08 Sep THAT’S A WRAP!
Investors headed into the August reporting season gingerly, worried about the impact on Australian listed companies of high inflation, climbing interest rates, and a tight labour market.
As it turned out, it wasn’t all bad news.
Australia’s major listed companies performed better than expected, with many unveiling healthy profits. But given the fears about a recession both here and overseas amid continued global political instability, boards were cautious about providing guidance.
Cannings consultant Aileen Bodart takes a look at four key sectors to see how they fared.
TRANSPORT: TAKING OFF
With people keen to travel once again after years of pandemic-induced restrictions, the sector is seeing some signs of recovery.
Flight Centre’s revenues surged 115 per cent, helping the company shrink its losses in FY22. CEO Graham Turner didn’t provide earnings guidance but is hopeful of underlying profits in the first six months of FY23.
Despite strong travel demand, Qantas plunged to a $1.9 billion loss after enduring reliability issues, sky-high fuel prices and staff absenteeism. Analysts warned the airline is unlikely to reach pre-pandemic profitability levels until FY24.
ENERGY & RESOURCES: A NEW BOOM
Australian energy giants were the big winners this season because of the global energy crisis, the war in the Ukraine and high resource prices.
Investors in Whitehaven, BHP and Woodside reaped the rewards of the companies’ huge profits, receiving billions of dollars in dividends.
The sector’s outlook is positive, despite the rise of renewable energy. Whitehaven CEO Paul Flynn is confident that demand for coal will remain strong, while BHP’s Mike Henry expects China to be a reliable source of demand for commodities this year, while other economies slow.
BANKING: INTEREST-ING TIMES
The benefits of higher interest rates haven’t translated to increased net interest margins (NIMs) for CBA and NAB amid intense mortgage competition and rising funding costs.
However, this didn’t stop CBA from achieving a large profit rise, spurred by home and business lending growth. CEO Matt Comyn expects CBA’s NIM to improve as it passes on more of the cash rate to borrowers, but analysts believe mortgage competition will dampen cash flow.
Judo Bank, a small and medium-sized business lender, unveiled its maiden results, reporting a profit, one of the world’s first challenger banks to do so within five years of launching.
RETAIL: PRICE CRUNCH
The retail sector proved more resilient than expected despite low consumer confidence.
JB Hi-Fi reported record revenue as consumers remained keen to upgrade to the latest tech despite rising prices.
Woolworths delivered higher revenues and profits but noted that some customers were “trading down” and buying cheaper products. CEO Brad Banducci says the battle against inflation isn’t over, but he expects it to peak before Christmas.