in the past?
A final interesting dynamic is the de facto rate cuts lenders have been bequeathing borrowers out-of-cycle. We first highlighted this news to readers months ago. The RBA has done the same in its August minutes, which revealed that “cumulative movements in interest rates since the start of the year amounted to a noticeable easing in financial conditions”. It seems those calling for RBA rate cuts are already getting them.
Household leverage is at near-record levels. Photo: AFR
Kiwi medical device maker Fisher & Paykel Healthcare has shaken off the effect of a slightly weaker New Zealand dollar to upgrade its full year net profit guidance on the back of strong demand for its products.
The company is a challenger to Australian success story ResMed in the $8 billion sleep therapy space. Like ResMed, FPH generates a large chunk of its revenue from North America - 47 per cent according to Bloomberg.
The dual listed company said it expects to earn net profit after tax of $NZ100 million ($90.4 million) for the year ended March 31 2015, so long as the Kiwi dollar sits at about US84¢ for the remainder of the year.
In May, based on an exchange rate of $NZ1 to US86¢, the company told the market to expect full year net profit of $NZ97 million.
Chief executive Michael Daniell told the company’s annual general meeting in Auckland that growth in the first half of the financial year, which goes until September 30, had been “robust”. “We expect first half constant currency operating revenue growth of approximately 14 per cent and constant currency operating profit growth of approximately 60 per cent,” he said.
Fisher & Paykel shares are 0.9 pr cent higher at $4.42.
“Strong demand has continued into the new financial year, driven by growing acceptance by clinicians and healthcare providers of the solutions we provide.”
Mr Daniell said take-up of two recently launched used by sufferers had been “enthusiastic”.
The $2.4 billion company also supplies humidifiers and ventilators to hospitals and other healthcare providers. This respiratory and acute care product group showed strong growth, he said.
At current exchange rates, the company expects operating revenue for the first half to be approximately NZ$315 million and net profit after tax to be approximately NZ$45 million dollars. Assuming an NZ to US exchange rate of approximately US84¢ for the balance of the year, the company now expects full year operating revenue to be approximately NZ$650 million.
Australia is frightening developers away from renewable energy even before the government decides on whether to overhaul targets for the industry's growth.
Prime Minister Tony Abbott's decision to take advice on renewable energy targets from a sceptic about the causes of global warming prompted at least two developers to reconsider plans for wind and solar farms. Earlier this week, the company planning a giant solar plant in Mildura pulled out of the project citing the risk the government will rework its policy.
Concern that Australia will dismantle the target is unsettling to an industry that has brought in $20 billion since the country first set goals for clean energy in 2001.
"The reported intentions of Mr Abbott amount to economic vandalism, pandering to the climate sceptic minority and represents a total misread of community aspirations," said Miles George, the managing director of Infigen Energy, which has stakes in 24 wind farms in Australia and the US.
Keeping the renewables target would shrink coal's share as the fuel for Australia's power market from about 74 per cent to 64 per cent by 2020, according to the Climate Institute, an environmental research group. Repealing it would add about $8 billion in profit to coal plant operators including Origin Energy, AGL Energy and EnergyAustralia.
Abbott and Hockey reckon poor people don't matter, writes economics editor Ross Gittins:
It doesn’t seem yet to have dawned on Tony Abbott that he was elected because he wasn’t Julia Gillard or Kevin Rudd, not because voters thought it was time we made a lurch to the Right.
The man who imagines he has a “mandate” to mistreat the children of boat people, ensure free speech for bigots, give top appointments to big business mates and reintroduce knights and dames, represented himself as a harmless populist before the election.
The other thing he doesn’t seem to have realised is that just as he has us moving to reduce our commitment to action against climate change and to make the budget much less fair, the rest of the advanced economies are moving the opposite way.
President Obama is taking steps to overcome Congress’s refusal to act on global warming, the Chinese get more concerned about it as each month passes and the International Monetary Fund is chastising us for our apostasy.
And while we use our budget to widen the gap between rich and poor, people in other countries are realising the need to narrow it.
Gittins: saving capitalism from its excesses
We simply cannot take the capitalist system, which produces such plenty and so many solutions, for granted. Ross Gittins comments.PT3M26S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-3dxny 620 349 August 19, 2014
BHP’s shares are still down 4.2 per cent at $38.03, as investors react negatively to the miner's controversial $14 billion demerger plan and the lack of a mooted $3 billion buyback.
Here's what the analysts are saying:
JPMorgan has maintained a neutral rating on BHP arguing it expects more upside in rival miner Rio Tinto over the next 12 months, particularly with its ability to announce capital management initiatives in the first half of 2015.
“BHP is now trading at relatively high multiples vs its peers,” JP Morgan analyst Lyndon Fagan said in a note to clients. “Now that capital management appears to be off the agenda near term, and there is unlikely to be a rush to own the Ltd stock to gain a stake in NewCo, the share price could remain under pressure near term.”
Citigroup has retained its neutral rating but says the lack of capital management initiatives disappoints and notes investors now face a choice over two very different looking mining companies.
