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AUSTRALIA MARKEYTS(2017-08-18)

SYDNEY
2017-08-18 10:36

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Adelaide Brighton Ltd (ABC):
The housing and infrastructure boom on the eastern seaboard is triggering price rises for pre-mixed concrete and aggregates used in construction, with Australia’s biggest cement supplier expecting to lift prices for the second time this year. Adelaide Brighton chief executive Martin Brydon said on Thursday demand was continuing to rise, particularly in Melbourne and Sydney, and a second round of price rises for a range of products was anticipated later this year. Revenue increased by 4.7 per cent to $718.4 million. Shareholders will be paid a steady first-half dividend of 8.5¢ a share on October 5. The company’s share price has been largely flat over the past 12 months although there was a small spike to $6.04 in early May. A year ago Adelaide Brighton shares were sitting at $5.72.
 
AGL Energy Limited (AGL) & Origin Energy Limited (ORG):
It’s hard otherwise to explain the nonchalance of the sharemarket to the threats supposed to be hanging over Origin Energy and arch rival AGL Energy, the two biggest in the game. In a market often keen to pounce on an excuse to sell off a stock during earnings season, the risk of government intervention on energy prices could have expected to come into play. But it has barely registered. But the shock of Origin’s $2.2 billion impairment-afflicted full-year loss and absence of a dividend was overlooked as the market zeroed in on a forecast 14-21 per cent gain in earnings from power and gas retailing this coming year, and progress on cutting debt. Meanwhile, AGL last week foreshadowed core profit would jump as much as 29 per cent in 2017-18, surprising market with the figure and the early timing ahead of the normal guidance at the AGM in September. Both AGL boss Andy Vesey and Origin’s Frank Calabria were careful to predicate their outlook on the absence of any drastic policy change . Yet neither sounded particularly worried, despite the likelihood the bullish outlooks would only intensify the heat around soaring power bills.
 
Blackmore Limited (BKL):
Blackmores announced on Thursday that its chief operating officer Richard Henfrey had been elevated to the position of chief executive after a short process to find a new leader after Ms Holgate quit to become the boss of Australia Post. Mr Henfrey, who turns 50 on Saturday, said on Thursday he would be concentrating on stepping up organic growth in an industry that was going through enormous change. ‘‘We’re in a really dynamic and fast evolving space,’’ Mr Henfrey told The Australian Financial Review . ‘‘There’s no option here of standing still.’’
 
Breville Group Limited (BRG):
Small appliance maker Breville Group said a new partnership with Nespresso in North America helped offset a decline in earnings as discount retailers push more private label products and the expiry of a Philips distribution agreement takes its toll. The $1.3 billion company expects global business conditions to be ‘‘no less challenging’’ this new financial year compared with last year and remains upbeat about the company’s position. ‘‘It is difficult to provide financial guidance prior to Christmas trading,’’ chief executive Jim Clayton said. ‘‘While the macro environment continues to be dynamic and challenging, we believe our acceleration program is progressing well and will position us for continued success.’’ Shares in Breville were up 58c, or, 5.6 per cent, to $10.84 on Thursday. Revenue for the year to June 30 was up 5.1 per cent to $605.7 million. Earnings before interest and tax (EBIT) increased 7.2 per cent to $79 million. Net profit climbed 7.3 per cent to $53.8 million, taking basic earnings per share higher to 41.4¢.
 
Charter Hall Group (CHC)& Westpac Banking Corporation (WBC):
Fund manager Charter Hall has abandoned a proposed deal to take over Westpac-owned Hastings Funds Management and its $14.3 billion infrastructure portfolio as doubts emerged over leverage and earnings. The surprise announcement comes less than a month after Charter Hall and Westpac issued a joint statement that spurred expectations a deal was imminent as it confirmed due diligence was under way. The proposed tie-up has now been torn up, with Charter Hall managing director David Harrison, a renowned deal maker, left unpersuaded by a closer look inside Hastings.
 
Cochlear Limited (COH):
Cochlear chief executive Chris Smith, who is stepping down in January after just 30 months in the job, said he was disappointed to have to choose his family over his job but is proud of what the hearing implant pioneer accomplished on his watch. Shares in Cochlear surged 7 per cent to $153.02 on Thursday after the Sydney-based hearing implant maker boosted its final dividend 17 per cent to $1.40 a share and foreshadowed further strong profit growth in 2018. The dividend surprise was off the back of an 18 per cent lift in net profit and earnings per share.But he said the 2017 financial results had lived up to his expectations, the company had good momentum and he felt good about handing over the job to Dig Howitt, and the rest of the management team, in January. The company earned $223.6 million after tax on sales of $1.24 billion for the year to June 30 and foreshadowed a net profit of $240 million to $250 million in 2018, an increase of 7-12 per cent, based on an US80¢ Australian dollar.
 
