And that's a wrap...thanks for being with us today, we hope to see you bright and early again tomorrow.
For a round up of what happened today and what's happening tomorrow, here's what you need2know:
Markets
- ASX200 finished up 1.3% at 5104.1
- AUD at $US1.0271
- Nikkei up 2.7%, Shanghai up 1.9%, Kospi up 1.1%
- Gold at $US1601.96, WTI oil at $US92.90
- Wall Street futures are up 0.1% and FTSE100 futures are up 0.5%
News
- Customers before suppliers, says Woolies boss
- Supermarkets drive Woolies profit
- Rio snares former Transurban chief as CFO
- Harvey Norman sees light after profit plunges
- James Packer eyes bet on Sri Lanka
Overnight
- France - consumer spending and producer prices
- Spain - CPI
Tomorrow
- RBA index of commodity prices for February
- China - business sentiment indicator
The Lowy family’s own investment vehicle, run by the eldest son David, is looking to raise close to $665 million through the sale of the family's entire 7 per cent stake in Westfield Retail Trust.
Broking house UBS has been instructed to sell 214.8 million securities in WRT, which is equal to 7 per cent of securities on issue at $3.09 apiece. It is currently being undertaken by way of a fixed price bookbuild.
Former Transurban chief executive Chris Lynch has been named Rio Tinto’s chief financial officer, to take over from long-serving Guy Elliott.
Mr Lynch, a non-executive director of Rio since September 2011, will remain on the board and join Rio’s executive committee.
He was CEO at Transurban from 2008 until 2012 and before that worked as CFO at BHP Billiton for six years and in senior roles at Alcoa for 20 years.
Rio announced in July that Mr Elliott, a 30-year veteran of the company, would retire from the board at the end of 2012.
Retailer Harvey Norman was one of the best performers of the day, adding 9.2 per cent to $2.49 on an optimistic outlook.
IG Markets dealer Chris Weston said Harvey Norman’s upbeat sales growth enticed investors.
‘‘The discretionary sector’s clearly the best performing sector this year,’’ he said. ‘‘It’s been ages since we’ve seen any positive rhetoric coming from that company - they’re always very cautious.’’
Funds under management in Australia reached $2 trillion at the end of 2012 according to data - Managed Funds Australia - released by the Australian Bureau of Statistics today.
John Brogden, CEO of the Financial Services Council said: “Today’s announcement is a significant milestone for Australia’s funds management industry which is now the fourth largest in the world.
“We have a world class superannuation system which will continue to grow and support Australians in their retirement and fund managers who have grown Australia’s pool of funds by a massive 665 per cent from $265 billion 20 years ago, to today’s figure of $2 trillion.”
The dollar also rallied today, erasing earlier losses, as traders pared bets the RBA will cut its key interest rate after data showed companies will continue to invest into next year.
‘‘The information in the capital expenditure report is not enough to trigger a rate cut next week,’’ says Annette Beacher, head of Asia-Pacific research at TD Securities.
‘‘The first piece of information was a weaker-than expected December quarter. The second piece of information we noticed was that 2013-14 was stronger than expected. The Aussie seemed to have settled back at a slightly higher level after a violent movement.’’
The dollar added 0.4 per cent to trade at $US1.0278, after earlier falling as much as 0.4 per cent. It touched $US1.0184 yesterday, the lowest since October 10.
Today’s jump was the biggest one-day percentage gain in seven months, as investors were reassured by a smooth Italian debt sale and comments from US Federal Reserve Chairman Ben Bernanke.
The Australian market has rallied 9.8 per cent so far this year, supported by receding US and eurozone debt concerns as well as a relatively strong earnings season.
Here's how blue chip stocks went today:
- BHP: +1%
- Rio: +1.6%
- ANZ: +1.6%
- CBA: +1.9%
- NAB: +0.6%
- Westpac: +1.9%
- Fortescue: +2.6%
- Woolworths: +2.7%
- Wesfarmers: +1.3%
- Telstra: -0.4%
- Qantas: +4.8%
For those who are interested, here are the best and worst performers on the ASX200 today:
Among the sectors, energy shares surged 2.8 per cent, consumer discretionary jumped 2 per cent, financials rose 1.3 per cent and materials added 1.1 per cent.
Telecommunications bucked the trend, falling 0.4 per cent.
