Australian Index Up 1.1%; IAG Drops, Macarthur Coal Rises

Marcus Jacob
14 Feb, 2011
New York City

Australian stocks closed higher on mixed earnings reports. Macarthur Coal estimated full year net of at least $138 million. IAG dropped after it reported higher than expected losses from Queensland floods and in the UK.

[R]4:00 PM, February 13, 2011 Sydney – Australian stocks closed higher on mixed earnings reports. Macarthur Coal estimated full year net of at least $138 million. IAG dropped after it reported higher than expected losses from Queensland floods and in the UK.[/R]

S&P ASX 200 index gained 54.90 or 1.1% to 4,935.80 and All Ordinaries index increased 52.8 or 1.06% to 5,023.40.

The Australian dollar closed at $1.0042.

Macarthur Coal estimated full year net earnings in the range of $138 million to $143 million.

Insurance Australia Group said its losses from the recent floods in Queensland and Cyclone Yasi and the Perth bushfire are running ahead of its reserves.

IAG said its first net would be $161 million compared to $329 million a year ago period.

The company said the damages for the year so far has reached $300 million and are likely to exceed the damage reserve of $435 million. The insurer’s UK business has also been suffering.

The insurer also guided full margins to decline between 9% and 11% from the previous estimate of 10.5% to 12.5%. IAG stock dropped as much as 5% in trading.

Internet broadband network nationwide got an endorsement from a private consultant Greenhill Caliburn and cited wireless network as a major threat to the project’s viability.

The consultant said that the project is likely to achieve its intended goals as long as the widespread acceptance of the broadband quickly achieved.

The report also said that the NBN Corp will be able to raise funds as planned by the government contrary to widespread skepticism among brokers.

If users adopt other technologies to access Internet like the wireless networks, then the NBN Corp may have difficulty in achieving its financial targets.

Stock Movers

Allied Gold declined 1 cent to 59 cents and said net profit in the first half more than doubled.

BHP Billiton increased 90 cents to $47.28 to Rio Tinto gained $1.22 to $88.50. Macarthur Coal rose 23 cents to $12.58.

Western Areas rose 26 cents to $6.52 after the company guided higher production in the current fiscal year.

Leighton Holdings gained 26 cents to $30.97 after the construction and builder said first half profit declined 25% and estimated full year net to fall at least 20% to around $480 million.

Leighton said its interim dividend will be cut 5 cents to 60 cents and half-year net declied to $218 million.

Specialty Group closed unchanged at $1.26 and Salmat declined 16 cents to $4.44 after the company first half sales declined.