“Investors will have a choice between a NewCo with high leverage to commodity cycles versus a company with more stable earnings, margins, and cash flows where the latter could be at a disadvantage in up cycle,” Citi analyst Clarke Wilkins said. “Somewhat ironically we expect strong earnings growth from non-core BHP driven by higher nickel, aluminium and coal prices, while core-BHP earnings decline driven by iron ore.”
Macquarie has downgraded BHP to neutral from outperform, noting its underlying profit of $US13.4 billion was 1.4 per cent below the broker’s forecast, with BHP’s dividend of US121c a share also slightly below its expectations.
However, Macquarie analyst Adrian Wood increased its target price on BHP to $42.50 from $41 saying the company’s greater focus on iron ore expansion in the Pilbara to 290 million tonnes a year from previous guidance of 260-270 million tonnes a year would be well received.
How investors have reacted to companies reporting earnings today (or yesterday for BHP and QBE).
Some high profile winners and losers among the companies reporting today (or yesterday in the case of BHP or QBE).
Some more tidbits from the RBA chief's testimony:
#RBA Stevens "maybe 15 points" cut in lending rates since last cash rate move. (We've had a defacto further monetary easing.)— Michael Pascoe (@MichaelPascoe01) August 20, 2014
Oz bond rates lowest since Federation says Stevens. "Its an extraordinarily unusual world right now."— Shane Wright (@swrightwestoz) August 20, 2014
Stevens reminisces on origins of 2-3% infaltion target - it came from the "inflation-fighters par excellence - Germany"— Jacob Greber (@jacobgreber) August 20, 2014
STEVENS: THOUGHT ABOUT INTERVENTION WHEN A$ WAS MUCH HIGHER— Chris Weston (@ChrisWeston_IG) August 20, 2014
Apple's stock closed at an all-time high overnight, surpassing a 2012 record as investors look ahead to new products such as bigger-screen iPhones and a wristwatch-like device that may jump-start revenue growth.
Apple rose 1.4 per cent to $US100.53 ($108.11), topping the split-adjusted record of $US100.30 reached in September 2012, just before the iPhone 5 went on sale. The shares have gained 25 per cent this year, taking the stock's market cap to $US602 billion.
After rising more than sevenfold following the 2007 debut of its smartphone, Apple stock lost a third of its value in the year after the iPhone 5's release on concerns that the company was running out of blockbuster product ideas without its late co-founder Steve Jobs. The tenor has changed, with analysts estimating record sales for the next batch of iPhones, set to be released later this year.
Activist investor Carl Icahn, who had pushed Apple to buy back more of its own stock earlier this year, said the rise in the company's share price validated his earlier claim that the iPhone maker was undervalued.
"All my chips still on the table and in fact increased position over past year," Mr Icahn said in a Twitter post. Icahn owns 52.8 million shares in Apple worth $US5.3 billion, according to a recent filing.
In June, people familiar with the plans said Apple planned to start mass production on two smartphones with larger screens, a response to devices from rivals such as Samsung Electronics and HTC.
The stock's rise shows investors are buying into the strategy outlined by its chief executive, Tim Cook, who has been prodded to introduce bigger iPhones, give more money back to stockholders and introduce new devices.
Investor hopes that Apple boss Tim Cook will boost earnings with new whizzbang products such as a smartwatch device have lifted the share price.
Andrew "Twiggy" Forrest will receive his third $100 million pay day from Fortescue in the space of 13 months, after a $US2.74 billion profit allowed the miner to continue paying healthy dividends to shareholders.
The result was slightly lower than analysts had expected, but was a massive 56 per cent higher than last years $US1.74 billion profit.
The bigger profit was built upon a significant increase in iron ore exports, and came in a year when prices for Fortescue's only product were lower than previous years.
The company paid a 10 cent dividend, taking its full year dividend to 20 cents.
Forrest owns 33.19 per cent of Fortescue, meaning his stake will earn about $103.3 million when dividends are paid in October.
The company has also paid down another $US500 million on its debt, meaning its net debt now stands at $US7.2 billion.
Shares are up 0.2 per cent at $4.63.
Just another $100 million day ... Andrew Forrest Photo: Erin Jonasson
Macquarie Group has urged any aggrieved clients who lost money in the initial public offering of the BrisConnections toll road in 2008 to raise their concerns following claims it allowed a select group of wealthy customers to pull out of the disastrous float.
The investment bank allowed some wealthy customers to pull out of the BrisConnections initial public offering in 2008 when it looked like the float was going to tank, according to seven current and former Macquarie staff.
More than $20 million of BrisConnections shares were handed back by clients to their Macquarie stockbrokers before the shares began to trade, the sources said. The company forced the brokers, also known as private client advisers, to wear some of the losses, they added. The allegations relate to the total allocation to Macquarie Private Wealth clients, which was in the order of $100 million, as part of the float.
By returning the shares Macquarie clients had agreed to buy, the favoured investors avoided one-day losses of more than $10 million.