The sharemarket has push back to fresh four-and-a-half year highs. The S&P/ASX200 jumped 67.5 points, or 1.3 per cent, to 5104.1, while the broader All Ords gained 67.3 points, or 1.3 per cent, to 5120.4.
Air New Zealand will consider extending its trans-Tasman alliance with Virgin Australia to include the Pacific Islands when it has to reapply to regulators late this year for a continuation of the existing deal.
Declaring the Kiwi airline in ‘‘growth mode’’ after a solid first-half profit, the new chief executive, Christopher Luxon, said extending the alliance to cover the Pacific Islands was something the two airlines could consider because they both had ‘‘good Pacific Island businesses’’.
‘‘I’m not sure at this stage – that is something we are continuing to discuss,’’ he said.
The two airlines will have to apply for approval in Australia and New Zealand to continue their alliance on trans-Tasman routes by the end of this year.
The federal opposition has warned the builder of Labor’s $37.4 billion national broadband network (NBN) to consider a possible change of government this year before signing any contracts.
The advice given to the government-owned NBN Co was made in the dissenting report of coalition MPs attached to a joint parliamentary committee’s latest review of the network rollout, released today.
Communication Minister Stephen Conroy says it demonstrates the coalition’s plans to demolish the project if it wins government at the September 14 federal election.
The MPs said NBN Co should be aware ‘‘of the need to alter contracts’’ if the government changed, and suggested any deals have the necessary flexibility written into the terms of agreement.
Households have poured $57 billion into deposit accounts in the past year, as consumers continue to take a cautious approach to their finances.
Figures published today show the stock of household deposits continues to grow faster than the value of outstanding loans – despite recent signs of rising consumer confidence.
Households had some $588 billion on deposit with the nation's banks last month, statistics from the Australian Prudential Regulation Authority show.
This represents an increase of more than 10 per cent, or $57 billion, on a year earlier.
In a sign that high rates of saving have continued into 2013, deposits in January grew by about $4 billion, or 0.75 per cent.
Woolworths chief executive Grant O'Brien says the nation's largest supermarket chain will always favour the customer in negotiations with suppliers, amid claims Australia's supermarket duopoly is using predatory and bullying behaviour to squeeze grocery manufacturers.
Mr O'Brien said that competition in Australia was "alive and well" but that as Woolworths sat between the consumer on one side and suppliers on the other it had a "contract" with shoppers to deliver cheaper food prices.
"Our role as retailer is positioned midway between the customer and the producer and it's a balance we play everyday, we have got to make sure we are delivering better value to the customers so they are getting value and increasingly globally comparable value," Mr Grant said this morning in one of his strongest defences of Woolworths since taking on the CEO role in 2011.
Some more on that story showing the RBA thought the dollar was overvalued by as much as 15 per cent last year:
‘‘The RBA is on the edge of a policy dilemma with respect to the currency,’’ says UBS rates strategist Matthew Johnson.
‘‘Substantial further strength, say a move above $1.10, would require further rate cuts, but there is a limit to how far one ought to push such a policy, as it may create financial stability issues a little further down the track.’’
Despite a first half profit slump of 36 per cent, Harvey Norman shares are going strong today, up 6.4 per cent. In fact they've had a pretty solid run in the last few months, as this graphic shows.
The $82 billion Future Fund has decided it will stop investing in tobacco, after a long campaign from anti-smoking groups and the Greens.
The David Gonski-led board has been reviewing this issue for some time, and today it has concluded the health and social costs of smoking were too great. It's a sharp change from the fund's previous position, that the assets did not compromise its policies on sustainability.
At December 31 the fund had investments in 14 tobacco companies, worth $222 million in total.
Treasury Wine Estates, Australia’s largest winemaker, posted first-half profit that beat analyst estimates as rising Asian sales and cost-cutting limited negative currency movements.
Net income rose 31 per cent to $52 million in the six months ended December from $40 million a year earlier, the company said in a statement today.
Better availability of luxury and premium wines over the next six months should support demand for higher-value labels that make up as much as 70 per cent of operating profit, Chief Executive Officer David Dearie told an investor call. Treasury has been buying land and planting new vines to develop higher- margin wines as the strong Australian dollar makes cheaper labels less profitable.
Shares are up 5.5 per cent to $5.17.
