Commentary
 
Moving beyond cautious optimism

The light of a New Year is often met through bleary eyes, recalling the highlights and reflecting on the hurdles before inevitably proclaiming a bunch of resolutions. 


As investors woke from the reporting season just gone results delivered profits broadly in line with expectations but with noticeably soft outlook statements. In the absence of producing fireworks Board’s instead dimmed shareholders prospects with the catch-phrase “caution”.


Muted Expectations

Despite all the political talk of “moving forward”, sentiment was subdued in the lead up to this year’s reporting season. Contrast this with the upbeat tone in February before problems in European and Japanese economies sank confidence, and renewed fears that the US will slide back into recession.  

In early August former chairman of the US Federal Reserve Alan Greenspan advised, “We're in a pause in a recovery, a modest recovery but a pause in the modest recovery feels like a quasi-recession.”

Putting a cap on hopes often facilitates achieving a stable if not satisfactory outcome. Many investors anticipated shares would fall or remain flat in the second half and predictably the results confirmed this.

Positive Outcomes


Though few corks dented the ceiling Goldman Sachs reported positive results for 144 companies in the S&P/ASX200. In total this group amassed close to $60 billion in profit. Overall profit grew 21.5 per cent underpinned by the materials sector in the top spot with 43 per cent profit growth. Resource stocks reaped the benefit from a rebound in Chinese output.

Among the highlights, Newcrest Mining Ltd (ASX:NCM) doubled its annual net profit to $557 million, BHP Billiton Ltd (ASX:BHP) increased its profit by 116.5 per cent to US$12.72 billion  and Fortescue Metals Group Ltd (ASX:FMG) posted a 14 per cent lift to US$581 million. 

For calendar reporting miners, Woodside Petroleum posted a 40 per cent half year rise to US$901 million, while Rio Tinto Ltd’s (ASX:RIO) half year net earnings surged 260 per cent to US$1.62 billion. 

Rio Tinto’s chief executive Tom Albanese says the International Monetary Fund forecast nearly four per cent global growth for both this and next year, with Chinese GDP expected to grow at approximately nine per cent. The global miner’s long term view is that industrialisation and urbanisation in China, followed by India, will drive robust growth in demand for commodities. 


Retail Recovery 

Consumer Discretionary stocks however felt the pinch with weak consumer spending and the loss of the 2009 Federal Government Stimulus weighing heavily on the sector. 

Myer Holdings Ltd (ASX:MYR) full year profit fell 38.2 per cent to $67.2 million, dragged down by the cost of its initial public offering. CEO Bernie Brookes reflecting, “The retail environment in the year was very challenging, characterised by global economic uncertainty and fragile consumer confidence”. 

In contrast David Jones Ltd (ASX:DJS) added 9.1 per cent to achieve a $171 million net profit. CEO Paul Zahra says while Access Economics is forecasting an improvement in consumer confidence, the retailer will continue to remain cautious and structure internal budgets based on conservative sales forecasts. 

Fiscal 2010 saw less carnage than earlier years with profit increasing though notably sales remained steady.

Harvey Norman Holdings Ltd (ASX:HVN) reported an 8 per cent increase in net profit after tax to $231.41 million, with revenue from continuing operations falling to $2.45 billion from $2.5 billion the year before. Executive Chairman Gerry Harvey says the year was a tale of two halves; following the momentum provided by the stimulus package, a considerable drop-off in second half retail spending occurred.  

Making more money or spending less is guaranteed to increase capital. The profits presented in this reporting season where more a result of the latter, tightening internal purse strings to brace against external lingering uncertainty.  


Increased Dividends

A year of bringing in lunches allowed for an end of year surplus for shareholders to enjoy with a total of $39 billion in dividends declared. The re-emergence of higher dividends added a touch of silver lining to boost sentiment, with 40 per cent of companies firming final dividends.

Payouts are yet to recover to pre-GFC levels although CitiGroup point out the 2010 result represented earnings per share growth of 9.5 per cent from the year before. The advance compares with a 20.1 per cent tumble in 2009, when earnings per shares retreated in the wake of the GFC.