BrisConnections shares fell 59 per cent on their debut on the Australian Securities Exchange because of concerns fewer cars than forecast would use its toll road in Brisbane.
“That is a terrible way to treat clients. All clients should be treated the same,” managing director of Sirius Fund Management, Kieran Kelly, said.
“There’s always been an underlying compromise with having a wealth management area and stockbroking arm tied to an investment bank and I don’t know how you remove that conflict of interest.”
Macquarie chief executive Nicholas Moore is facing questions over the bank's conduct during the BrisConnections float, days after it had to contact 160,000 clients over the quality of financial advice they received. Photo: Luis Enrique Ascui
Can Glencore make investors in the beleaguered mining industry happy after BHP Billiton disappointed them?
After a decade of explosive commodities price gains fuelled by Chinese demand, mining companies are dealing with slower growth by spurning mergers and cutting costs. Fund managers including BlackRock are demanding cash now rather than have money risked on another round of acquisitions and expansions that flooded metals markets with surplus production in recent years.
Glencore, the third-largest miner by value, may announce a share buyback when it reports earnings today, according to Citigroup and UBS. Its chief executive officer Ivan Glasenberg, who has criticized competitors for building too many mines during the boom, has an extra $US7 billion in cash after the sale last month of a Peruvian copper operation.
Other big miners are also targeting shareholder payouts. Barrick Gold says it’s now focusing on returns rather than production volumes. Earlier this month, Rio Tinto raised its dividend and said it’s on its way to becoming a “cash machine” as a cost-cutting drive starts to bear fruit.
BHP is trying to rationalize its portfolio of mines and smelters and yesterday announced a plan to spin out aluminum, coal, manganese and silver assets into a new company. Still, the company’s shares fell 4.9 percent in London, the most in more than two years, after it said it wasn’t ready yet to start returning cash to investors.
“Although we think the demerger strategy looks sound and will likely benefit shareholders, it’s nowhere near as tangible as a share buyback,” Numis Securities said in a note yesterday.
BHP is up 0.5 per cent in London over the past 12 months, while Glencore has gained 19 per cent and Rio 12 per cent.
In 2011, as China devoured more iron ore and copper to feed its economic expansion, Melbourne-based BHP’s return on common equity was 45 per cent, according to data compiled by Bloomberg. Three years later the return was 18 per cent, the data show, as Chinese growth slowed.
The mining industry’s decade-long $US616 billion investment spree was followed by asset writedowns and management clear-outs. It would be foolish for CEOs of the biggest companies to revert to the “damaging strategies of the last cycle,” BlackRock’s Evy Hambro, who manages the $8 billion World Mining Fund, said earlier this month.
Here's some more on Glenn Stevens' testimony, in which the RBA chief berated corporate Australia for its continuing cash splash with some surprisingly strong words:
Companies’ focus on returning cash to shareholders might be stifling much-needed investment in new production to rebalance the Australian economy away from mining, Reserve Bank governor Glenn Stevens says.
Speaking before the House of Representatives Standing Committee on Economics, Stevens reiterated that the “animal spirits” needed to expand the stock of productive assets, which creates employment, were still lacking.
“There are some encouraging signs here,” he said. “Nonetheless, if reports are to be believed, many businesses remain intent on sustaining a flow of dividends and returning capital to shareholders, and less focused on implementing plans for growth.
“Any plans for growth that might be in the top drawer remain hostage to uncertainty about the future pace of demand.
“That's actually nothing new. It's pretty normal at this point of the cycle.
His comments come amid a relatively subdued outlook for the Australian economy, forecast to grow at a below-trend of rate of between 2 and 3 per cent over the next 12 months at least.
After rapid expansion in the March quarter, June quarter gross domestic product growth is likely to have slowed considerably.
Waiting for 'animal spirits' ... RBA chief Glenn Stevens
Southern Cross Media Group has reported a full-year net loss of $296 million, due largely to write-downs on intangible assets and investments.
The regional television, radio and metropolitan radio broadcaster recorded underlying net profit of $79.6 million for the year ended June 2014, compared with consensus expectations of $80.1 million.
Revenue was flat at $640 million, while EBITDA was down by 15 per cent to $179.7 million.
Southern Cross chairman Max Moore-Wilton will step down from the board during fiscal year 2015, while former Macquarie Capital boss Michael Carapiet will leave the board at the company’s annual general meeting this year.
Southern Cross has appointed former Lion Nathan chief executive Rob Murray, chartered accountant Kathy Gramp and former IBM Australia chief Glen Boreham as non-executive directors.
Southern Cross has had a difficult run due to the loss of star Sydney radio duo Kyle Sandilands and Jackie O, and lacklustre ratings from its metropolitan free-to-air television affiliate Ten Network Holdings.
“The fiscal year 2014 results continue to show the resilience of our business,” Southern Cross chief executive Rhys Holleran said. “In what has been a challenging trading environment, and a challenging year for the group overall, I am pleased with the results and the direction in which the group is heading.”