Here's a quick look at how markets around the region are performing:
- Nikkei(Japan): +1.9%
- Shanghai: +0.4%
- Taiwan: +0.2%
- South Korea: +1%
- Singapore: +0.1%
- New Zealand: +0.8%
Vitamin maker Blackmores lifted sales across Australia, Asia and New Zealand by 29 per cent rise to $164.3 million.
However, its net profit fell 4.8 per cent to $13.6 million in the half year to December 31.
Blackmores shares have plummeted 12.2 per cent, to $30.11
The Japanese government has nominated Asian Development Bank President Haruhiko Kuroda to be the next governor of the Bank of Japan, a lawmaker said today.
Kuroda, 68, would replace current BOJ governor Masaaki Shirakawa, who will step down on March 19.
The government also nominated academic Kikuo Iwata and BOJ official Hiroshi Nakaso to serve as the central bank's two deputy governors, said Genichiro Sada, a lawmaker from the ruling Liberal Democratic Party.
The RBA estimated the Australian dollar was overvalued by around 7 per cent back in December, internal documents show, which was only modestly above what it considered to be the currency's long-run equilibrium rate.
Papers released under the Freedom of Information Act show the estimate of 7 per cent came from the preferred model used by staff at the RBA and were made around mid-December.
Woolworths chief executive Grant O'Brien kept to a very tightly-worded script when asked about the Australian Competition and Consumer Commission's probe into claims that the big supermarket groups have been bullying suppliers, writes BusinessDay's Mal Maiden.
Woolies had a strong track record in running a business that was "fully compliant," he said, adding that it had a "suitably qualified and accredited" team. The focus was, is and would be on running a successful business, he said, one that both boosted returns for its shareholders and delivered a better shopping experience for its customers. Falling grocery prices and steadily increasing customer numbers in Woolies supermarket were evidence that the group was succeeding, he suggested.
There's no doubt however that behind the scenes Woolies and its big competitor, Coles, will be looking hard to see if claims that buyers have bullied suppliers are correct.
The supermarkets are powerful, and suppliers have been reluctant in the past to back up anecdotal claims of bullying with evidence, not of the exercise of their considerable power, but the illegal deployment of it.
ACCC Rod Sims broke through that barrier last year when he said any supplier that came forward with information could do so in confidence. He heard enough to upgrade the probe into a formal investigation where suppliers can be called to give information that could be used as evidence.
Crown has confirmed that its executive chairman James Packer was in Sri Lanka this week reviewing the island nation’s potential to become another outpost of his global casino empire.
Mr Packer met with Sri Lankan ministers to discuss investment options, according to reports from Sri Lanka.
"They have not finalised the area and the amount they are going to invest. The government has asked them to come up with a proposal," Lakshman Yapa Abeywardene, Sri Lanka's Minister of Investment Promotion, told Reuters.
"The government proposed (for) them to invest in a large city hotel in Colombo and go to (the eastern city of) Trincomalee to look into possible investment opportunities."
Treasury Secretary P.B. Jayasundera said Mr Packer had expressed an interest in "integrated tourism", which typically includes hotels, casinos and other entertainment.
A Crown spokesman declined to comment about potential investments in Sri Lanka.
Harvey Norman chairman Gerry Harvey said retail conditions were still tough, but offered some optimism for the future.
‘‘The aggressive discounting experienced in the second half of 2012 has stabilised and pleasingly we are seeing an uptick in sales,’’ he said in a statement.
‘‘Interest rates are at historical lows which should start moving the consumer back into the buying cycle from the savings cycle.’’The company closed nine stores and opened six new stores in the six months to December.
There is still hope ... Gerry Harvey.
Port Hedland, used by BHP Billiton and Fortescue Metals to ship more than 20 million tonnes of iron ore a month, expects to reopen later today following an assessment of any damage caused by a cyclone.
"At this stage, things are looking pretty good, though we still need to assess the situation for any damage," Port Hedland Port Authority spokesman Steed Farrell said.
JP Morgan economist Tom Kennedy said despite the unsatisfying December quarter Capex figures, the overall outlook was positive.
‘‘When you look at the prior quarter there’s been a pretty large downward revision, so I think the actual spend was disappointing,’’ he said.
‘‘For the 2014 financial year it looks like firms are at least expecting to increase spend once again and by more than we had anticipated, so going forward we think there’s a bit of juice left in the mining investment pipeline.’’
He said the numbers suggested investment in the broader economy would be topping out, but there was still some growth to come.
