Zinifex, Wesfarmers Rise 7%

123jump.com Staff
22 Feb, 2008
New York City

Caltex Australia plunged 11% after it forecasted tighter refining margin this year prompting earnings worries. Wesfarmers reported 53.3% rise in first half profit including results from the recently acquired Coles. Sims Group reported fiscal first half 2008 profit decline of 9.5% to $102 million. Chinese steelmakers appear to reject overtures to raise iron ore prices by 71% from Rio Tinto. Takeovers Panel ruled that shareholders of Zinifex have a right to cancel their acceptance of the offer.

[R]7:00PM New York, 11:00AM Sydney – Caltex Australia plunged on the lowered outlook on refining margins in 2008. Sims Group net profit fell 9.5% but consolidated profit at Wesfarmers surged 53.3% on Coles acquisition.[/R]

Market Sentiment

ASX 200 index fell 0.4% or 23.5 to close at 5,559.90

The Preliminary market turnover was 2.01 billion shares worth $6.39 billion, with 551 stocks moving up, 625 moving down, and 346 unchanged.

Market Driver

Wesfarmers, which acquired Coles last year, posted first half earnings rose by 53.3%. Net profit for the half-year ending in December was a record $601 million, up from $392 million in the prior corresponding period.

The consolidated total revenue rose 107.9% to $9.81 billion. The consolidated result for the first time included Coles, acquired in November, and reflected strong sales in the Coles businesses over Christmas.

Coles contributed $357 million in earnings before interest and tax. Wesfarmers declared an interim dividend of 65 cents. Wesfarmers share gained 6.8%.

Gainers and losers

Of the ASX 200 index stocks, AED Oil Limited led the gainers with a rise of 18.4% followed by increases in Minara Resources of 8.6%, in Arrow Energy Limited of 7.3%, in Zinifex Limited of 7.3%, and in Harvey Norman of 6.8%.

Of the ASX 200 index stocks, Caltex Australia Limited led the decliners with a fall of 10.8% followed by losses in Austar United of 5.7%, in DB RREEF Trust of 5.5%, in Coeur D''alen of 5.5% and in City Pacific Ltd of 4.8%.

Chinese steelmakers reject Rio''s demand

The largest buyers of iron ore, Chinese steelmakers, today indicated that it would reject Rio Tinto Group''s demand for a minimum 71% increase in the raw material.

Two people familiar with the negotiations, who declined to be named, disclosed the deadlock in negotiations as reported on Bloomberg news service. The people indicated that the steelmakers could only accept a 65% price increase.

Rio Tinto rose 1.4%.

Caltex share falls 11% after lower profit forecast

The nation''s biggest oil refiner, Caltex Australia Ltd''s share fell 11%, the most in six years, after forecasting lower profits from processing crude oil this year.

The company also indicated that it cut its second-half dividend, citing rising operating costs and squeezed refining margins and they may decline on the rising dollar. The company reported full-year profit within a December forecast range.

Australian oil companies have spent record $34 billion on minerals and energy projects to boost output to meet soaring demand.

Sims post $102.2 million in net profit

The world''s biggest recycler of scrap metal, Sims Group Limited Group chief executive, Jeremy Sutcliffe, today announced a net profit after tax for the half year ended 31 December 2007 of $102.2 million.

Sales revenue increased 4% to $2.73 billion on the first half of the 2007 financial year. Earnings before interest, tax, depreciation and amortization were 3.6% lower at $211.3 million from the year ago. Net profit after tax was lower at 9.5% from a year ago to $102.2 million and earnings per share declined 10.5% to 81.1 cents.

Sales in tonnage declined 0.7% to 4.7 million tons from a year ago.

North American revenues, 52% of total revenues, rose 12.6% in the first half of fiscal 2008 but in Australian dollar were flat. European revenue, 28% of total revenues, rose 15.6% from a year ago but rose 7% in Australian dollars.

Sutcliffe was upbeat that earnings for this quarter could surpass those for the first two quarters after a surge in scrap metal prices. Sims fell 0.3%.

Takeovers Panel rule on Zinifex offer

The Takeovers Panel today ruled that Allegiance shareholders who accepted Zinifex''s $1 per share offer after 5.00 pm Melbourne time but before 7.30 pm on February 8, 2008 have a right to apply to Zinifex to cancel their acceptance of the offer, as published in a letter dated Feb 22, 2008 on the website of Allegiance.

This was after the Panel had made a declaration of unacceptable circumstances and final orders regarding Zinifex Ltd''s $745 million hostile takeover bid for nickel miner Allegiance Mining NL.

The Takeovers Panel ordered Zinifex to halt the processing of acceptances last week, after Allegiance claimed that some of its shareholders including 5% shareholder Lion Selection Group Ltd – had accepted the offer, wrongly believing it was about to close or had already closed.

Zinifex''s original offer was scheduled to close at 1900 AEDT on February 8th, but 30 minutes later, Zinifex''s announcement that it had extended its $1 per share offer for the two more weeks as reported on the filing on the Australian stock exchange website.

The Takeover Panels said Zinifex''s letter advising shareholders that the offer had been extended was collected by Australia Post at about 1700 AEDT on February 8.

Zinifex shares gained 7.3%.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 187.82 or 1.37% to 13,500.46, in Hong Kong Hang Seng index decreased 317.96 or 1.35% closed to 23,305.04. Australia ASX 200 index decreased 23.50 or 0.42% to close 5,559.90.

In South Korea Kospi Index decreased 17.91 or 1.05% to close at 1,686.45, in Thailand SET index closed lower 0.27 or 0.03% to 826.86 and Indonesia JSE Index edged increased 6.97 or 0.25% to 2,741.18. Sensex index in India decreased 385.61 or 2.17% to 17,349.07.