Brickworks Ltd (BKW):
Construction materials company Brickworks has delivered a drop in first-half net profit despite record sales in its building products business unit. The company (BKW) unveiled a 6.8 per cent fall in statutory net profit after tax to $97 million, but underlying net profit after tax, which strips out one-off items, lifted 4 per cent to $115.6m for the half year ending January 31. The company announced a fully franked interim dividend of 18 cents per share, up 5.9 per cent on last year’s interim dividend. Total dwelling commencements were down 7.2 per cent for the period, but this is compared to the record peak in the prior corresponding period, the company said. Group revenue declined to $396.7m from $428.9m for the first half last year. The company is optimistic on its second half earnings, saying the building activity pipeline remains strong in New South Wales and Victoria.
Cimic Group Ltd & Mirvac Group (CIM & MGR):
Two listed groups, Mirvac and CIMIC, are quietly exiting one of their major Canberra holdings, a whole city block at the heart of the City Hill Precinct, in a deal worth about $90 million. The pair are selling the 2.6ha site, which they bought more than a decade ago, to Canberra development company Morris Property Group, with the transaction almost finalised. The deal, which came about via an offmarket approach, would see the pair exit the site they bought for $92m in 2007. It is being handled by Colliers International, which did not return calls. But it is understood that the Canberra developer could look to turn the site, Block 12, Section 63 City, into a series of apartment buildings that could accommodate up to 1000 units, with some commercial elements. R
Lendlease Group (LLC):
Lendlease is pushing ahead with its Two Melbourne Quarter office tower, selling the $550 million project to First State Super and to one of its funds as it signs anchor tenant EnergyAustralia. Construction is set to start this month for the 25-storey, 50,000sq m Woods Bagot-designed tower, which is almost half leased. About 12 contiguous floors are left in the building that is set to house up to 4500 workers on flexible 2000sq m floor plates when complete. Lendlease Development will build the project, which will be jointly owned by the super fund and the Australian Prime Property Fund Commercial and managed by Lendlease Investment Management.
Myer Holdings Ltd:
Myer executive chairman Garry Hounsell, who will pay himself $83,333 a month until a new chief executive can be found, is asking shareholders to back his gambit of slashing prices and investing in customer service, after unveiling the steepest loss in the department store’s more than 100-year history. In the short term Myer investors will have less money in their pockets as the retailer skips its interim dividend to safeguard its cash, buttress its financing covenants and renegotiate its debt facilities, which expire in 17 months. The net profit before impairments was $40.1m for the 26 weeks to January 27, in line with guidance given in February, while revenue for the first half was down 3.6 per cent to $1.72 billion. Myer’s online site is now the retailer’s third-biggest store by revenue as sales grew 48.9 per cent to $105.2m for the half, following a 48.4 per cent increase in the first half of 2017. The cost of doing business also fell, down 0.3 per cent to $537.1m, although profit margins sank 73 basis points to 37.53 per cent due to reduced purchases, a shift in marketing focus and an unexpected $3m jump in shoplifting. R
Rio Tinto Ltd & BHP Billlition Ltd (RIO & BHP):
Mining giants BHP Billiton and Rio Tinto have warned of rising inflation in the Australian iron ore industry adding to the growing pressure on the sector from a mixed outlook for China and increased competition out of Brazil. BHP’s Australian iron ore operations head Edgar Basto said there were signs of tightening labour markets in the west due to the wave of infrastructure projects under way on the east coast. Speaking on the sidelines of the Global Iron Ore and Steel Forecast Conference in Perth yesterday, Mr Basto said the recent return of construction activity in the WA resources sector and the increased cost of steel and diesel had also added to pressure. The rising inflation comes at a potentially testing time for the iron ore industry. The price gap between high and low-grade iron ores has widened over the past year from about 10 per cent to 40 per cent, with the changing market dynamic felt more keenly in Australia than in its rival Brazil, which typically produces higher grade ores.
Sigma Healthcare Ltd (SIG):
Pharmacies and drug supplier Sigma Healthcare’s full-year underlying profit has fallen 10.5 per cent to $59.9 million on decreased demand for its hepatitis C medication. Net profit for the 12 months to January 31 rose 3.5 per cent to $55.1 million because of a drop in oneoff items, but underlying profit was hit by a fall in sales revenue to $4.1 billion from $4.4 billion. Sales revenue was broadly flat excluding the hepatitis C medicines. The company (SIG) said it had appointed Goldman Sachs as financial adviser to assist with potential acquisitions that could diversify earnings. Sigma declared a final, fully franked dividend of 2.5 cents, a payout ratio of 88.7 per cent of underlying profit.
Virgin Australia Holdings Ltd (VAH):
Ms McArthur will replace Rob Sharp, who was elevated to Virgin group executive in mid-2016. Returning Tigerair to profitability will be Ms McArthur's key focus. The budget spin-off ran at a $24 million underlying loss in 2017, and at a $6.7 million loss in the first half of 2018. "I wouldn't be CEO if I wasn't focused on returning a profit," Ms McArthur said. Tigerair has been consolidating its domestic routes having withdrawn from all international destinations, and it is replacing its fleet of Airbus A320s with Boeing 737s, which will deliver cost savings over the long term. Virgin Australia Group CEO John Borghetti said Ms McArthur had a done an outstanding job transforming the cargo and charter flight business and was "confident that she will make an invaluable contribution in this new role".