The company wants to lower its debt-to-earnings ratio and announced a dividend of 3¢ per share, which brought the full-year dividend to 7.5¢ per share. This compares with the full-year dividend of 9¢ per share last year.
Citi analyst Justin Diddams said the result came in below market expectations and that the underlying numbers excluded $8 million worth of newly identified “onerous contracts”.
“These results highlight the magnitude of operational challenges facing Southern Cross,” he said.
Here’s a reaction on Twitter to the mild jawboning by the RBA guv - "I can't see the logic for the dollar not being lower," Glenn Stevens said at today's testimony - and his ensuing admission that he ‘‘could be wrong’’ on whether the dollar comes down over the next year:
"I could be wrong for the next year or more" on dollar fall, says Stevens. #AUD reacts with the violence of an easter island statue— Jacob Greber (@jacobgreber) August 20, 2014
STEVENS: SHORT-TERM SPECULATORS UNDERESTIMATE AUSSIE DROP RISK - Got to be time to tax them...!!— Chris Weston (@ChrisWeston_IG) August 20, 2014
The dollar, meanwhile, hasn't really reacted and is trading flat at 93.00 US cents
Solid earnings growth at Coles, Bunnings and Officeworks has offset weaker earnings from coal, Target and chemicals, lifting Wesfarmers’s full-year underlying net profit by 6.1 per cent to $2.39 billion.
The Perth-based conglomerate also booked net one-off gains of $291 million from the sale of its insurance operations, lifting bottom line net profit by 19 per cent to $2.69 billion.
Group EBIT, before one-off items, rose 3.5 per cent to $3.78 billion as 9.1 per cent EBIT growth at Coles and 8.3 per cent growth at Bunnings was partially offset by a 36.8 per cent drop in EBIT at Target, 12.2 per cent in coal and 20.6 per cent in chemicals and safety.
The underlying net profit result was in line with consensus forecasts of about $2.4 billion, while underlying EBIT exceeded forecasts around $3.68 billion.
Wesfarmers also announced plans to return $1.1 billion, or $1 a share, to shareholders after selling its insurance operations for $3 billion earlier this year.
The distribution, which is likely to take the form of a capital return and a fully franked dividend, is subject to approval by the Australian Taxation Office and shareholder approval at the annual meeting later this year.
The capital return was widely anticipated by the market, despite Wesfarmers’s attempts to play down its capital management capacity after exiting the insurance industry.
Wesfarmers returned 50¢ a share, or $580 million, to shareholders in November.
The company's shares are 1.5 per cent higher at $44.68.
Sales from Coles, Bunnings and Officeworks have boosted Wesfarmers' annual profit. Photo: Louise Kennerley
Karoon Gas Australia has advised it will seek to buy back up to 10 per cent of its shares, putting to work the proceeds from its $US600 million exit from its Browse Basin permits through a deal with Origin Energy.
Based on Karoon's closing price on Tuesday of $3.66, the buyback would cost about $92 million, the company said on Wednesday.
Karoon undertook a review of its capital position after clinching the Browse Basin transaction with Origin, with the board deciding that a buyback was the most effective way to return surplus capital to shareholders.
Executive chairman Robert Hosking said the on-market buyback "highlights the strength of the balance sheet over the medium term".
He said the buyback, which will start September 3 at the earliest, would increase the exposure for all shareholders to the upcoming appraisal drilling to take place at the Kangaroo oil discovery in Brazil, and the company's oil-focused 18 month drilling program.
Karoon noted there was no guarantee it would buy back the full amount of up to 25.112 million shares and it reserved the right to suspend the buyback, which will depend on the prevailing share price and other factors, at any time.
All the shares bought back will be cancelled, it said.
Karoon shares are 0.6 per cent higher at $3.68.
It seems there's no end to the bad news for shareholders in waste collector Transpacific, this time with the decision to ground its entire trucking fleet following a fatal accident in South Australia.
Comcare issued the notice, with question marks over the roadworthiness of its fleet and the adequacy of the maintenance program.
The news follows heavy provisions disclosed Tuesday due to additional remediation needed at its garbage tips.
The shares were down as much as 18 per cent in early trade and are now a heavy 7.2 per cent lower at 90c.
Building materials group Fletcher Building said it has achieved the first $NZ25 million of its $NZ100 million cost-cutting target as the strong New Zealand dollar and subdued building in Australia dampened profits.
The trans-Tasman materials giant reported full-year net profit after tax of $NZ339 million ($306.8 million), up from $NZ326 million a year ago.
Revenue fell to $NZ8.401 billion from $NZ8.517 billion.
Net earnings before significant items totalled $NZ362 million, up 11 per cent from financial 2013,
In a statement to the ASX Fletcher chief executive Mark Adamson said it was a “strong” underlying earnings result “with double-digit earnings growth despite currency headwinds and subdued trading conditions in Australia for much of the year”.
“We would have met the top end of our guidance range had the New Zealand dollar not strengthened the way it has over the past year,” he said.
Significant items of $NZ32 million were incurred from the sale of Pacific Steel.
