Australian Earning Results: 17th February 2020

The Australian share market struggled to rise into positive territory on Monday. Sectors performance was mixed, with Information Technology, Energy and Real Estate leading gains of more than 0.5%, while significant losses were seen in the Consumer Discretionary and Communication Services sectors.

Brambles Ltd, Regis Resources Limited and QBE Insurance were among the best performers of the ASX200 today, following the release of the earnings reports.

Brambles Limited (BXB) widely recognised as a leading sustainable logistics business rose by more than 4% to $13.18 on an upbeat profit outlook, despite a drop of 9% in the first half net profit. The company manages to deliver sales and earnings growth in the first half in a challenging economic environment.

• Sales growth +7% at the high end of the Group’s mid-single-digit revenue growth objective
• Underlying Profit +5% includes +3pt benefit from AASB 16; sales contribution to profit, efficiency gains and lower lumber and transport inflation offset higher operating costs and asset charges across the Group
• Net finance costs decreased 12% despite US$14m of lease interest recognised due to AASB 16. The decrease reflected interest income from Australian dollar deposits and lower debt funded by IFCO sale proceeds
• Profit after tax (incl. discontinued operations) down (9)% due to inclusion of US$51.4m of IFCO earnings in 1H19. IFCO was divested in 2H19
• Underlying effective tax rate decreased to 29.9% reflecting a change in mix of global earnings
• Underlying EPS of 17.8 US cents up 1.0 US cent reflecting higher earnings and 0.3 US cent benefit from the share buy-back

Regis Resources Limited (RRL) reported a strong half-year net profit after tax of $93.4million. The Australian gold miner’s revenue was boosted by the sales price rather than quantity. For the 2020 outlook, the Duketon operations continue to be on track to deliver the annual production guidance. Its share price ended more than 3% higher

• Record Net Profit of $93.4 million which represents a 17% increase in the prior corresponding period
• Revenue of $371.4 million with 182,807 ounces of gold sold at an average price of $2,063 per ounce
• EBITDA of $185.6 million with a strong EBITDA margin of 50%
• Cash flows from operating activities of $147.2 million
• A fully franked interim dividend of 8 cents per share declared
• Production on track to meet full-year guidance 340,000-370,000 oz

QBE Insurance Group (QBE) announced an FY19 statutory net profit after tax of $550M, up 41% from $390M in the prior year. Its share price jumped by 4.24% to $14.75.

• Adjusted net cash profit after tax was $733M, up 6% from $692M in the prior year
• Adjusted cash profit return on equity was 8.9%, up from 8.0%2 in the prior year
• Group-wide renewal rate increases averaged 6.3% compared with 5.0% in the prior year
• Premium rate momentum accelerated across all divisions over the course of FY19, especially in International (particularly Europe) and North America
• Group-wide renewal rate increases averaged 8.3%3,4 during 2H19

GWA Group Limited, the leading supplier of building fixtures and fittings to household and commercial premises performed strongly despite the struggling residential housing conditions. Tim Salt, the Managing Director highlighted the resilience of the business in the face of challenging market conditions.

• Net Profit of $23.6 million
• A fully-franked interim dividend of $0.08 per share
• 1HFY20 revenue of $206.3 million and EBIT of $37.5 million

The Company’s share price rose by 2.05% to finish the day at $3.98 from $3.90.

Index Limited (IMD) share price traded in the red before lunch despite strong earnings reports. The mining tech company edged higher to close at 1.34% higher at $1.51.

• Strongest half-yearly revenue of $127.9m – up 2% on 1H19 ($125.0m)
• Underlying EBITDA of $28.1m1 – up 12% on 1H19 ($25.2m)
• A robust balance sheet with a strong net cash position of $25.5m2 – up 24% on 1H19
• A fully-franked interim dividend of 1cps declared – up 25% on 1H19 (0.8cps)

Bendigo and Adelaide Bank (BEN) issued its interim-results which a dividend cut and lower profits while announcing a $300 million capital raise and a trading halt.

• Statutory net profit:$145.8 million, down 28.2 per cent, including a pre-tax software impairment of $87.1 million and accelerated amortisation of $19.0 million
• Cash earnings after tax:$215.4 million, down 2 per cent
• Net interest margin: 37 per cent, up 2 basis points (bps)

This week will be the busiest week for February’s earnings. We will see more companies reporting on Wednesday and Thursday, respectively. Stay tune with GO Markets for more updates!