Csl Limited (CSL):
Blood products group CSL has simplified the way it structures executive pay and added a novel ‘‘take-home pay’’ table to its annual report in an attempt to head off a ‘‘second strike’’ against its chief executive’s remuneration. Paul Perreault was paid $US8.18 million ($10.25 million) in the year to June 30, including $US4.2 million in cash salary and bonuses and just under $US4 million in long-term and sharebased incentives, about the same as in 2016. But his ‘‘take-home pay’’ – outlined in a separate ‘‘mums and dads’’ table suggested by the Australian Shareholders’ Association as a way to defuse rows over executive pay – came in at $US7.4 million.
 
Evolution Mining Limited (EVN):
Evolution Mining executive chairman Jake Klein says the gold miner’s decision to adopt a new earnings-linked dividend policy reflects its ‘‘maturity’’ and will hopefully deliver higher returns to shareholders in the future. As it reported a record net profit of $217.6 million for the 2017 financial year, Evolution abandoned its revenuelinked dividend policy in favour of a new policy based on earnings. Evolution has paid a revenue-linked dividend since 2013, which it increased from 2 per cent to 4 per cent of annual revenue in June 2016. It promoted the policy as a ‘‘royalty-style’’ return, which delivered shareholders direct exposure to the company’s operational performance and the gold price. Yesterday, the Sydney-based company said its return to profit, generation of franking credits and entry into the ASX100 index were behind a move to reconsider how it calculated shareholder returns. It declared a fully franked 3¢-per-share final dividend, the first under its new policy to pay half-yearly dividends equal to 50 per cent of its after-tax earnings.
 
Godfreys Group Limited (GFY), JB Hi-Fi Limited (JBH) & Harvey Norman Holdings Limited (HVN) :
Vacuum cleaner retailer Godfreys has stopped the downward slide in samestore sales and collected $5.3 million in franchise fees as 22 more outlets were transferred out of company ownership But it’s a long way back for the embattled retailer, which plunged to a bottom-line loss of $18.4 million in 2016-17 after big goodwill impairments. Total revenue dropped 2.9 per cent to $174.1 million. Managing director John Hardy said the board had adopted a back-to-basics approach. But many experts believe Godfreys is struggling to rid itself of an image as an old and tired retailer, outpointed by JB Hi-Fi and Harvey Norman, as those bigger chains snare more market share in vacuum cleaners.Godfreys said on Thursday in presentations to investors that about 75 per cent of total revenue came from company-owned brands and licensed brands including Sauber, Wertheim and Hoover. Godfreys does not sell Dyson, one of the ‘‘hot’’ brands in the $1.3 billion vacuum cleaner market.
 
Pepper Group Limited (PEP):
A dispute between private equity firm Pacific Equity Partners and former PEP pair Anthony Kerwick and Rob Koczkar over access to documents has escalated to the Supreme Court. Australia’s biggest private equity firm filed a claim in April seeking access to any materials that Mr Kerwick and Mr Koczkar used in fundraising for their new private equity business, Adamantem Capital, that referenced PEP or PEP’s investments. Mr Kerwick, Mr Koczkar and Adamantem are named as the three defendants in the action; PEP is being represented by Arnold Bloch Leibler. PEP wants orders that the defendants provide discovery of any documents with information regarding ‘‘the financial performance of any of the PEP funds or PEP portfolio companies’’, or, any ‘‘activities’’ PEP and its employees engaged in to improve the value of investments. PEP is also seeking costs, according to the filing.
 
QBE Insurance Group Limited (QBE):
QBE Insurance Group chief executive John Neal has ruled out selling off the group’s ‘‘disappointing’’ emerging markets division, in the face of questions about the insurer’s consistently patchy global performance. On Wednesday the $16.5 billion global insurer told the market it would move its poorly performing emerging markets unit back to its previous structure of separate divisions for Latin America and the Asia Pacific region. The decision was driven by a spike in claims throughout the regions, including higher accident claims and claims associated with Hong Kong workers’ compensation. This saw the unit report a combined operating ratio (COR) of 110.8 per cent for the 2017 half year, up from 99.5 per cent in 2016. A COR over 100 indicates an underwriting business is unprofitable. QBE shares sank yesterday, closing down more than 7 per cent to sit at $11.17, its lowest point this year. Morningstar analyst David Ellis said that ‘‘investor patience has worn out’’ with the offshore issues.
 
