Australian Stocks Flat; Billabong Soars 13%, Fortescue Net Surges Seven-fold

Marcus Jacob
18 Feb, 2011
New York City

Stocks in Australia edged lower today but gained 1% in the week on mixed corporate earnings. Fortescue Metals first-half net jumped seven-fold and Sims Metals Management net rose 23.6%. ANZ Banking Group underlying profit increased 27%. Surfwear retailer Billabong soared 13%.

[R]5:00 PM Sydney – Stocks in Australia edged lower today but gained 1% in the week on mixed corporate earnings. Fortescue Metals first-half net jumped seven-fold and Sims Metals Management net rose 23.6%. ANZ Banking Group underlying profit increased 27%. Surfwear retailer Billabong soared 13% after it reaffirmed flat earnings for the year.[/R]

The ASX 200 index edged lower 1.70 to 4,936.70 and the All Ordinaries index closed up 0.1 to 5,026.1.

The Australian dollar at close traded US$1.012 and spot gold traded 0.8% higher to US$1,385.00.

Fortescue Metals founder and chief executive Andrew Forrest lost an appeal in the Australian Federal Court. The court upheld the appeal by the Australian Securities and Investments Commission against Fortescue that it misled investors in 2004.

The decision by the full bench of the Federal Court may lead the removal of Andrew Forrest from its role as director of the company that he founded and turned it into $20 billion market cap.

The ASIC alleged that in 2004 Fortescue misled investors and said that contracts with Chinese customers were “binding” and infrastructure deals with Chinese were never completed.

The lower court ruled in 2009 that the company did not mislead investors and was not found guilty of deceptive practices.

The latest Federal Court ruling found Forrest negligent in its directors’ obligations.

Stock Movers

ANZ Banking Group declined 76 cents or 3% to $24.89 after it reported first-half underlying net rose 27%.

Billabong surged 6.4% to $8.51 after the company reaffirmed its full-year earnings outlook to be flat in constant currency. The retailer also lowered interim dividend to 16 cents from 18 cents in the period a year ago.

Sales in the first half declined 16% to $834.9 million from $721 million a year ago period and net declined 18% or fell 10% in constant currency to $57.2 million from $63.4 million a year ago.

Fortescue Metals increased 1 cent to $6.88 and it reported first-half profit soared seven-fold to US$314 million and declared its first dividend of 3 cents a share.

James Hardie increased 0.9% to $6.62 and the company said operating profit declined 30% to US$21 million in the third quarter on sales decline of 4% to US$272.6 million.

The building products maker lowered its full-year outlook to between US$105 million from US$115 million from the previous guidance between US$110 million and US$125 million.

The U.S. focused company is required to make 35% of its cash flow into asbestos industry fund and missed payment in 2009 and is likely to miss again in 2012 if it loses its tax appeal in Australia.

Sims Metals Management increased 39 cents to $19.33 after it reported first half net rose 23.6% to $49.3 million.