Bega Cheese (BGA); Blackmores (BKL):
Blackmores chief executive Christine Holgate likens the slow rebuild of sales momentum at the vitamins group to renovating a house and says she’s feeling more comfortable about the underlying trajectory, despite falling sales. The slowdown is largely because Chinese entrepreneurs who last year were buying with gusto in Australia to sell online in China haven’t returned in full force. Sales for the nine months ended March 31 fell 6.7 per cent to $496 million. Ms Holgate said on Thursday that Blackmores Australia sales had grown steadily in each quarter of 2016-17 but the company’s overall full-year profits would not match the booming result of 2015-16 when profits hit $100 million for the full year. But she said it would be unlikely that even given the improving momentum that Blackmores would be back at a point where it may top $100 million in annual profits again in 2017-18. ‘‘I think that would be a bit too optimistic,’’ she said.
BHP Billiton Limited (BHP):
BHP Billiton has taken a more bearish view of the global economy, predicting it will grow slower than previously thought and drag down demand for minerals in the process. BHP’s vice-president of ‘‘market analysis economics’’, Huw McKay, said recent shifts towards protectionism and isolationism in several countries, notably by the United States under President Donald Trump, would take their toll on the global economy. ‘‘Over the past year, political volatility and uncertainty has increased to very high levels,’’ he said in a blog post. ‘‘Policies that aim to reduce rather than encourage international trade have been flagged in many countries, more may follow.’’ BHP predicted in February that global economic growth would be between 3 and 3.5 per cent in 2017, and Mr McKay said it should be at the top end of that range.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank of Australia will drop ‘‘financial indicator covenants’’ from all its existing and new lending contracts for small businesses borrowing less than $3 million. The move has been applauded by small business ombudsman Kate Carnell, who has criticised such clauses for ‘‘offending basic principles of fairness’’. The report on the banking industry’s code of conduct by Phil Khoury and the House of Representatives economics committee report into the big four banks also criticised non-monetary default clauses in loans to SMEs and called for their removal. Non-monetary default clauses transfer external risks to customers by giving banks power to enter negotiations when, for example, the value of property security falls as determined by a loan-tovaluation ratio. This gives banks power to default a business if risk factors change.
Downer EDI Limited (DOW); Spotless Group Holdings Limited (SPO):
Takeover target Spotless Group expects profits to increase marginally in 2017-18 from the band of $80 million to $90 million which it is forecasting for this financial year, as chief executive Martin Sheppard urged shareholders to take their eyes off the rear-view mirror and look ahead. But the board has declined to put a specific value on its own shares even though it is urging shareholders to reject a $1.15 per share bid from Downer EDI, believing its new forecast is enough for shareholders to make a judgment about the company’s worth. Spotless released a target’s statement on Thursday which said that forecasts by stockbrokers for 2017-18 were too low and didn’t fully factor in the expected benefits of a rationalisation of uneconomic contracts, reduced overhead costs and an improvement in the company’s net debt position.
Fortescue Metals Group Limited (FMG); Poseidon Nickel Limited (POS):
Billionaire Andrew Forrest’s stake in Poseidon Nickel has been sliced in half by the dilutive impact of the embattled junior company’s strategies to conserve cash. Mr Forrest, who chaired the nickel junior between 2007 and 2013, held a 32 per cent stake in the company in 2012, most of it gained by underwriting a $20 million rights issue that year. But that stake has been gradually diluted and at last notice on April 4 had been crunched to 14.5 per cent.
Macquarie Group Limited (MQG):
Major Western Australia gas supplier Quadrant Energy is being prepared for an initial public offering which could value the company at as much as $4 billion, as revealed by Street Talk on Thursday. It is understood Quadrant Energy owners Macquarie Capital and Brookfield Asset Management have started testing market appetite in the potential float, calling investment banks to pitch for joint lead manager roles. Perth-based Quadrant Energy is one of the country’s largest oil and gas companies and supplies more than 40 per cent of Western Australia’s domestic gas from its production points in the WA’s north-west.
Woolworths Limited (WOW); Wesfarmers Limited (WES):
Wesfarmers’ chief executive-elect Rob Scott is in the middle of a listening tour, travelling around the various parts of his new empire and meeting with key people inside and outside the group. No doubt at the top of his destination list is Melbourne, where so much of the Wesfarmers retail empire is located. And after the company’s quarterly results on Thursday, there’s no doubt where Scott will be spending a good chunk of his time – Coles. That the supermarket chain has been ceding market share to a resurgent Woolworths is nothing new. But clearly the market has underestimated the pressure that Coles is finding itself under to hold the line. Coles’ sales grew by just 0.3 per cent during the quarter, the slowest rate in nine months; adjusting for the late Easter period, the number improves to 0.7 per cent. But even this is below the 0.9 per cent sales growth posted in the December quarter and a million miles from the 4.9 per cent growth that Coles saw in the March quarter of 2016. Obviously, the supermarket is cycling against some strong numbers, so it’s not easy matching the growth rate of a year ago, when Woolworths was only emerging from its period as a bit of a rabble. But surely Scott would be concerned about the price Coles is having to pay to hold its ground.
