Australian Capital Spending Falls 5.2%, Qantas Cuts 5,000 Jobs

Marcus Jacob
27 Feb, 2014
New York City

Australian stocks declined after December quarter capital investment fell more than expected 5.2%. The spending is expected to fall further in the current quarter. Qantas confirmed its plan to trim 5,000 jobs.

[R]5:00 PM Sydney – Australian stocks declined after December quarter capital investment fell more than expected 5.2%. The spending is expected to fall further in the current quarter. Qantas confirmed its plan to trim 5,000 jobs.[/R]

Australian indexes closed lower and the dollar eased in international trading.

Market sentiment was weak at the opening after a mixed close in international trading and Qantas announced another job cut.

The indexes declined more after one hour of trading after the release of capital spending data from the Australian Bureau of Statistic.

The statistics agency said capital spending by businesses declined 5.2% in the December quarter and a measure of intentions of future spending dropped 17.7% from a year ago period. Mining capital spending outlook index plunged 25%.

Australian dollar slipped to 89.44 U.S. cents and in stock market trading turnover fell to 858 million shares worth $4.4 billion.

The ASX 200 index fell 25.60 to 5,411.40 and the broader All Ordinaries slipped 26 to 5,421.

Stocks in Review

Rio Tinto fell 37 cents to $66.60. BHP lowered 20 cents to $38.38. Woodside Petroleum Limited jumped 29 to $38.15.

Westpac slid 2 cents to $33.54.

Nine Entertainment Co Holdings Ltd gained 0.4% to $2.29 after the media company reported revenue in the first-half ending in December rose to $799.7 million from $651.1 million a year ago.

Net in the period swung to a profit $31.7 million compared to a loss of $94.1 million a year earlier.

Qantas Airways Limited plunged 9.1% to $1.15 after the airline company said revenue in the first-half ending in December dropped 4% to $7.9 billion from $8.24 billion a year earlier.

Net in the period swung to a loss $235 million compared to a profit of $111 million for the same period a year earlier.

The Australian flag carrier said it will eliminate approx 5,000 jobs to reduce $2 billion in costs over three years.

Qantas also announced an agreement with Brisbane Airport to sell and leaseback airport terminal for $112 million.

Transfield Services Limited tumbled 11.9% to 85 cents after the infrastructure developer stated revenues in the first-half ending in December slipped 2.7% to $1.81 billion from $1.86 billion a year ago.

Net in the first-half swung to profit $4.6 million compared to a loss of $246.8 million a year earlier.

Transfield won new contracts worth 190 million with QGC Pty Ltd in Queensland and Chorus in New Zealand for the Ultra-Fast Broadband network.

Air New Zealand closed up 1 cent to $1.76 after the New Zealand-based airline said revenue in the first-half ending in December fell 1.5% to NZ$2.35 billion.

Net profit in the period surged 40% to NZ$140 million compared to NZ$100 million a year ago period.

Air New Zealand holds 24% stake and is the largest shareholder in Virgin Australia. Virgin share closed unchanged at 35 cents.