Stockland Corporation Limited (SGP):
Stockland’s deposit cancellation rates improved across the country in the year to June, led by a strengthening house and land market across the eastern seaboard and helped by a recovering WA market. The country’s largest developer, which this week reported a higher than expected profit as it settled a record number of new residential lots, said on Thursday cancellation rates of deposits paid at the exchange of a conditional contracts were well below the longterm average of 13 per cent. The shares were trading 6¢, or 1.4 per cent higher at $4.40 on Thursday, adding to Wednesday’s 4¢ gain.
 
Tatts Group Limited (TTS):
Tatts Group will be ‘‘very protective’’ of its lotteries assets around the country should the federal government move ahead with plans to establish a national sports lottery that may cannibalise Tatts’ customer base. Tatts derived 66 per cent of its pre-tax earnings from its lotteries division in 2017, though a lack of jackpots hit the company’s overall result. Net profit fell 5.7 per cent to $220.5 million in 2017 and revenue was down 5.1 per cent to about $2.8 billion. Tatts took a $137.8 million revenue hit from only having 31 major jackpots of $15 million or more in 2017, compared with 45 in the previous year. Mr Cooke said the group had made a ‘‘powerful’’ start to 2018, benefiting from an Oz lotto jackpot run that helped deliver a 25 per cent rise in after-tax profits for July.
 
Telstra Corporation Limited (TLS):

Telstra and News Corp are believed to have reignited plans to merge Fox Sports into Foxtel after the pair delayed the move and a potential listing last year. Sources said Telstra and News Corp, which own 50 per cent of Foxtel each, have been talking about the strategic direction of the subscription service provider in recent months. The deal could be announced as early as Friday. A potential deal would involve merging Fox Sports, which is wholly-owned by News Corp, into Foxtel. It would dilute Telstra’s stake to 35 per cent and increase News Corp’s to 65 per cent. Telstra would lose the control it has now with a 50 per cent stake, but it is believed a deal would involve the telco getting greater access to content. Initial plans in 2016 were to list the combined business, further diluting Telstra’s stake. However, sources suggested that may not be the case under the new plan.
 
Treasury Wine Estates Limited (TWE):

Treasury Wine Estates chief executive Mike Clarke says a $900 million treasure chest of luxury wine stocks sitting in inventory will help push profit margins towards a lofty target of 25 per cent, as he ruled out a demerger of the firm’s commercial wines portfolio. The owner of brands such as Penfolds, Wolf Blass, Wynns and Sterling Vineyards delivered a solid jump in profit margins under a strategy to shift upmarket. Mr Clarke said Treasury was also enjoying strong grape harvests in Australia and the US which had bolstered higher-quality wine stocks. Treasury Wine Estates chief executive Mike Clarke says a $900 million treasure chest of luxury wine stocks sitting in inventory will help push profit margins towards a lofty target of 25 per cent, and has ruled out a demerger of the firm’s commercial wines portfolio. The company also announced a $300 million share buyback on Thursday and delivered rising profit margins across all four of its main geographic regions, although the European business inched ahead marginally.
 
Wesfarmers Limited(WES):
Wesfarmers is cashed up to pursue acquisitions after delivering its strongest profit growth in at least six years, despite a slump in earnings at Coles and red ink at Bunnings’ British and Ireland operations. Incoming managing director Rob Scott has flagged a new era of mergers, acquisitions and asset sales to take advantage of the healthy balance sheet and record profits left by outgoing chief Richard Goyder and finance director Terry Bowen. ‘‘Every decade the portfolio looks materially different to what it looked like 10 years prior – that’s certainly the case today. I don’t think I’d be doing my job if in 10 years’ time we looked exactly the same as we do today,’’ said Mr Scott, who takes the helm in November. ‘‘There will be opportunities for us to allocate our capital into areas where we think we can generate better returns and we’ll look opportunistically to monetise businesses we already have.’’
 
Whitehaven Coal Limited (WHC):
Whitehaven Coal chief executive Paul Flynn has told shareholders to expect more dividends after showering them with their first capital return in five years. Whitehaven will hand back $200 million to investors in the form of a 14¢ special distribution and a 6¢ dividend, both of which will be paid after the company’s annual meeting in November. The bumper payout came after Whitehaven’s statutory profit rose 20-fold from $20.5 million in the 2016 financial year to $405.4 million in 2017 thanks to surging coal prices, higher production and strong cost control. Whitehaven has not paid dividends since late 2012, but Mr Flynn said shareholders can expect further payouts given the company’s strong balance sheet.
(Source: AIMS)
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