Healthier dividend payments reflect the cash companies have amassed through prudent financial management.


Looking Ahead

The Australian Financial Review reports that the country’s top 200 companies had a combined total of more than $100 billion in cash on hand at June 30, up 42 per cent on the year before. Despite the lowest gearing in 15 years, down 36 per cent on the year before, companies remain reluctant to spend.

The country has yet to return to the black but finances are improving, CEO’s however are still guarded. 

To avoid lazy balance sheets companies will need to steer future growth. And while caution is wise to maintain, it must now be complemented with direction to defy the New Year’s hangover and translate optimism into opportunity. 

Lelde Smits Finance News Network


 
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Market Wrap: Aus shares close 0.78% higher

21 May 2012 - Aus shares close 0.78% higher. Qantas (ASX:QAN) confirmed it will cut of 500 engineering jobs and close its heavy maintenance base at Tullamarine.
- 21/05/2012
21 May 2012 - Aus shares close 0.78% higher. Qantas (ASX:QAN) confirmed it will cut of 500 engineering jobs and close its heavy maintenance base at Tullamarine.
- 21/05/2012
21 May 2012 - Aus shares up 0.5%. Syrah Resources Limited (ASX:SYR) will divest its interest in Syrah’s Saudi Arabian subsidiary.
- 21/05/2012
21 May 2012 - Another tough day for markets on Friday, although the Euro did rebound from it lows to finish near session highs. Aud and Kiwi, not so lucky and looking heavy. Greek and Spanish concerns continue to damage sentiment, although G8 leaders have urged for Greece to remain in the Euro. Heavy data week ahead.
- 21/05/2012
21 May 2012 - Orica Limited (ASX:ORI) has partnered with worldwide chemical company Yara and Apache to build an ammonium nitrate plant in the Pilbarra region.
- 21/05/2012
21 May 2012 - Elders Limited (ASX:ELD) has generated a net profit of $40.5 million for its first-half results ending March 31 this year, returning the company to profitability.
- 21/05/2012
21 May 2012 - Rio Tinto Limited's (ASX:RIO) chief is reportedly cautious about expanding its iron ore production in Western Australia.
- 21/05/2012
21 May 2012 - James Hardie Industries (ASX:JHX) has posted a full-year net profit of $613 million.
- 21/05/2012
21 May 2012 - Investment advisor James Gerrish takes a technical look at S&P 500, S&P ASX200, US ten year bonds, China Shanghai Index, Spanish ten year bonds, Italy ten year bonds, ANZ, TLS, BWP, MIN.
- 21/05/2012
21 May 2012 - GrainCorp Limited (ASX:GNC) will be posting its half-year profit this week with the grains handler under pressure to declare a special dividend to shareholders.
- 21/05/2012
21 May 2012 - National Australia Bank Limited (ASX:NAB) has lifted its subordinated notes offering to $1 billion from $500 million.
- 21/05/2012
21 May 2012 - Aus shares set for lower start. Qantas Airways Limited (ASX:QAN) is expected to announce 400 job losses today at its heavy maintenance base in Tullamarine
- 21/05/2012
18 May 2012 - ASX plunges 2.7%. Paladin Energy Limited’s (ASX:PDN) Kayelekera mine is back in full operation after inking a deal with striking workers in Malawi.
- 18/05/2012
18 May 2012 - ASX sinks to lowest level this year. Bill Shorten comes out swinging at BHP Billiton Limited's (ASX:BHP) chairman’s comments that Australia’s industrial relations system has become an obstacle to big business.
- 18/05/2012
18 May 2012 - Greece and Spain continue to weigh heavily and equity markets have had a genrally tough session. Sterling and the Jpy were the main points of interest in the currency markets today as most consolidated at the bottom end of their recent ranges. Moody's Spanish bank downgrade at the end of the day has not helped sentiment.
- 18/05/2012
