Yet another fast and furious profit reporting season is over. We get bombarded with so much information that it’s pretty hard to get perspective on what actually happened.
That’s why I always look forward to CommSec’s wrap up of reporting season to provide the overview. Here’s summary of CommSec’s key takeaways from this year.
- Aggregate revenue rose 8.9 per cent over the last financial year, but expenses were up by 13.9 per cent… so net statutory profit fell by 42.9 per cent. Profits rose for 40 per cent of companies and fell for 60 per cent. While 84 per cent of companies issued a profit,16 per cent recorded a statutory loss.
- Earnings per share fell by 27.7 per cent, dividends fell by 2.5 per cent and cash balances were cut by 9.7 per cent.
- An historically high proportion of companies issued a dividend or announced/extended a share buyback. The large number of buybacks also suggests that companies are more optimistic about future Australian household spending, despite deep consumer pessimism and rapid rate hikes. Qantas was one company that opted to extend a buyback rather than issue a dividend.
- According to FN Arena, 31.5 per cent of the 295 biggest listed companies beat market forecasts; 39.3 per cent had results in line with forecasts; and 29.2 per cent missed or fell short of analyst expectations.
Challenging and resilient
Two words dominated the company profit reporting season: ‘challenging’ and ‘resilient’. It describes how companies, and the broader economy, have performed in the face of marked increases in interest rates, the rising cost of living, higher input costs and an uncertain global economy.
- Metal recycler, Sims, reflected on its ‘resilient’ performance, despite reporting a 70 per cent fall in profit and a 58 per cent cut in its final dividend. And Seven West Media reflected on its ‘solid’ financial results despite ‘the challenging environment’.
- The performance of retailers – and consumer-focused companies more generally –can so far be put under the column of ‘resilient’. Carsales.com celebrated a ‘fantastic’ set of results with profit quadrupling. Sneaker retailer Accent Group reported improving sales at the beginning of financial year 2024 trading, sending its share price up 17 per cent.
- In a sign of stabilisation in the Aussie housing market, conglomerate Wesfarmers reported solid growth in its hardware store chain Bunnings and lifted its annual profit, sending its shares over 3 per cent higher.
- Woolworths out-performed Coles. Coles is battling costs and left the final dividend unchanged. Woolworths outlined its strategy to deal with ‘shrinkage’ or theft, while lifting its final dividend. But challenges are ahead of both as consumer spending patterns change.
- Many retailers reported weaker conditions over the six months to June, and particularly soft July results. An exception being online furniture retailer, Temple & Webster, noting a pick-up in sales over the second half of the financial year with momentum continuing into August.
Future looks good?
There were a surprising number of companies that have expressed confidence in the future.
- Even JB Hi-Fi, in categorising ‘heightened uncertainty’, plans to use all the tools in the kit bag in the period ahead to drive sales, including data mining, targeted marketing, inventory control and cost reductions. Bapcor and Carsales.com remain upbeat. GUD said there has been no sign of motorists delaying vehicle repairs.
- Medical imaging firm, Pro Medicus noted a solid outlook with trends driving the industry continuing. And wealth management firm Netwealth flagged a strong sales pipeline. But SEEK warned about the threat of higher unemployment ahead. And Computershare is worried about more rate hikes ahead.
- The holy grail of any business is pricing. Solid results from James Hardie and Boral had much to do with their ability to pass on higher costs to builders and customers. GUD also highlighted the support of solid margins in its report. And Transurban noted that it was able to raise about 70 per cent of its tolls in line with higher inflation rates.
Get Kochie’s weekly newsletter delivered straight to your inbox! Follow Your Money & Your Life on Facebook, Twitter and Instagram.
Read this next: