Australia Company reporting season delivers surprise results for Australian economy
MAFS star Tracey Jewel weds high school sweetheart Nathan Constable
Married At First Sight star Tracey Jewel has tied the knot in a surprise wedding to her doting fiancé, Nathan Constable. On Saturday, the glowing 37-year-old married her high school sweetheart in a quaint Perth ceremony.Tracey, who is 35-weeks pregnant, looked radiant in a custom-made gown by Ashley Graham x Pronovias, who went 'above and beyond' with intricate embellishments which draped down her figure perfectly.
If you don't know what you're looking for, company reporting season doesn't necessarily stir excitement.
But the latest half-year results have been one of the most fascinating in recent memory and have given us a look into just how corporate Australia, and thus the economy we all live in, is faring.
Just like other recent economic indicators, like the falling unemployment rate, reporting season has been better than expected.
"This reporting season has been an extremely positive one," chief investment officer at Burman Invest, Julia Lee, told The Business.
"There's been more beats than misses and in fact it's been the best one we've seen in a while in terms of an upgrade to earnings expectations."
A tale of two platforms; or, the strange lack of outrage about the gig economy
While big media companies can snap their fingers and get government intervention in their fight with tech platforms, workers and unions have to do it the hard way.If the media was misleading audiences beforehand about the news bargaining code scam, Facebook’s calling of Australia’s bluff and removing all the content that media companies insisted was being “stolen” last week unleashed a holy war against the social media giant, led by sanctimonious journalists, froth-mouthed academics, raging media executives and furious government ministers.
Equity analysts who study companies closely put out predictions about what numbers those businesses will report in terms of their revenue, profits, cash holdings, tax paid and dividends to shareholders.
They're traditionally pretty optimistic forecasts.
So when more companies beat those forecasts than miss them, it suggests businesses are performing very well.
"It's been a good season — companies are reporting earnings, more companies are reporting dividends and a lot of companies have a significant amount of cash on hand," CommSec chief economist Craig James told The Business.
Looking at some of the numbers, you'd be forgiven for being surprised Australia entered its first recession in nearly three decades last year.
Moldova court rules against presidential decree on new government
Sandu’s repeated nomination of Natalia Gavrilita as PM after Parliament rejection is unconstitutional, top court rules.Tuesday’s ruling could hobble Sandu’s efforts to hold a snap general election and prolong a standoff between the pro-European Union president and a Parliament that is dominated by lawmakers aligned with her pro-Russia predecessor Igor Dodon.
"We got something like 86 per cent of the ASX200 companies reporting a profit," Mr James said.
"The normal long term average is 88 per cent, so I would have to consider that a pretty good outcome."
Companies that did particularly well divvied up their takings with shareholders.
"Certainly it’s been a bumper season for the miners, particularly in terms of iron ore," Mr James said.
"If you can sell more of the product and if the prices are getting up towards some of the highest levels that we have ever seen, clearly you’re in a great position to be able to provide some money back to shareholders."
Iron ore prices nearly doubled in the half, and coupled with surging demand from China, it meant the likes of, Rio Tinto and Fortescue Metals Group had plenty of cash to hand out to shareholders.
But it wasn't just the miners who paid out.
"The banking sector looks like it’s started an upgrade in terms of its earning cycle as well, so that's a very positive signal for investors," Ms Lee said.
Stimulus Checks to Americans Earning Over $50K Won't Boost Economy Before Pandemic Ends: Expert
Economists acknowledge that many people earning $50,000 or more annually have resumed working since the CARES Act's passage last spring. While they are likely to save most of what they receive in stimulus payments, experts also anticipate a portion of those funds will reenter the economy eventually.The extent that a third wave of checks will deliver personal respite and economic revitalization has been widely debated among congressional leaders and civilians alike. While experts agree that the $1,400 checks included in Biden's proposal are necessary to assist millions of U.S.
"The recovery we've seen in dividends has been much better than anticipated."
CBAfrom the six months prior, although it was still lower than pre-COVID levels.
Part of the recovery in the banks is because more people are getting back to repaying their mortgages.
The Australian Banking Association says 91 per cent of mortgages that were deferred at the peak of the pandemic are now being repaid as normal.
"We've seen a very strong recovery across Australia," CBA chief executive Matt Comyn when his company reported in early February.
"Which I think is a credit to the overall management of the pandemic."
JobKeeper cash back
The government is also reaping some financial benefits from strong company performances.
"When the crisis hit, a number of the retailers put their hand out and said, 'yes we'll have some of that JobKeeper money', and now 12 months down the track a lot of them are saying, 'we're a little bit embarrassed we've done a whole lot better than we expected so we'll give you some of those dollars back'," Mr James explained.
Europe less at risk of inflation and rate fears: analysts
Investors are watching inflation carefully, worried that a boiling over of prices will ruin the expected strong pandemic recovery although analysts believe Europe faces much less of a risk than the United States. "We have a European recovery programme considerably less strong, and a loss of growth that is much greater, so there aren't the same risks of overheating as in the United States," said Fabien Tripier, an economist at CEPII, a Paris-based research centre on the world economy.The US economy shrank 3.5 percent last year while the drop for the eurozone was nearly double that.
"Certainly JobKeeper did work and it has been a boost to the overall economy."
Some of the companies that returned JobKeeper payments include Cochlear, Toyota, Iluka Resources, Adairs, Nick Scali, Dominos and Super Retail Group.
But not every company that posted a solid profit.
"In March 2020, Gerry Harvey told Sixty Minutes that his profits are up nine per cent; it's difficult to see how he qualified for JobKeeper much less to see why he should now hang on to government subsidies," criticised Labour MP Andrew Leigh.
Harvey Norman increased its dividend to shareholders, after doubling its profits in the half.
"Other firms that have been highly profitable in 2020 ought to think about whether now is the right time to return JobKeeper," Mr Leigh told The Business.
Not everyone is soaring
Not surprisingly, tourism companies suffered more losses in the six months to December.
Qantasas its revenue plunged $6.9 billion because of continued travel restrictions.
Chief executive Alan Joyce said the airline was pushing back its expected return to international travel to October.
"We're only planning for 40 per cent of our international operation to come back in financial year 2022 — we don't think we'll get back to 2019 levels until 2024," he said.
One year into pandemic, sky begins to clear over U.S. economy
One year into pandemic, sky begins to clear over U.S. economySAN FRANCISCO/WASHINGTON (Reuters) - Despite the U.S. economy's near miss with a depression last year and an ongoing coronavirus pandemic that has brought travel to a virtual halt, Jeff Hurst, the chief executive of vacation rental firm VRBO, sees a boom on the horizon.
Flight Centre's loss after tax totalled $317 million.
"The conditions we have encountered since March last year have undoubtedly posed the greatest challenge our industry and many others have faced," said chief executive Graham Turner when handing down his company's results.
"Rather than enter a holding pattern ahead of future domestic and international border re-openings, we are taking steps to ensure we are well placed for the eventual recovery."
Webjet, another player in the travel space, posted a net loss of $132 million for the second half of last year.
Its revenue was slashed by 90 per cent.
Growth won't last
In many ways, the rebound has been so good, because the six months before were so bad.
Which suggests while the growth has been significant, it's unlikely to remain at the levels seen this reporting season.
Take the retail space.
We all remember the supply issues with some of our daily staples and how busy supermarkets were when the pandemic first hit — and whenever there's an outbreak.
But those surges haven't been extended long term.
"We saw that definitely coming through in Coles, which came out with a strong result, but then the outlook was very soft and we saw the shares being sold off," explained Ms Lee.
It's unlikely JB Hi Fi Group's 86 per cent rise in profit to $317.7 million will be repeated.
Sales for the retailer, which includes its New Zealand business and The Good Guys, rose nearly 24 per cent to $4.9 billion.
JB Hi-Fi chief executive Richard Murray described it as an "extraordinary period" but due to the uncertainty of the pandemic, the company did not provide sales and earning guidance for the second half of the financial year.
Corporate Australia's caution is also seen in the amount of cash businesses are keeping in the bank.
"Companies are holding a lot of cash on their balance sheet for the simple reason that they're unsure about the future," explained Mr James.
He said 70 per cent of companies lifted their cash holdings in the past year, with aggregate cash holdings more than 50 per cent higher, up from $82 billion to $124 billion.
Despite the record-breaking reporting season, the losses felt from widespread shutdowns early in 2020 are fresh in the minds of businesses, and they're prepared for another hit.
China sets modest 6% economic growth target amid COVID rebound .
Expected 2021 growth rate is far below what economists are forecasting as Beijing aims for more sustainable development.In 2020, China dropped a gross domestic product (GDP) growth goal from the premier’s work report for the first time since 2002 after the pandemic devastated its economy.