(Source: AIMS)
Construction materials company Brickworks has delivered a drop in first-half net profit despite record sales in its building products business unit. The company (BKW) unveiled a 6.8 per cent fall in statutory net profit after tax to $97 million, but underlying net profit after tax, which strips out one-off items, lifted 4 per cent to $115.6m for the half year ending January 31. The company announced a fully franked interim dividend of 18 cents per share, up 5.9 per cent on last year’s interim dividend. Total dwelling commencements were down 7.2 per cent for the period, but this is compared to the record peak in the prior corresponding period, the company said. Group revenue declined to $396.7m from $428.9m for the first half last year. The company is optimistic on its second half earnings, saying the building activity pipeline remains strong in New South Wales and Victoria.
Cimic Group Ltd & Mirvac Group (CIM & MGR):
Two listed groups, Mirvac and CIMIC, are quietly exiting one of their major Canberra holdings, a whole city block at the heart of the City Hill Precinct, in a deal worth about $90 million. The pair are selling the 2.6ha site, which they bought more than a decade ago, to Canberra development company Morris Property Group, with the transaction almost finalised. The deal, which came about via an offmarket approach, would see the pair exit the site they bought for $92m in 2007. It is being handled by Colliers International, which did not return calls. But it is understood that the Canberra developer could look to turn the site, Block 12, Section 63 City, into a series of apartment buildings that could accommodate up to 1000 units, with some commercial elements. R
Lendlease Group (LLC):
Lendlease is pushing ahead with its Two Melbourne Quarter office tower, selling the $550 million project to First State Super and to one of its funds as it signs anchor tenant EnergyAustralia. Construction is set to start this month for the 25-storey, 50,000sq m Woods Bagot-designed tower, which is almost half leased. About 12 contiguous floors are left in the building that is set to house up to 4500 workers on flexible 2000sq m floor plates when complete. Lendlease Development will build the project, which will be jointly owned by the super fund and the Australian Prime Property Fund Commercial and managed by Lendlease Investment Management.
Myer Holdings Ltd:
Myer executive chairman Garry Hounsell, who will pay himself $83,333 a month until a new chief executive can be found, is asking shareholders to back his gambit of slashing prices and investing in customer service, after unveiling the steepest loss in the department store’s more than 100-year history. In the short term Myer investors will have less money in their pockets as the retailer skips its interim dividend to safeguard its cash, buttress its financing covenants and renegotiate its debt facilities, which expire in 17 months. The net profit before impairments was $40.1m for the 26 weeks to January 27, in line with guidance given in February, while revenue for the first half was down 3.6 per cent to $1.72 billion. Myer’s online site is now the retailer’s third-biggest store by revenue as sales grew 48.9 per cent to $105.2m for the half, following a 48.4 per cent increase in the first half of 2017. The cost of doing business also fell, down 0.3 per cent to $537.1m, although profit margins sank 73 basis points to 37.53 per cent due to reduced purchases, a shift in marketing focus and an unexpected $3m jump in shoplifting. R
Rio Tinto Ltd & BHP Billlition Ltd (RIO & BHP):
Mining giants BHP Billiton and Rio Tinto have warned of rising inflation in the Australian iron ore industry adding to the growing pressure on the sector from a mixed outlook for China and increased competition out of Brazil. BHP’s Australian iron ore operations head Edgar Basto said there were signs of tightening labour markets in the west due to the wave of infrastructure projects under way on the east coast. Speaking on the sidelines of the Global Iron Ore and Steel Forecast Conference in Perth yesterday, Mr Basto said the recent return of construction activity in the WA resources sector and the increased cost of steel and diesel had also added to pressure. The rising inflation comes at a potentially testing time for the iron ore industry. The price gap between high and low-grade iron ores has widened over the past year from about 10 per cent to 40 per cent, with the changing market dynamic felt more keenly in Australia than in its rival Brazil, which typically produces higher grade ores.
Sigma Healthcare Ltd (SIG):
Pharmacies and drug supplier Sigma Healthcare’s full-year underlying profit has fallen 10.5 per cent to $59.9 million on decreased demand for its hepatitis C medication. Net profit for the 12 months to January 31 rose 3.5 per cent to $55.1 million because of a drop in oneoff items, but underlying profit was hit by a fall in sales revenue to $4.1 billion from $4.4 billion. Sales revenue was broadly flat excluding the hepatitis C medicines. The company (SIG) said it had appointed Goldman Sachs as financial adviser to assist with potential acquisitions that could diversify earnings. Sigma declared a final, fully franked dividend of 2.5 cents, a payout ratio of 88.7 per cent of underlying profit.
Virgin Australia Holdings Ltd (VAH):
Ms McArthur will replace Rob Sharp, who was elevated to Virgin group executive in mid-2016. Returning Tigerair to profitability will be Ms McArthur's key focus. The budget spin-off ran at a $24 million underlying loss in 2017, and at a $6.7 million loss in the first half of 2018. "I wouldn't be CEO if I wasn't focused on returning a profit," Ms McArthur said. Tigerair has been consolidating its domestic routes having withdrawn from all international destinations, and it is replacing its fleet of Airbus A320s with Boeing 737s, which will deliver cost savings over the long term. Virgin Australia Group CEO John Borghetti said Ms McArthur had a done an outstanding job transforming the cargo and charter flight business and was "confident that she will make an invaluable contribution in this new role".
(Source: AIMS)
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