AP Eagers has foreshadowed a dip in profit for the first half, echoing similar challenges in the car market to its takeover target Automotive Holdings Group yesterday. Citing an 8 per cent decline in overall new vehicle sales to the end of April, chief Martin Ward said the company expected profit to drop by 7 per cent to 10pc on the previous half year period. He said he was “delighted” that the AHG board had backed the company’s merger deal and urged AHG shareholders yet to accept the offer to do so. “We look forward to working with the AHG Board collaboratively to satisfy the few remaining conditions, including engaging constructively together with the ACCC to secure regulatory approval,” Mr Ward said.
Coca-Cola Amatil Ltd (CCL):
Local Coke bottler Coca-Cola Amatil has reaffirmed its full year earnings guidance for a loss, but said it was encouraged by progress in its struggling Indonesian business. Ahead of its AGM today, managing director Alison Watkins said group results had so far been in line with the company’s expectations, with double digit volume growth in Indonesia over the first quarter. Capital expenditure for the year was expected to be in line with the previous, taking into account continued capital invested in Indonesia, including a second affordable sparkling pack line. Meanwhile, Chairman Ilana Atlas said negotiations for the sale of SPC were continuing with a short list of parties, and was confident the business divestment was the right course for SPC.
DuluxGroup Limited (DLX):
DuluxGroup has reported a 4.1 per cent drop in profit in what it described as a “challenging” quarter, but forecast renovation activity to pick up in the second half. The company, currently the subject of a $3.8 billion takeover deal by Nippon Paint, reported net profit of $68.2 million for the six months to March 31, 4.1 per cent below the prior year’s adjusted NPAT. Earnings before interest and tax were $109.1 million, an increase of 0.5 per cent when compared to prior year adjusted EBIT. The paint maker said raw material costs were stabilising, and its core home renovation markets were expected to “continue providing resilient, profitable growth”, setting it on the path for full year profit of $150.7m, up on the year prior. The board declared a first half dividend of 15 cents per share, as well as a special dividend of 28 cents per share.
Goodman Group (GMG):
Industrial property powerhouse Goodman Group has reaffirmed a 9.5 per cent rise in operating earnings for the financial year with chief executive Greg Goodman saying the pursuit of convenience in retailing was driving the group’s business. Goodman, which has $44.1 billion in logistics assets under management, flagged opportunities in Hong Kong, Shanghai, Beijing and Shenzhen on the back of strong demand from its tenants during a fourth quarter update. “The structural trends of urbanisation, rising consumerism and the ever-increasing need for convenience, continue unabated — driving demand for industrial property in key urban centre,” Mr Goodman said. Demand from tenants was outstripping supply for urban logistics globally as Goodman’s tenants moved to improve the efficiency of their supply chains, Mr Goodman said. The company has $3.7 billion in 69 projects under development, 83 per cent of which was being undertaken with partners.
Optus Group Ltd (OPG):
Optus has posted a 16 per cent slump in full year net profit, with the temporary suspension in the rollout of hybrid coaxial fibre (HFC) services over the NBN making a severe dent on the telco’s books. However, a strong fourth quarter has helped Optus contain much of the damage, with the telco continuing to post strong customer growth in the post-paid mobile market.The telco’s net profit for the full year ending March 31, 2019 fell from $782 million to $659m year-on-year, however, operating revenues continue to edge up. Optus operating revenue for the full year increased 6 per cent to $9.1 billion, buoyed by strong customer growth and higher equipment revenues. Full year earnings before interest, taxes, depreciation and amortization (EBITDA) was marginally down at $2.7bn.
Sigma Healthcare Ltd (SIG):
Sigma Healthcare has kicked off its staff reduction plans with about a third of the 300 flagged job cuts already made after the cancellation of a lucrative contract. Mark Hooper, chief executive of Sigma, told investors at today’s annual general meeting that the well-managed wind down of supply to Chemist Warehouse and reduction of associated costs was proceeding to plan. “An unfortunate reality is the reduction in our workforce, with around one-third of the 300 team members we announced in March having already finished with Sigma, with further reductions largely complete by October this year,” he said. Sigma’s contract with MyChemist/Chemist Warehouse Group — worth about 40 per cent of annual revenues — expires in June. The Australian-listed company had also decided in March that after a detailed assessment of a $727 million takeover offer from Priceline owner API, it could deliver better shareholder value by going it alone. Sigma had implemented a business transformation program, “Project Pivot”, to review options to offset the loss of the Chemist Warehouse contract. It has previously revealed that review had uncovered $100m in savings.
Sims Metal Management Ltd (SGM):
Falling scrap prices are set to hit Sims Metal Management, according to Morgan Stanley. In a research tactical idea released this week, analyst Andrew Scott said the stock was in for a fall as a result of lower prices and lower volumes. He said the brokerage still liked the longer term fundamentals of the business, but there was earnings risk in the short term.
St Barbara Ltd (SBM):
Gold miner St Barbara is set to acquire Canadian miner Atlantic Gold Corporation in a deal worth $768 million, diversifying the company’s production base. Alongside the purchase, the miner this morning announced an underwritten $490 million entitlement offer to partly fund the buy as well as a $200m three year loan facility with Westpac to support the combined company. Atlantic is listed on the Toronto Stock Exchange, and shareholders in the company have been offered $C2.90 per share, with the company to be delisted from the TSX if the deal completes. “The addition of Moose River to the portfolio diversifies St Barbara’s production base with a low cost producing asset in a very favourable and prospective jurisdiction,” chief Bob Vassie told the market.“It is a sustainable long life operation of scale with a low AISC position which generates impressive margins. The asset also has significant growth potential which St Barbara identifies as an exciting opportunity.” Completion is expected to occur in July 2019.
Villa World Ltd (VLW):
Residential housing estate developer Villa World says customer sentiment is low, but it has sold 783 blocks of land in the first three quarters of the financial year, including 266 in the first four months of this year. It has hinted its final dividend may be reconsidered, especially in light of AVID Property Group's $2.345 per share offer. "Customers continue to experience a reduction in the availability of finance and delayed finance approvals," Villa World tells the ASX this morning. Shares are down 2.2 per cent to $2.21. "As a result, both carried forward sales and new sales are taking longer than anticipated to settle. This will see approximately 80 to 115 settlements previously expected in second half of 2018-19 to now settle in 2019- 20." Villa World is not providing guidance for the current financial year given the uncertainty, but expects gross margins within the range of 23 per cent and 25 per cent. It expects sentiment to improve after the federal election and "as lenders work through the repercussions of the Banking Royal Commission".
(Source: AIMS)
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