18 May 2012 - Santos Limited's (ASX:STO) CEO and MD cautions the liquefied natural gas (LNG) industry may face cost blow outs in the future.
- 18/05/2012
18 May 2012 - Paladin Energy Limited (ASX:PDN) welcomes the return to full production after inking a deal with striking workers in Malawi.
- 18/05/2012
18 May 2012 - South Australia’s Premier dismissed doubts raised over BHP Billiton Limited’s (ASX:BHP) future projects following comments from the global miner's chairman and CEO.
- 18/05/2012
18 May 2012 - PanAust Limited (ASX:PNA) releases the results of plant scale test work for its flagship Phu Kham copper and gold mine in Laos.
- 18/05/2012
16 May 2012 – Ventnor Resources Limited (ASX:VRX) MD Bruce Maluish talks about the base metals explorer’s drilling campaign at its Thaduna and Green Dragon copper project as it works to define a maiden resource.
- 16/05/2012
16 May 2012 - Investment advisor Gary Glover takes a technical look at S&P ASX200, All Ords, S&P ASX200 Materials, S&P 500 Cash, US Index Cash, CRB Futures, Copper Comex, Spain IBEX, RIO, ILU, WOR, JHX, NAB, ANZ, CAB, TLS, QBE.
- 16/05/2012
15 May 2012 – CRU Group consultant Professor Allan Trench provides an outlook for commodities to 2015, forecasts stand-out performers and details where to find value in mining stocks.
- 15/05/2012
15 May 2012 – Corazon Mining (ASX:CZN) Managing Director, Brett Smith, provides an update on drilling at its Canadian, Nickel Sulphide Project, Lynn Lake.
- 15/05/2012
14 May 2012 - Apollo Minerals Limited (ASX:AON) Executive Director and COO, Dominic Tisdell, outlines the iron ore explorer’s plans to advance its Commonwealth Hill project in SA and Mount Oscar project in WA.
- 14/05/2012
14 May 2012 - Intra Energy Corporation Limited (ASX:IEC) Executive Chairman, Graeme Robertson outlines the coal producer’s projects in Tanzania, focus on domestic markets and plans to increase its resource base to meet demand.
- 14/05/2012
27 Apr 2012 - Chinalco Yunnan Copper Resources Limited (ASX:CYU) managing director, Jason Beckton details the company's projects in North Western Queensland, Chile and Laos.
- 27/04/2012
27 April 2012 – Mutiny Gold (ASX:MYG), Managing Director, John Greeve provides an update on its key Deflector Project, time line and economics.
- 27/04/2012
27 Apr 2012 - Gascoyne Resources Limited (ASX:GCY) Managing Director, Mike Dunbar, talks about the company's Glenburgh Project and its extensive drilling program.
- 27/04/2012
26 Apr 2012 – ANZ Banking Group's (ASX:ANZ) Chief Economist, Warren Hogan, provides a forecast for the Australian dollar, interest rates, commodities and the S&P/ASX 200.
- 26/04/2012
23 Apr 2012 – WPG Resources Limited (ASX:WPG) Executive Chairman, Bob Duffin details the company’s new projects in the Woomera Prohibited Area of South Australia and direction following the sale of its Peculiar Knob project.
- 23/04/2012
12 Apr 2012 – Ausbil, Portfolio Manager Micro Caps, Tony Waters, talks about strength in earnings which have translated into strong gains in the first quarter.
- 12/04/2012
11 Apr 2012 - Investment advisor Gary Glover takes a technical look at S&P ASX200, S&P ASX500 Cash, Dow Jones, Nasdaq 100 futures, FT-100 Cash, Russell 2000, Spain IBEX, CRB Index, Copper, BHP, WOR, MND.
- 11/04/2012
05 Apr 2012 - Northward Capital, CEO & Sector Portfolio Manager, Darren Thompson talks about the improvement in sentiment, key positions in their Australian Equities Composite fund and outlook for local equities.
- 05/04/2012
03 Apr 2012 - White Rock Minerals (ASX:WRM) Managing Director, Geoff Lowe, introduces its Mt Carrington Project in the Drake mineral field of Northern NSW.
- 03/04/2012
02 Apr 2012 - Investment advisor James Gerrish takes a technical look at S&P/ASX200, Dow Jones, SSE Composite, US Dollar Index, Spanish Government 10 Year Bonds, Citigroup Economic Surprise Index, US Interest Rate, Italy Government 10 year bonds, Euro v US Dollar.