The RBA would most likely keep interest rates on hold for the next month, Mr Kennedy said, having lowered expectations for the investment phase of the mining resources boom in its most recently released Statement on Monetary Policy.
‘‘We think these figures would be in line with their expectations, so I don’t think it’s really a bell-ringer for them in terms of lowering the cash rate; I think they’ll feel quite comfortable keeping it on hold next week,’’ he said.
Harvey Norman's total sales in the six months to December fell by 7.3 per cent from the previous corresponding period, to $2.88 billion.
However the retailer said January sales were up 4.1 per cent.
Harvey Norman half year net profit has come in at $82 million, down from $129 million in the corresponding period last year.
Here's a reaction to the Capex numbers from David Scutt, Treasury Dealer at Arab Bank Australia.
Based on #Capex, along with the #construction figures yesterday, the economic transition from the #miningboom looks far more stable #ausbiz
— David Scutt (@David_Scutt) February 28, 2013
Australia will see a notable shake-up in its top five exports by 2030 triggered by Asia’s economic
growth and urbanisation, says a report from HSBC.
- Raw materials (like iron ore) which are currently Australia’s top exports will be replaced by mineral fuels such as liquefied natural gas (LNG), and will be used to supply Asia’s future energy security needs. The rise of mineral fuels will contribute 20% to Australia’s overall export growth by 2020.
- Similarly, the report finds base metals, like copper and nickel, will also be within Australia’s top five exports by 2030 and will be used to support the manufacturing of higher-end goods like electrical equipment, stainless steel, batteries and electric motors for Asia’s growing consumer market.
- James Hogan, Head of Commercial Banking for HSBC Bank Australia, said: “Asia’s middle class is set to explode from 500 million currently to 1.3 billion by 2030 and 2.6 billion by 2050. As Asian countries urbanise and its consumers’ tastes mature, Australia’s exports will similarly change to meet these growing demands.”
Marble Bar in Western Australia’s Pilbara region remains on red alert as Tropical Cyclone Rusty moves inland and continues to weaken.
It’s expected to ease below cyclone intensity later today and has been downgraded to a category two after peaking as a category four before it crossed the coast on Wednesday afternoon.
At 5am (WST), the Bureau of Meteorology estimated Rusty was 65km east-northeast of Marble Bar and 190km east-southeast of Port Hedland, where residents have been given the all clear to return home.
The iron ore export town had been expected to bear the brunt of the cyclone but has come through relatively unscathed, with only tree branches littering roads and about 55 homes without power.
The main contributor to the decrease in the 2013-14 expectation from the previous corresponding period was mining, with investment falling by 11.6 per cent, the Bureau of Statistics reported.
The 2013-14 expectation for building and structures was $111.8 billion, down 6.6 per cent from the same period the year before. Mining investment was expected to drop by 8.9 per cent.
A fall of 27.9 per cent in expected mining investment pulled the 2013-14 estimates in equipment, plant and machinery down to $40.7 billion.
While the 2013-14 expectations of capital expenditure was 8.1 per cent lower than the first estimate for the previous corresponding period, it was broadly in line with economists' expectations of between $130 billion to $150 billion, which they said would mean the expected peaking of the mining boom would still be around mid-2013.
While the headline number wasn't crash hot, it looks like the longer-term Capex numbers weren't too bad, the dollar is now up at $US1.0250.
The first estimate of capital expenditure for 2013-14 was $152.5 billion, while the fifth estimate of the expected capital expenditure for 2012-13 was $168.2 billion.
The first estimate of capital expenditure for 2013-14 was expected to have a strong impact on the Reserve Bank's March board meeting next Tuesday.
The dollar has now returned to almost exactly were it was prior to the Capex announcement, at $US.10234.
The new private capital expenditure fell 1.2 per cent in real terms, seasonally adjusted, in the December quarter, official data released this morning shows.
The Australian dollar had been at $US1.0228 but has now fallen below $US1.02.
Investors continued to shrug off caution over the near term earnings outlook for James Hardie, pushing the shares ahead another 25c to $9.75.
The focus remains the emerging upswing in US housing starts, with James Hardie making it clear in its third quarter earnings yesterday the year ahead is looking good, with sales growth expected to exceed costs, which will allow it to expand margins.
And to ensure it profits from the emerging turnaround in US housing starts it is to spend more than $US30 million refurbishing an idled plant on the US west coast, which it intends to start-up early 2014.
The rebound in the US may be slowed by ongoing tight credit conditions, it said, but no recovery is anticipated in Australia.
A quick whip around of the blue chips now:
- BHP is 0.71% higher to $36.95
- Rio is 1.35% higher to $66.90
- Fortescue is 1.2% higher to $4.65
- CBA is 1.26% higher to $66.84
- Westpac is 1.49% higher to $30.65
- Woolies is 1.25% higher to $34.45
- Harvey Norman is 1.1% higher to $2.30
- JB Hi-Fi is 0.87% lower to $12.47
- Ten is 1.52% lower to 33.5 cents
- Qantas is 1.27% higher to $1.59
- Telstra is 0.65% lower to $4.58
Challenger continues to stretch its lead over cross-city wealth rival Perpetual in funds under management, or FUM. Remember FUM is a key driver of revenue for wealth management firms. Challenger, which has gone through substantial transformation in recent years, has seen funds jump 27 per cent to $35.3 billion. Much of Challenger’s exposure is to bonds.
Perpetual’s FUM, which is skewed to equities, was up by 8 per cent to $24.3 billion. The figures come as Challenger’s cash profit jumped 17 per cent to $149 million, with earnings predominantly driven by the Life division. Perpetual’s first half cash profit was up 2 per cent at $35.1 million.
For investors, turnaround story and a play on equity markets. Challenger, which has been supported by a $50 million share buyback, is facing headwinds as the rally in bond markets appears to be reaching an end.
New home sales rose 4.2% in January according to Housing Industry Association. House sales up 4.0% with apartment sales up 4.9%.#breaking — CommSec (@CommSec) February 28, 2013
There’s about a 1 in 3 chance of a 25 basis point rate cut in March, according to the latest futures market data from Credit Suisse.
- Today: 30% chance of a 25bp rate cut
- Previous Day: 31% chance of a 25bp rate cut
Pricing over the next 12 months
- Today: 46 basis points of rate cuts
- Previous Day: 48 basis points of rate cuts
Fund manager Challenger Limited has posted a normalised half-year net profit of $149 million, for the six months to end-December, a 17 per cent increase over the same time last year.
Challenger has pointed to fast-paced growth in sales of annuity products which has helped boost earnings. The fund manager says its retail annuity sales have grown at a compound annual rate of 33 per cent for the last four years thanks to a number of long term drivers: the start of the Baby Boomer retirement wave, changes in retirees ‘‘risk preferences’’ to favour secure income investments while people are living longer in retirement.
Challenger’s life insurance business - Australia’s largest provider of annuities - achieved total sales for the half-year of $1.98 billion, an increase of 55 per cent on the previous corresponding period.
Lonsec private client adviser Michael Heffernan reckons the Woolworth result has energised the ASX today.
‘‘That has just powered the whole market,’’ Mr Heffernan said.
‘‘Whenever a stock goes up more than one per cent after a result it means they have either exceeded expectations or it has just been a great result.’’
Wooloworth shares are now 2.2% per cent higher to $34.76.
Australia’s Port Hedland, home to the world’s biggest bulk export terminal, escaped with only minor damage from a weakening tropical Cyclone Rusty that’s now moving inland into the Pilbara iron ore mining region.
Rusty, now a Category 2 cyclone, made landfall 110 kilometers north of the town yesterday and is located 65 kilometers east-northeast of Marble Bar, the Bureau of Meteorology said.
Port Hedland exports product from mines owned by BHP Billiton, Fortescue Metals Group and Atlas Iron as well as Rio Tinto Group’s shipping terminals at Dampier and Cape Lambert ports shut earlier this week.
Port Hedland, Dampier, Port Walcott and other ports in Western Australia handled iron-ore shipments totaling more than 500 million metric tons last year, or a 43 percent world share, according to Alphabulk. They accounted for 24 percent of demand for Capesizes, the biggest ore carriers, it said.
Prolonged rainfall from Rusty expected over mines owned by BHP and Fortescue ‘‘could lead to more significant long-term loss of production,’’ Alphabulk said. The companies are Australia’s second- and third-largest ore exporters, respectively. Atlas may also be affected, according to a bureau projection.
Dare we say it, a rusty bus?
Ex-dividend today: FAIRFAX MEDIA $FXJ FPO 1.0c. INSURANCE AUSTRALIA GrP $IAG FPO 11.0c. SONIC HEALTHCARE $SHL FPO 25.0c. — CommSec (@CommSec) February 27, 2013
A bit more here on the Woolworths.
The supermarket giant reported that its pubs and poker machines venture, ALH Group, saw revenues jump more than 19 per cent to $759 million for the half, while earnings before interest and tax (EBIT) increase more than 21 per cent to $141 million.
It said this was driven by pub acquisitions during the period and changes to Victorian gaming regulations.
The latter gives the grocery group a much larger share of profits from poker machines it operates in the state. Woolworths' ALH arm now operates more than one-third of the poker machines in Victoria's pubs - 4677 machines - which is about the maximum allowed under current licensing arrangements.
A poker machine. Photo: John Woudstra
With the ASX200 hovering around a gain of 1 per cent, here are some of the best-performed companies in early trade:
- Perpetual: +6.31%
- Imdex: +4.53%
- Aurora Oil & Gas: +3.55%
- Transfield: +3.51%
- Seven Group Holdings: +3.18%
- Boral: +2.74%
- Boral: +2.74%
As we near the end of reporting season, BusinessDay's Glenda Kwek writes that with nearly $40 billion worth of profits handed down over the past month, signs are emerging the recovery in earnings is gaining momentum.
Although the proportion of companies that have beaten expectations for the first half of the 2013 financial year was similar to the last few years, expectations among analysts of future earnings growth have improved.
''For the first time in three years, a majority of companies [54 per cent] are seeing their earnings forecast upgraded,'' Deutsche Bank's head of equity strategy, Tim Baker, said.
And Craig James adds:
So far 133 companies report interim earnings: Aggregate revenue +1.5%, expenses +5.9%, profit -11%, dividends +0.5%, cash -5.7%
— Craig James (@craigjamesOZ) February 27, 2013
Sector by sector on the ASX200:
- Consumer staples: +1.56%
- Info tech: +1.34%
- Energy: +1.15%
- Financials: +1.03%
- Consumer disc: +1%
- Industrials: +0.92%
- Health: +0.75%
Some early stocks price movements among companies which have reported today:
- Aurora Oil & Gas: +3.6% to $3.79
- Challenger: +0.8% to $3.65
- Harvey Norman: +1.3% to $2.31
- Perpetual: +4.4% to $41.21
- Treasury Wines: +2.2% to $5.01
- Woolworths: +1.6% to $34.56
The Australian share market has opened almost one per cent higher.
The benchmark S&P/ASX200 index is up 48.7 points, or 0.97 per cent, at 5,085.3, while the broader All Ordinaries index is up 46.9 points, or 0.93 per cent, at 5,100.00.
On the ASX 24, the March share price index futures contract was up 50 points at 5070, with 8,415 contracts traded.
The main bit of economics news today arrives at 11.30am when the ABS releases capital expenditure data for last three months of 2012. The numbers indicate the amount businesses spent on buildings and equipment, and are expected to show a slowdown in spending.
A Bloomberg survey forecasts 1 per cent growth in the quarter, down from 2.8 per cent in the September quarter. With a rates decision due next Tuesday, these numbers will be factored into the RBA's thinking.
SPI flying yet again, now +50. While it'd suggest economic weakness, in a world searching for yield, a poor #capex report will help the #xjo — David Scutt (@David_Scutt) February 27, 2013
Vale SA, the world’s largest iron-ore producer, posted a record quarterly loss after writing down the value of some of its assets.
Profit missed analysts’ estimates on an adjusted basis.Vale posted a fourth-quarter net loss of $2.65 billion, or 51 cents a share, compared with a profit of $4.67 billion, or 91 cents, a year earlier, the Rio de Janeiro-based company said today in a regulatory filing.
Earnings before interest, taxes, depreciation and amortization, or adjusted Ebitda, declined to $4.39 billion, missing a $4.79 billion average estimate by 14 analysts compiled by Bloomberg.
Chief Executive Officer Murilo Ferreira is selling assets, cutting investments and writing down unprofitable projects as falling metal and mineral prices led last year to its lowest annual profit since 2009.
The company failed to boost iron-ore output in 2012, ceding its title as the world’s second-largest miner by market value to Rio Tinto Group in October and losing market share to its Australian rivals.