The company, which supplies laminates, steel, plasterboard and other building products, said it will pay a final dividend of 18¢ on October 15.
“We’re confident we can further grow earnings in the year ahead, with a strong construction backlog in New Zealand and further benefits from [cost-cutting program] FBUnite,” Mr Adamson said.
Strong construction and new home building and repairs activity in New Zealand bolstered earnings in the year.
Fletcher shares are 0.7 per cent higher at $8.27.
Fletcher Building's earnings have been hit by a stronger Kiwi dollar and subdued building activity in Australia.
Australia’s biggest annuities provider, Challenger, is seeking to raise $280 million to beef up its capital base and fund a boom in annuities sales in the new financial year.
Challenger is looking to tap institutional investors for $250 million through a share placement underwritten by UBS, and completed through a bookbuild.
The company, which has a market value of $4.2 billion, is also seeking $30 million from retail investors through a share purchase plan.
The majority of the funds raised will be invested into Challenger Life, the group’s life annuities arm, as tier 1 capital to fund the group’s expected boom in annuities sales in fiscal 2015.
It is the first time Challenger is raising equity since 2007, when the company was still backed by James Packer.
The capital raising comes after Challenger unveiled a 7 per cent rise in normalised net profit of $329 million for the year to June. The company posted $3.38 billion in total annuities sales during the year, and a 28 per cent rise in retail annuity sales to $2.8 billion.
The group’s life sales hit $613 million – a significant jump from just $46 million two years ago.
“Challenger has recorded five straight years of retail annuity sales growth, and has unambiguous expansion prospects. It’s time to change gears so we can capitalise on the opportunities before us,” Challenger boss Brian Benari said.
The group posted a 13 per cent rise in assets under management to $50.7 billion across its life and funds management divisions. Challenger’s funds management business, which includes its boutique incubator arm Fidante Partners, saw $2.1 billion in inflows.
“Our funds management division more than doubled its earnings over the last two years, and with $50 billion in unfilled investment capacity, we’re now one step closer to our ultimate ambition of becoming a top five Australian fund manager,” Mr Benari said.
Challenger shares are 3.1 per cent higher at $7.95.
Logistics giant Brambles has reported a 5 per cent rise in full-year underlying profit to $US960.1 million as new business in the core pallets division drove stronger revenues.
Revenue for the year ended 30 June rose six per cent to $US5.41 billion.
Chief executive Tom Gorman said economic conditions are slowly improving and the final quarter of the year was solid after harsh winter weather hit United States business activity in the third quarter.
Mr Gorman said the company has now formally launched the “One Better” program to achieve $US100 million in overhead cost reductions by 2019.
The cost savings target was revealed at the February half-year result.
“As a result of this program we expect overheads as a percentage of sales to reduce by at least two percentage points by FY19 from approximately 15.5 per cent,” Mr Gorman said in a statement to the ASX.
Brambles declared a final dividend of 13.5¢ a share with 30 per cent franking.
Brambles shares have dropped 0.9 per cent to $9.36.
Brambles bottom line was boosted by pallets as the company embarks on a cost cutting mission.
Online job advertising giant SEEK says its expects its bid for Asian jobs portal JobStreet to be completed by September, at an increased price, and has flagged growth in dividends.
Seek this morning reported underlying net profit for the year of $179.7 million, slightly under analyst expectations. Full-year revenue was $756.4 million, slightly above analyst expectations.
Co-founder and managing director Andrew Bassat said all divisions performed well in "moderate economic conditions. In the last 12 months, significant progress has been made in completing complex mergers and acquisitions as well as the roll-out of key product initiatives to support the placement strategy. These activities are central to Seek's evolution and long-term aspirations."
Seek's shares are 1.6 per cent higher at $17.27.
Shares have recovered their losses from the open and are hovering around break-even after BHP's slump is offset by strong gains in the big four banks.
QBE has jumped 4.6 per cent as it returns to trade following announcement of a capital raising, helping the ASX 200 to a broadly flat start at 5621.7, while the All Ords is at 5617.3.
The big four banks are all between 0.7 and 0.9 per cent up, while Telstra has advanced 0.7 per cent.
Woodside is up 1 per cent on its interim profits result.
In addition to BHP, the biggest drags on the market are Suncorp, down 5.1 per cent as it trades ex-dividend, Transpacific Industries - which is in freefall and down another 16.5 per cent - and Coca-Cola Amatil, down 4.7 per cent on its interim profits announcement.
Rio is down 0.3 per cent.
Gas pipeline owner APA Group posted a 16.5 per cent increase in full-year profit to $343.7 million, boosted by a chunky one-off tax gain of $144.1 million.
Before one-time items, net profit gained 14 per cent to $199.6 million, while EBITDA rose 12.9 per cent to $747.3 million, almost exactly in line with the $748 million consensus among analysts.
APA, which earlier this month gave up its ambitions to take over gas distributor Envestra, had already provided guidance for Ebitda of $740 million-$750 million.
For 2012-13, full year statutory profit was $296 million, underlying NPAT $179 million and Ebitda $763 million.