- 02/04/2012
28 Mar 2012 – Solimar Energy Limited (ASX:SGY) CEO, John Begg, details developments at the oil and gas explorer’s Kreyenhagen project and outlines plans for its Paloma oil discovery and Marokopa producing project.
- 28/03/2012
27 Mar 2012 – Challenger Energy Limited (ASX:CEL) MD, Paul Bilston, details the gas explorer’s drilling success at its Mercury Stetson Prospect in Texas and provides an update on its 800,000 acre Karoo Basin Project in South Africa.
- 27/03/2012
23 Mar 2012 - Global risk analyst Satyajit Das foresees a series of sovereign debt crises, warns of an inevitable global reset to end debt-fueled ponzi prosperity and advises how to safe-guard assets amid enormous volatility.
- 23/03/2012
21 Mar 2012 - Phylogica Limited's (ASX:PYC) CFO, Nick Woolf provides an update on the company’s relationship with Johnson & Johnson’s pharmaceutical unit, Janssen, Roche, MedImmune and Pfizer and its goal of becoming self funding.
- 23/03/2012
20 Mar 2012 - Business Futurist and BRIC expert, David Thomas, reveals his biggest investment opportunities and how to benefit from the changing global order.
- 20/03/2012
19 Mar 2012 – Lodestar Capital Partners, Portfolio Manager, John Morgan provides an update on the improving global economic situation and what this has meant for the local market and their Australian Strategic Share Fund.
- 19/03/2012
19 Mar 2012 - Iron Road Limited (ASX:IRD) Managing Director, Andrew Stocks, introduces the iron ore developer’s projects in SA and WA, plans to complete a DFS and further resource expansion work.
- 19/03/2012
15 Mar 2012 - Blackthorn Resources Limited (ASX:BTR) CEO and MD, Scott Lowe, details the explorer's growth potential as moves to production at Perkoa in H2 and advances drilling at its Mumbwa project.
- 15/03/2012
14 Mar 2012 - YTC Resources Limited (ASX:YTC) chief executive Rimas Kairaitis, interviewed at the Resources Roadshow in San Francisco, provides an update of the company’s primary assets and the progress of bringing the Hera gold project online.
- 14/03/2012
14 Mar 2012 - Black Range Minerals Limited’s (ASX:BLR) managing director TonySimpson, speaking at the Resources Roadshow USA, outlines why he believes he has an exceptionally cheap operation and a worthwhile investment opportunity.
- 14/03/2012
06 Mar 2012 - Having lived through Argentina’s debt crisis Professor Alan Cibils outlines the similarities and risks to Greece’s fiscal crisis, predicting a default is imminent and claiming "the sooner the better”.
- 06/03/2012
06 Mar 2012- Diatreme Resources Limited (ASX:DRX) Executive Chairman and CEO, Tony Fawdon, talks about the company’s Cyclone Zircon Project in the Eucla Basin of WA, as it nears a decision on a definitive feasibility study.
- 06/03/2012
05 Mar 2012 - Silver Lake Resources Limited (ASX:SLR) Managing Director, Les Davis, provides an update on its recent transaction with Phillips River Mining Limited (ASX:PRH) and confirms it is on track to deliver full year production guidance.
- 05/03/2012
05 Mar 2012 - Phoenix Gold Limited (ASX:PXG) Managing Director, Jon Price speaks about the start of drilling at Castle Hill, expanding the resource and developments at the company’s projects in WA.
- 05/03/2012
01 Mar 2012 - Macphersons Reward Gold Limited (ASX:MRP) Managing Director, Moorie Goodz explains plans to be in production at its Tycho discovery by mid-year and details progress at its WA projects.
- 01/03/2012
24 Feb 2012 - Rox Resources Limited (ASX:RXL) Managing Director, Ian Mulholland, details developments at the exploration company’s projects including a maiden JORC resource at the Mt Fisher gold and nickel project in WA, and plans for its Marqua and Myrtle projects in the NT.
- 24/02/2012