(Source: AIMS)
Blackmores chief executive Christine Holgate likens the slow rebuild of sales momentum at the vitamins group to renovating a house and says she’s feeling more comfortable about the underlying trajectory, despite falling sales. The slowdown is largely because Chinese entrepreneurs who last year were buying with gusto in Australia to sell online in China haven’t returned in full force. Sales for the nine months ended March 31 fell 6.7 per cent to $496 million. Ms Holgate said on Thursday that Blackmores Australia sales had grown steadily in each quarter of 2016-17 but the company’s overall full-year profits would not match the booming result of 2015-16 when profits hit $100 million for the full year. But she said it would be unlikely that even given the improving momentum that Blackmores would be back at a point where it may top $100 million in annual profits again in 2017-18. ‘‘I think that would be a bit too optimistic,’’ she said.
BHP Billiton Limited (BHP):
BHP Billiton has taken a more bearish view of the global economy, predicting it will grow slower than previously thought and drag down demand for minerals in the process. BHP’s vice-president of ‘‘market analysis economics’’, Huw McKay, said recent shifts towards protectionism and isolationism in several countries, notably by the United States under President Donald Trump, would take their toll on the global economy. ‘‘Over the past year, political volatility and uncertainty has increased to very high levels,’’ he said in a blog post. ‘‘Policies that aim to reduce rather than encourage international trade have been flagged in many countries, more may follow.’’ BHP predicted in February that global economic growth would be between 3 and 3.5 per cent in 2017, and Mr McKay said it should be at the top end of that range.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank of Australia will drop ‘‘financial indicator covenants’’ from all its existing and new lending contracts for small businesses borrowing less than $3 million. The move has been applauded by small business ombudsman Kate Carnell, who has criticised such clauses for ‘‘offending basic principles of fairness’’. The report on the banking industry’s code of conduct by Phil Khoury and the House of Representatives economics committee report into the big four banks also criticised non-monetary default clauses in loans to SMEs and called for their removal. Non-monetary default clauses transfer external risks to customers by giving banks power to enter negotiations when, for example, the value of property security falls as determined by a loan-tovaluation ratio. This gives banks power to default a business if risk factors change.
Downer EDI Limited (DOW); Spotless Group Holdings Limited (SPO):
Takeover target Spotless Group expects profits to increase marginally in 2017-18 from the band of $80 million to $90 million which it is forecasting for this financial year, as chief executive Martin Sheppard urged shareholders to take their eyes off the rear-view mirror and look ahead. But the board has declined to put a specific value on its own shares even though it is urging shareholders to reject a $1.15 per share bid from Downer EDI, believing its new forecast is enough for shareholders to make a judgment about the company’s worth. Spotless released a target’s statement on Thursday which said that forecasts by stockbrokers for 2017-18 were too low and didn’t fully factor in the expected benefits of a rationalisation of uneconomic contracts, reduced overhead costs and an improvement in the company’s net debt position.
Fortescue Metals Group Limited (FMG); Poseidon Nickel Limited (POS):
Billionaire Andrew Forrest’s stake in Poseidon Nickel has been sliced in half by the dilutive impact of the embattled junior company’s strategies to conserve cash. Mr Forrest, who chaired the nickel junior between 2007 and 2013, held a 32 per cent stake in the company in 2012, most of it gained by underwriting a $20 million rights issue that year. But that stake has been gradually diluted and at last notice on April 4 had been crunched to 14.5 per cent.
Macquarie Group Limited (MQG):
Major Western Australia gas supplier Quadrant Energy is being prepared for an initial public offering which could value the company at as much as $4 billion, as revealed by Street Talk on Thursday. It is understood Quadrant Energy owners Macquarie Capital and Brookfield Asset Management have started testing market appetite in the potential float, calling investment banks to pitch for joint lead manager roles. Perth-based Quadrant Energy is one of the country’s largest oil and gas companies and supplies more than 40 per cent of Western Australia’s domestic gas from its production points in the WA’s north-west.
Woolworths Limited (WOW); Wesfarmers Limited (WES):
Wesfarmers’ chief executive-elect Rob Scott is in the middle of a listening tour, travelling around the various parts of his new empire and meeting with key people inside and outside the group. No doubt at the top of his destination list is Melbourne, where so much of the Wesfarmers retail empire is located. And after the company’s quarterly results on Thursday, there’s no doubt where Scott will be spending a good chunk of his time – Coles. That the supermarket chain has been ceding market share to a resurgent Woolworths is nothing new. But clearly the market has underestimated the pressure that Coles is finding itself under to hold the line. Coles’ sales grew by just 0.3 per cent during the quarter, the slowest rate in nine months; adjusting for the late Easter period, the number improves to 0.7 per cent. But even this is below the 0.9 per cent sales growth posted in the December quarter and a million miles from the 4.9 per cent growth that Coles saw in the March quarter of 2016. Obviously, the supermarket is cycling against some strong numbers, so it’s not easy matching the growth rate of a year ago, when Woolworths was only emerging from its period as a bit of a rabble. But surely Scott would be concerned about the price Coles is having to pay to hold its ground.
(Source: AIMS)
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