Chairman Len Bleasel declared a final distribution of 18.75¢ per security, taking full-year dividends to 36.25¢, up 2.1 per cent from the year earlier.
US home construction rebounded in July and the cost of living rose at a slower pace, showing a strengthening US economy has yet to generate a sustained pickup in inflation.
A 15.7 per cent jump took housing starts to a 1.09 million annualized rate, the strongest since November, and halted a two-month slide, the Commerce Department said in Washington. The consumer price index increased 0.1 per cent after rising 0.3 per cent in June, the Labor Department also reported.
An improving job market and cheaper borrowing costs are helping revive residential real estate, helping boost sales at companies such as Home Depot. As inflation continues to run below the Federal Reserve’s target, it gives the central bank room to keep interest rates low well after the projected end of its bond-buying program in October.
“The recovery remains on track, but we’re not moving forward at a burning-hot pace,” said Laura Rosner, a US economist at BNP Paribas in New York. “The Fed has the luxury really to keep policy very accommodative and keep fostering economic growth and labour market improvement.”
“There’s no hurry to raise rates at this point,” said Rosner.
Price pressures also abated overseas. UK inflation cooled more than economists forecast in July, giving the Bank of England leeway to keep its key interest rate at a record low. The rate of consumer-price growth fell to 1.6 per cent from 1.9 per cent in June, the Office for National Statistics said in London.
There’s been a lot of positive talk around this earnings season, which has seen shares rallying close to the year’s highs, but Deutsche Bank says so far most companies it follows have actually missed estimates.
‘‘Only 42 per cent of companies that have reported have beaten DB analysts’ expectations, which is a very low proportion relative to recent years,’’ the bank’s analysts point out in a note this morning.
But they add that the proportion of earnings forecasts upgrades is around the recent levels, which is a little more encouraging.
Liver cancer drug developer Sirtex Medical said its full year net profit rose 30.6 per cent to $23.9 million, boosted by record dose sales of its targeted internal radiation therapy.
The Sydney-based company, which pierced the $1 billion market capitalisation point for the first time in July, just missed expectations of net profit of $24.6 million. It had net profit of $18.3 million in the same period last year.
Revenue in the year ended June 30 rose 30.9 per cent to $131.3 million, which beat consensus expectations of $127.8 million, according to data compiled by Bloomberg.
The company’s radioactive SIR-Spheres product is a targeted liver cancer therapy. It is seen by many oncologists as a second line therapy, to be used when other therapies fail. But Sirtex is conducting clinical trials in the hope of positioning its product as a first line therapy.
In the full year dose sales rose 17.3 per cent to 8,561.
The result was fairly well flagged given Sirtex provided its fourth quarter dose sales numbers to the market on July 3. At the time Sirtex said it would no longer report quarterly sales and move to a focus on medium and long term goals.
Chief executive Gilman Wong said Sirtex’s current growth rate was sustainable. But he said a positive result from one of the company’s clinical trials "should see an acceleration or step change in our growth.”
The stock has gained 59 per cent in the past year, compared to a 10 per cent rise in the S&P/ASX200 index. At Tuesday’s closing price of $20.04, it just off a 12-month high of $20.22 hit the day prior.
Discount retailer The Reject Shop has posted a 25.6 per cent slump in full-year net profit to $14.5 million, in line with an earnings warning delivered earlier in the year, with like-for-like store sales for the first six weeks of the new financial year also in decline.
The retailer, which has struggled over the last few years due to intense competition from other large discounters such as Target, Kmart and Big W and a pull back in consumer spending, said it will tilt its stores towards higher margin goods and give more shelf space to high sales categories in 2015.
The full benefits of this change to its entire store network should start to be seen as the company heads into the second quarter of 2015, the company said this morning.
The Reject Shop has posted a 15.1 per cent lift in sales for 2014 to $711.5 million with comparable store sales - which strips out the impact of new store openings - down 0.45 per cent.
Reported net profit fell to $14.5 million, while adjusted profit was 2.3 per cent weaker at $19.5 million. The adjustments to the profit included new store opening costs, asset write offs and other asset impairments.
The Reject Shop declared a fully franked final dividend of 8.5 cents per share, with a record date of September 26 and payment date of October 13.
Coca-Cola Amatil is facing its second consecutive year of lower earnings after first-half net profit fell as weaker sales in convenience stores and petrol stations and supermarket pricing pressure crunched margins in its earnings engine room, the Australian beverages business.
Net profit fell 15.6 per cent to $182.3 million in the six months ended June 30 from $215.9 million in the year-earlier period, the company said. EBIT in Australia, which generates more than 80 per cent of profits, fell 14.1 per cent to $226.5 million, while earnings in Indonesia plunged 83.4 per cent to $5.2 million, dragging group EBIT down 15.3 per cent to $316.7 million.
The net profit result was ahead of consensus forecasts of around $177 million, while the 15.3 per cent drop in EBIT was in line with the company’s profit warning in April, when new chief executive Alison Watkins warned that June-half earnings would fall 15 per cent and said that 2015 would “not be an easy year.”
