Australian Dollar Edges Up, Investments to Expand 32%; Origin Energy Down

Marcus Jacob
24 Feb, 2011
New York City

Australian stocks closed lower tracking markets in Asia but the Australian dollar edged up after businesses investment is expected to increase 32% in the next financial year. Origin Energy declined after it lowered outlook. Pacific Brands fell 15% after it reported a loss.

[R]4:30 PM Sydney – Australian stocks closed lower tracking markets in Asia but the Australian dollar edged up after businesses investment is expected to increase 32% in the next financial year. Origin Energy declined after it lowered outlook. Pacific Brands fell 15% after it reported a loss. Toll Holdings gained on better than expected earnings.[/R]

Stocks in Australia traded lower as investors worry that continued turmoil in Libya and the Middle East will keep oil near $100 a barrel and hurt the nascent economic recovery in the developed world.

However, the Australian dollar edged higher after businesses prepare to invest more in the next financial year as resource industry expands.

The ASX 200 index declined 36.60 or 0.8% to 4,809.30 and All Ordinaries Index fell 34.50 or 0.7% to close at 4,901.10.

The Australian dollar edged up US$1.002 and gold closed at US$1,430 an ounce.

The Australian dollar surged after the Australian Bureau of Statistics said that businesses plan to increase investment by 32% from the current year for the year ending in June 2012.

Miners are expected to invest as much as $100 billion in several energy projects on the coast of Australia. Three large projects to extract natural gas are driving the investments. The Gorgon LNG project operated by Chevron, BG Group and a consortium led by Santos are working on $74 billion of projects.

The ABS also indicated capital spending in building and equipment rose 1.3% to $29.7 billion in the quarter to December.

Pacific Brands Asset Write Down

Pacific Brands, the apparel maker reported first-half declined after it wrote down assets and took a restructuring charge of $9.4 million. The company declared net loss of $166 million on write-down of $175 million. The net profit a year ago was $22 million.

Sales declined to $852 million and excluding the discontinued businesses fell only 2.3%. Underlying profit in the period rose 64% to $58 million as the company shifted most of its production to China and increased operating margins.

Origin Energy Lowers Outlook

Origin Energy reported first-half net loss of $136 million compared to a gain of $371 million a year ago. Underlying profit declined to $340 million from $355 million, excluding one-time charges.

Revenues in the first half rose 7% to $4.6 billion and interim dividend of 25 cents a share and the company also lowered full-year earnings growth outlook to between 10% and 15% from 15% increase earlier estimated.

Toll Holdings Net Rises

Toll Holdings said first-half revenues increased 28% to $4.2 billion on acquisitions and net profit in the period rose to $175 million.

Earnings before interest and tax rose 20% to $253.90 million but domestic forwarding business rose only 1% to $562 million. However, resource industry oriented business increased 7% revenues to $371 million.

Stock Movers

Banks, insurance and miners led the decliners in Sydney trading.

Westpac declined 18 cents to $23.49 and Commonwealth Bank decreased 46 cents to $52.73 and NAB fell 2 cents to $25.80.

BHP Billiton declined 0.8% and Rio Tinto fell 71 cents to $84.25. Newcrest, Australia’s largest independent miner increased 17 cents to $39.11.

Pacific Brands dropped as much as 15% after it reported first-half loss of $166 million.

Oil Search increased 1 cent to $6.95 and Woodside Petroleum declined 63 cents or 1.5% to $41.85. Origin Energy fell as much as 5.6% to $15.56.

Fairfax decreased 7.5 cents to $1.34 after it reported net profit rose 15.8% to $172.3 million for the six-month period ending on December 26.

Insurance Australia Group declined 4 cents to $3.63 after it reported 51% decline in first-half net to $161 million and lowered its full year outlook.

Suncorp Group declined 21 cents to $8.39 and QBE fell 4 cents to $18.25.

Aristocrat Leisure added 2 cent to $3.18 after it swings to 2010 net profit of $77.19 million compared to a loss of $157.8 million a year ago.