Also helping to give some confidence to offshore investors overnight:
#Italy looks to be heading towards some form of coalition gov. good chance that new govt will at least hold the line on Monti reforms..
— Shane Oliver (@ShaneOliverAMP) February 27, 2013
On Woolworths:
‘‘The new management is doing a good job,’’ said Rhett Kessler, a fund manager at Pengana Capital.
‘‘It’s a well-managed franchise, food inflation’s coming back, and there’s operating leverage in the business.’’
The shares closed yesterday at A$34.01, capping a 38 percent gain over the past year that’s outstripped the 18 percent improvement in the S&P/ASX 200 index.
The ACCC has also this year barred the Woolworths acquisition of hardware stores in Ballarat and a hotel in Tasmania. Photo: Glen Hunt
James Packer may be lining up a bet on Sri Lanka, scouting the Indian Ocean island for potential investments as he seeks to build a global casino empire.
Packer, who owns half of casino operator Crown Ltd, met with Sri Lankan ministers this week to discuss hotel and entertainment investment options, according to officials who met with him.
"They have not finalised the area and the amount they are going to invest. The government has asked them to come up with a proposal," Lakshman Yapa Abeywardene, Sri Lanka's Minister of Investment Promotion, told Reuters on Wednesday.
"The government proposed (for) them to invest in a large city hotel in Colombo and go to (the eastern city of) Trincomalee to look into possible investment opportunities."
Treasury Secretary P.B. Jayasundera said Packer had expressed an interest in "integrated tourism", which typically includes hotels, casinos and other entertainment.
A Crown spokesman said the company would not comment about potential investments in Sri Lanka. Analysts said Packer's interest in Sri Lanka was unexpected.
"I would have thought their focus would be more with Southeast Asia rather than somewhere like Sri Lanka," said one Australian-based gaming analyst, who declined to be identified.
Treasury Wines Estates has reported a net profit of $52.3 million for the six months to December, a 30.8 per cent increase from the previous corresponding period.
It also recorded earnings before interest and tax of $73.4 million, a 20 per cent drop from the same period the year before, as the cost of goods sold rose on the back of challenging weather conditions affecting the 2011 vintage and difficult retail conditions.
The company, one of the world's largest wine firms and the former wine arm of Foster's, declared an interim dividend of 6 cents per share, 50 per cent franked.
Treasury Wines Estate's chief executive, David Dearie, said his company was continuing to invest for growth and that the outlook for the global wine industry remained positive.
"Overall the wine industry is edging ever closer to supply and demand balance with the poor 2012 vintage in Europe further reducing global supply," Mr Dearie said in a statement.
"Early signs of the 2013 Australian vintage appear generally favourable with growing conditions characterised by low rainfall in winter and the growing season to date."
Retail reporter Eli Greenblat writes that Woolworths' pre-abnormal profit of $1.247 billion, a gain of 5.5 per cent, is for continuing operations and excludes the one-off impact in the previous half of losses incurred from the sale of its Dick Smith electronics business and the divestment of its property into a new property trust.
Woolworths’ first half profit has grown to $1.15 billion as earnings from its supermarkets rose by six per cent.
The supermarket giant’s net profit in the six months to December 31 was up 19 per cent from $966.9 million in the previous corresponding period.
Earnings from its supermarkets were six per cent higher than the previous corresponding period at $1.65 billion, due to further growth in market share and customer numbers, Woolworths said.
The company declared an interim fully-franked dividend of 62 cents, up from 59 cents in the previous corresponding period.
Aurora Oil & Gas has reported a net profit of $US58.8 million ($57.3 million) for the 2012 financial year, a 92.4 per cent increase from the previous year.
The Texas oil and gas group did not declared a dividend.
The company recorded a 293 per cent increase in revenue for last year to $US295 million. In its fourth quarter, revenue rose 32 per cent from the previous quarter to $US112 million.
"Looking forward to 2013, the company is well-funded for the planned development program at the Sugarkane field," Aurora Oil & Gas said.
"Based on the current drilling program for 2013 and current commodity prices, management expect growth in production, revenue and profitability to continue through 2013."
Challenger Limited has reported an underlying net profit of $149 million for the six months to December, a 17 per cent increase from the previous corresponding period.
The financial services provider also recorded a statutory net profit of $222 million for the period, a 1010 per cent increase from the first-half results of 2011, on the back of investment gains following the recovery of debt markets.