Ms Watkins, who took the helm from long-serving chief Terry Davis in March, has flagged major restructuring and a “step-change” in fixed costs and productivity, saying Australia’s largest non-alcoholic beverage bottler is facing structural issues that are challenging its business model and its ability to deliver long-term sustainable growth.
“It is clear that CCA is facing a number of immediate challenges, particularly in the Australian beverage and Indonesian markets,” Ms Watkins said after unveiling the result.
CCA cut its interim dividend by 4¢ to 20¢ a share.
Coca-Cola Amatil has cut its dividend ahead as margins are crunched.
BA guv Glenn Stevens is appearing before a Parliamentary committee. Photo: Getty Images
Reserve Bank of Australia governor Glenn Stevens is about to make his appearance at the biannual public hearings of the House of Representatives Standing Committee on Economics.
As background, the committee is responsible for scrutinising the RBA and for ensuring its transparency and accountability to the Parliament, the community and the financial sector.
It also offers the opportunity for members to grill Stevens on a variety of hot topics, which could are likely to include the central bank’s economic outlook, the future path of monetary policy, house prices and the Australian dollar.
The committee is chaired by Kelly O'Dwyer, Liberal member for Higgins in Australia.
Woodside Petroleum has assured the market that its sole remaining growth project, the Browse floating LNG venture, is moving ahead as planned after reporting a first-half profit roughly in line with expectations.
Initial engineering and design work for Browse floating LNG is "on track" for a decision this half to commence engineering and design, while a final investment decision on the project is still targeted for the second half next year, Woodside said in its interim report this morning.
Woodside reported a 33 per cent jump in first-half underlying net profit to $US1.136 billion, which it said was a record and 8 per cent above the consensus estimate. The gain was fuelled by higher LNG prices, a lift in production and lower exploration write-offs.
However reported net profit, which rose 27 per cent to $US1.105 billion, also a record, missed the consensus figure by 9 per cent, according to numbers the company provided.
Revenues jumped 24 per cent on the first half last year, which Woodside said was due to higher prices as contracts for LNG supplied from the $15 billion Pluto venture in Western Australia moved onto new pricing arrangements, as well as higher production from the Vincent oil field.
Mr Coleman also pointed out that despite the collapse of the Israeli plans, Woodside's international exploration strategy is "taking shape", with new acreage picked up in Myanmar, and new ventures in Morocco, Tanzania and Gabon.
"We continue only to pursue those opportunities where we see value for our shareholders," he said.
Woodside declared a record interim dividend of US111¢ per share, a hefty 34 per cent increase on the same time a year ago.
Peter Coleman says production, at 46.5 million barrels of oil equivalent, is a record and "a testament to our assets' ongoing reliability." Photo: Bloomberg
BHP Billiton chief executive Andrew Mackenzie does not believe last night's sell-down on London markets was a rejection of the demerger option his company revealed on Tuesday, pointing instead at the absence of a share buyback and the complex nature of the proposal.
BHP's London shares were more than 4 per cent lower in the hours after the demerger was announced, and closed the session 4.9 per cent lower.
The company's Australian shares could follow suit this morning, having surged four per cent higher in the three trading days prior to the demerger being announced.
When asked if the sell-down in London was a sign the demerger concept was unpopular, Mr Mackenzie said; "No, I don't think so".
''We've had a number of pre-announcements of this over time and those were very much related to an outline of this transaction,'' he said.
Most investors were expecting BHP to launch a round of share buybacks worth up to $US3 billion alongside the demerger, and Mr Mackenzie noted that as a possible factor in the sell down.
''Expectations for large capital management event were playing in peoples' minds,'' he said.
"There is a lot for the market to currently digest, and most importantly our plan for capital management going forward.''
BHP promised on Tuesday to continue with its progressive dividend policy if the merger goes ahead, in a plan the company says will amount to a higher payout ratio given the smaller size of the group.
''That in itself is quite a generous piece of cash return, and of course there's the share (in the demerged entity) itself, which people can monetise or hold onto if they believe in its future,'' he said.
Profit is up %14, despite commodities slump.
Online travel group Webjet has reported a 195 per cent rise in full-year earnings to $19.1 million, driven in part by an improvement in its Zuji business.
The business reported EBITDA of $23.3 million, which was above its guidance of $21.5 million.
Webjet declared a final fully franked dividend of 7.25¢, bringing the total full year payout to $13.5¢, which was 0.5¢ above last year.
The company’s managing director, John Guscic, said its Lots of Hotels business continued to perform ahead of expectations, while the core Webjet business experienced an “essentially flat results” in line with the general domestic travel market.
“Our ongoing focus on pursuing higher margin business streams continued to grow our non-air revenues, with the packages business in particular showing good traction,” he said.
Rival Wotif.com Holdings, which is more focused on hotels, has also been growing its air and package business to combat a decline in its core accommodation business. Expedia has made a $703 million offer for Wotif. However, analysts think Webjet is less likely to attract a takeover offer because it makes much of its earnings from charging booking fees, which are rare in the global industry.