23 Feb 2012 - Kentor Gold Limited (ASX:KGL) Managing Director & CEO, Simon Milroy outlines the company’s plans to be producing in June 2012 at its Murchison Gold Project in WA and details Kentor’s Jervois Project in the NT and Andash Project in central Asia.
- 23/02/2012
15 Feb 2012 – Central Petroleum Limited (ASX:CTP) Managing Director John Heugh explains the significance of the flow at its Surprise- 1 well and plans to start selling oil from the Extended Production Test as early as April.
- 15/02/2012
14 Feb 2012 – Commissioners Gold Limited (ASX:CGU) Executive Chairman, Chris Battye talks about the exploration drive to find new gold deposits and starting first drilling of the Dalton project near Yass.
- 14/02/2012
14 Feb 2012 - Robust Resources Limited (ASX:ROL) Managing Director Gary Lewis outlines the gold and base metals explorer’s drilling and exploration campaign in Indonesia, detailing Robust’s budget, priorities and goals for 2012.
- 14/02/2012
07 Feb 2012 - Malcolm Turnbull slams the NBN Co as “a massively over-capitalised monopoly” and calls on a rigorous cost-benefit analysis. Mr Turnbull answers speculation he will challenge Liberal leadership and heralds the end of the mining tax under a Coalition government.
- 07/02/2012
31 Jan 2012 – Fairview Equity Partners executive director and portfolio manager, Michael Glenane, reveals which sectors he has his eye on; the relationship between private equity and small caps; and the key influencers of his fund’s performance last year.
- 31/01/2012
20 Jan 2012 – Westpac Banking Corporation’s (ASX:WBC) Global Head of Economics, Bill Evans, provides forecasts for Australian growth, interest rates and house prices and predicts a recession in Europe, stagnant US growth and China slowdown will spark stimulus policies.
- 20/01/2012
16 Jan 2012 – Central Petroleum Limited (ASX:CTP) MD, John Heugh details how the company has struck the first significant oil flow from an onshore discovery well for almost five decades in the Northern Territory, and explains plans for listing on the Toronto Stock Exchange.
- 16/01/2012
10 Jan 2012 – Phylogica Limited (ASX:PYC) CFO and VP Corporate Development Nick Woolf outlines its partnership with Janssen Biotech, a division of global giant Johnson & Johnson, and shares the company’s goals and guidance for 2012.
- 10/01/2012
06 Jan 2012 - American investor Jim Rogers reveals where to find "spectacular" investment opportunities and how to make "staggering" amounts of money in 2012, sharing his investment strategy and outlook for precious metals, commodities and stocks.
- 06/01/2012
22 Dec 2011 - American investor Jim Rogers reveals his long and short positions for 2012, underpinned by the belief Asia will outperform, and details his aversion to equities, urging global leaders to 'take the pain now' and tackle US and European debt.
- 22/12/2011
21 Dec 2011 – Phylogica Limited (ASX:PYC) CFO and VP Corporate Development, Nick Woolf, details collaborations with leading pharmaceutical companies and plans to do another three deals in the first half of 2012.
- 21/12/2011
19 Dec 2011 – Circadian Technologies Limited (ASX:CIR), CEO and managing director, Robert Klupacs, talks about applications for its VGX-100 therapy in the treatment of a range of solid tumours, its phase 1 & 2 clinical program and partnerships for commercialisation.
- 19/12/2011
15 Dec 2011 – Coppermoly Limited (ASX:COY) Managing Director, Peter Swiridiuk gives an update on drilling at Simuku and Nakru-1; the company’s tenements under application on New Britain Island; and explains what attracted it to the Esk Trough in Queensland.
- 15/12/2011
09 Dec 2011 - Corazon Mining Limited (ASX:CZN), Managing Director, Brett Smith, explains its key project in the historic nickel mining area of Lynn Lake, Manitoba, recent drill results, and project timeline.
- 09/12/2011
05 Dec 2011 - John Grace, Head of Equity at fund manager Ausbil Dexia talks about the importance of yield in the total return for banks and industrials and their overweight positions.