Challenger Limited declared an unfranked interim dividend of 9.5 cents.
The company's chief executive and managing director, Brian Benari, said in a statement that he was "very pleased" with the results.
"Over the last five years we have grown revenues by 48 per cent and normalised profit by 40 per cent, while our expenses have only risen 9 per cent, making us one of the most efficient financial services companies in Australia."
You bought the island so naturally you buy the airline next. If you're tech billionaire Larry Ellison, that is.
The Oracle chief executive added a small Hawaiian airline to his holdings, less than a year after he purchased the vast majority of land on the small Hawaiian island of Lana'i, off the coast of Maui.
Island Air, a Honolulu-based carrier with a handful of island-hopping planes and about 245 employees, will not make any staff changes as part of the sale and will continue normal operations, the company said.
Mr Ellison, the world’s eighth-richest man with an estimated net worth of $US40.7 billion according to the Bloomberg Billionaires Index, has been investing in Hawaii of late. In June, he agreed to buy 98 per cent of Lanai, the state’s sixth- largest island. Forbes Magazine recently named Mr Ellison the sixth-richest man in the world.
Expansion: Oracle CEO Larry Ellison gestures in front of the Linux mascot of penguins during a keynote address. File Photo: PAUL SAKUMA
Lend Lease is selling its Australian aged care business for $270 million, saying it was a non-core asset of the company.
The property group said in a statement to the ASX today that it had signed an agreement with Australian Aged Care Partners to sell the business, which includes 30 facilities - 2338 beds and 563 beds in development.
Lend Lease said it would receive $200 million in cash and a promissory note of $70 million, with the transaction to be completed by the end of March.
The aged care business had been acquired in 2009 as part of the Primelife deal.
Steve McCann, Lend Lease's chief executive and managing director, said the sale was in line with his company's strategy.
"The aged care business is more closely aligned to healthcare services than property and is therefore considered non-core for Lend Lease," Mr McCann said.
Fund manager Perpetual’s first half profit has grown by 19 per cent as it continues to cut costs.
Perpetual made a net profit of $27.3 million in the six months to December 31, up from $22.9 million in the previous corresponding period.
Under its new chief executive Geoff Lloyd, Perpetual has begun a three-year restructure program aimed at achieving $50 million in pre-tax savings each year.
The program produced restructure costs of $6 million in the six months to December, and the associated closure of its Dublin operations also produced other one-off financial impacts.
In the previous corresponding period, Perpetual incurred higher restructure costs and greater losses on the sale of assets.
Looking a bit more closely at the Wall Street gains, the Dow was up 1.27 per cent, S&P 500 was up 1.27 per cent, and the Nasdaq added or 1.04 per cent. Those are the best daily gains since January after the worst decline since November.
"The Fed continues to encourage risk-taking in markets, which is a powerful tool that makes the danger not being long stocks, not in being too long," said Tom Mangan, a money manager at James Investment Research in Xenia, Ohio.
Heading offshore for a moment and Wall Street has played a blinder on good data. A gauge of planned US business spending increased by the most in just over a year in January, a sign businesses were becoming more confident in the durability of the economic recovery.
The case for the economy's resilience was bolstered by another report on Wednesday showing that contracts to buy previously owned homes approached a near three-year high last month. Housing is expected to underpin growth this year.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 6.3 percent, the biggest gain since December 2011. Orders for the so-called core capital had slipped 0.3 percent in December.
"The strong gains in core capital goods orders suggest that business investment activity, which has been one of the sour points of this economic recovery, could provide a meaningful lift to overall economic activity this quarter," said Millan Mulraine, a senior economist at TD Securities in New York.
For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key markets numbers:
- SPI futures are 43 points higher at 5063
- The $A is higher at $US1.0235
- In recent trade in New York, the S&P500 was 1.43% higher at 1518.4
- In Europe, the FTSE100 rose 0.88% to 6325.88
- China iron ore was flat at $US151.90 a metric tonne
- Gold fell $US19.80 to $US1595.70 an ounce
- WTI crude oil rose 40 cents to $US93.03 a barrel
- Reuters/Jefferies CRB index lost 0.11% at 292.90
Good morning everyone. Welcome to the Markets Live blog for Thursday.
Contributors: Thomas Hunter, Jens Meyer, Max Mason
This blog is not intended as investment advice
BusinessDay with agencies
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