Webjet said it would provide guidance for its 2015 financial year at its annual meeting on November 26, but added total transaction value and EBITDA performance in July was ahead of last year.
Webjet's John Gusic: “Our ongoing focus on pursuing higher margin business streams continued to grow our non-air revenues, with the packages business in particular showing good traction."
AGL Energy has posted a 52 per cent jump in bottom line full-year profit, but underlying profit slid 3.9 per cent. The utility halted its shares from trading pending a $1.2 billion capital raising to help fund its $1.5 billion takeover of Macquarie Generation.
Underlying profit after tax for the year to June 30 slid to $562 million, from $585 million, AGL said. The result was almost exactly in line with market consensus estimates of $561 million for full-year underlying profit, representing a 13 per cent decline on the 2012-13 profit on the same basis of $585 million.
Net income surged to $570 million, from $375 million a year earlier, on sales that dipped 1.8 per cent to $9.54 billion. AGL said the increase was due to a decline in signficant items, which inflated the result in the 2013 financial year.
AGL declared a final dividend of 33¢ a share.
US stocks are closing in on record highs, with the Standard & Poor’s 500 Index rebounding at the fastest pace since February, as concerns over global crises give way to optimism that central banks will continue to accommodate a recovering economy.
More than $US710 billion has been restored to American equities in the past month and the S&P 500 is with in 0.3 percent of an all-time high amid bets that the Federal Reserve will leave interest rates near zero for longer even as economic growth shows signs of accelerating. The US equity benchmark added 0.5 per cent to 1,981.60 at 4 p.m. in New York today.
Stocks rallied today as retailers led gains on better-than-projected earnings while data showed inflation pressures remain limited and housing starts jumped. The Nasdaq added 0.4 per cent, its fifth straight day of increases, to the highest level since 2000. The Dow Jones rose 80.9 points, or 0.5 per cent, to 16,919.6, still 219 points from its record. Apple jumped 1.4 per cent to close at an all-time high.
“The market has come back strong this week in a repeat of what we’ve seen throughout the bull run, the ability to motor through geopolitical events,” Tim Rudderow, chief investment officer Pennsylvania-based Mount Lucas Management, said. “Today’s numbers were solid but not spectacular, and that’s perfect in an environment where really robust economic growth would not be positive.”
The Nasdaq Composite advanced 0.4 per cent after rallying 1 per cent to its highest level since March 2000 yesterday. The Dow Jones Internet Composite Index is at the highest since March after tumbling nearly 20 per cent after investors sold off the best performers during the five-year bull market amid concern valuations had become too expensive.
Local shares are set for a flat open ahead of a fresh round of corporate earnings including Wesfarmers, Woodside Petroleum and Coca-Cola Amatil, while eyes will turn to BHP shares when trading opens after shares in the miner fell nearly 6 per cent in London overnight.
Here's what you need2know:
• SPI futures down 8 points, or 0.1%, to 5574
• AUD at 93 US cents, 95.74 Japanese yen, 69.85 Euro cents and 55.98 British pence
• On Wall St, S&P 500 +0.5%, Dow +0.5%, Nasdaq +0.4%
• In Europe, Euro Stoxx 50 +0.6%, FTSE +0.6%, CAC +0.6%, DAX +1%
• Spot gold down 0.3% to $US1295.05 an ounce
• Brent oil down 0.1%s to $US101.54 per barrel
• Iron ore slips 0.3% to $US93 per metric tonne
What’s on today
• RBA governor Glenn Stevens testifies before House of Reps standing committee on economics in Brisbane, Australian Q2 wage cost index
• US July advance retail sales, US FOMC meeting minutes.
• EU June industrial production, UK July jobless claims.
Stocks to watch
• Results are expected from Brambles, Wesfarmers, Coca-Cola Amatil, Challenger, Woodside Petroleum (interim), Fortescue Metals Group, Fletcher Building, TradeMe, APN News and Media, Ausenco, APN News & Media, AGL Energy, Challenger Financial, Seek (interim), Aveo Group, Southern Cross Media, ROC Oil (interim), Charter Hall Retail REIT, Webjet, The Reject Shop, Decmil Group, Cedar Woods Properties.
• AGL may look to raise $1.3b in rights issue: AFR
• • In London, BHP Billiton’s shares fell 5.9pc to 1965 pence. In late trading in New York, the miner’s shares were down 3.8pc to $US70.03. The stock has been downgraded to underperform vs neutral at Credit Suisse and to neutral vs buy at Citi
• JB Hi-Fi, Suncorp and Magellan Financial trade ex-dividend.
• GWA cut to hold from buy at Bell Potter and to sell from hold at Credit Suisse.
• Macquarie raised to neutral vs underweight at JPMorgan; price target $54.35.
• QBE raised to buy vs hold at Bell Potter with a PT of $12; $650m placement priced at $10.10/share, says AFR
• Deutsche Bank has upgraded CSL to a “buy” recommendation with a $76.50 a share target price after it reported strong sales, despite increased competition.