- 05/12/2011
29 Nov 2011 - Lynas Corporation Ltd (ASX:LYC) Executive Director, Nicholas Curtis, details plans to ramp up production in the first half of 2012, its Mt Weld expansion, Malawi developments and outlook on rare earths demand, pricing and Chinese export quotas.
- 29/11/2011
22 Nov 2011 - Atlantic Gold NL (ASX:ATV) Executive Director, Wally Bucknell, details the gold explorers projects in Nova Scotia, including developments at its Touquoy and Cochrane Hill projects and plans to be in production by 2014.
- 22/11/2011
22 Nov 2011 – Canadian billionaire, CEO and chief investment officer, Eric Sprott, lists his favourite precious metals stock picks and forecasts gold will be north of $2000 and silver will hit $50 in six months time.
- 22/11/2011
09 Sep 2011– Blackthorn Resources Limited (ASX:BTR) MD & CEO, Scott Lowe, explains its projects and production time frame.
- 09/09/2011
10 Jan 2011 - Property Council of Australia executive director NSW, Glen Byres discusses the NSW Government Metropolitan Plan for Sydney.
- 10/01/2011
12 Oct 2010 – CommSec, Equities Economist, Savanth Sebastian gives us an update on how the economy is tracking including a look at the latest RBA rates decision, equities and the outlook for the S&P/ASX200 index.
- 12/10/2010
October '10 - Andy Semple explains what they are, differences from standard options and when they are used.
- 01/10/2010
September ‘10 - Andy Semple explains the differences between stock and index options and the advantages of trading an option with broad based exposure.
- 01/09/2010
August ‘10 - Andy Semple reminds us of all about the usefulness of a simple long dated call. Less risk than owning the underlying stock with built in protection at the strike price. Why not use a long dated call for your next buy and hold trade?
- 01/08/2010
30 June 2010 – Independent Property Inspections, Founder, Leon Cupit explains what they are why they are becoming mandatory when a selling home.
- 30/06/2010
29 June 2010 - Jo Brown from United Property Partners talks about tax incentives for investing in property under the scheme.
- 29/06/2010
June ‘10 - Andy Semple explains how to brings in two premiums writing out of the money puts and calls, potentially selling your stock for more or adding to your position for less than the current price.
- 03/06/2010
May ‘10 - Andy Semple explains how the Bull spread delivers a similar return to the protected buy write for a whole lot less capital.
- 05/05/2010
May ‘10 - 'AAA' Commercial Mortgages, MD, John Macalyk explains the pros & cons, citing Mike Tyson as inspiration.
- 30/04/2010
22 April 2010 – Independent Property Inspections, Founder, Leon Cupit talks about the things you don’t see on new and existing property, that need an expert to bring them to your attention.
- 22/04/2010
April ‘10 - Andy Semple explains why sensible gearing is a must and how to use it as a line of credit for options trading.
- 01/04/2010
01 March 2010 – BIS Shrapnel, Senior Economist, Jason Anderson talks to us about the impact of rising interest rates and the expiry of the boost to the First Home Owners Grant on house prices and affordability, looking also at rents and holiday home ownership.
- 01/03/2010
February ‘10 - 'AAA' Commercial Mortgages, MD, John Macalyk explains what’s available and how to qualify.
- 11/02/2010
January 2010 - Andy Semple talks trend trading basics and how to use these to time your option trades
- 29/01/2010
December 09 - Andy Semple takes us through an example of a BHP $38 Dec put where we receive 50c in premium.
- 01/12/2009
30 June 2009 - Paul Xiradis, CEO and Head of Equities, at fund manager Ausbil Dexia shares his views on where the money will be made as the economy recovers.
- 30/06/2009
 
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