Australian Stocks Fall, AWB Net Drops

123jump.com Staff
10 Feb, 2009
New York City

Australian market averages fell after a report from National Australia Bank showed business confidence declined to a record in January. Investor sentiment was further weakened after AWB cautioned its first half profit may drop 55% in the first half.

[R]3:00AM New York, 7:00PM Sydney - Australian business confidence falls in January. AWB projects 55% drop in the first half profit.[/R]

Australian market averages fell after a report from National Australia Bank showed business confidence declined to a record in January after a bounce induced by the government''s stimulus package in December.

Investor sentiment was further weakened after AWB cautioned its first half profit may drop 55% in the first half.

In Sydney trading ASX 200 index fell 0.6% or 19.9 to 3,488.70.

Of the ASX 200 index stocks, 70 rose, 112 declined, and 18 were unchanged. JB Hi-Fi Ltd. led advancers in the index shares with a rise of 17.4% followed by Kagara Ltd increasing 16.7%.

Australian Business Confidence Drops

National Australia Bank reported today that the country''s business confidence index dropped 12 points to –32 in January, as business conditions slipped 5 points to an overall reading of –11.

Confidence in retailing & wholesaling slipped 51 index points, while manufacturing, construction and transport dropped to recessionary levels.

Trading fell 7 points to –4 after the government stimulus-inspired bounce recorded in December.

The survey notes that employment remained unchanged at -17 index points.

Forward orders rose 4 points to -20 index points, but capital spending declined to -21 index points and capacity utilization fell 0.4 points to 80.3.

Exports declined 8 points to -33 points in January – a fall of 23 points in the last two months. Labour costs also fell to 4% in the review period after being flat in December.

Annual retail prices advanced 0.2 points to 3.7% in January, as purchase costs also edged higher to 7.2%.

National Australia Bank however forecasts that there will be a moderate recession in 2009, with the GDP expected to shrink to 0.25% in 2010.

In addition, a budget deficit of A$50 billion in fiscal 2009/2010 is projected on continued government intervention.

AWB Forecasts 55% Drop in H1 Profit

AWB cautioned today that its first half profit will drop between 45% and 55% from A$22.3 million recorded in the comparable period a year ago.

On an underlying earnings basis, interim profit is expected to slip between 55% and 65% from A$64.6 million a year ago.

AWB managing director Gordon Davis said the lower than expected volumes from the grainflow storage operations were received due to drought in the eastern states.

The company further forecasts a wheat pool with volumes in the range of 2.5 million tons to 3 million tons, the first time since 1945 AWB hasn''t had a monopoly over bulk wheat exports.

“Such forecasts assume a continuation of current slow trading conditions in the coming two months. The full year result will largely depend on improved seasonal conditions in the second half of the financial year,” said Davis.

Gainers & Losers

JB Hi Fi led advancers in the ASX 200 index shares with a rise of 16.7% followed by increases in Kagara Ltd of 16.7%, in EMECO Holdings of 13.5%, in PMP Ltd. of 11.4%, and HFA Holdings of 9.1%.

Lynas Corp. led decliners in the ASX 200 index shares with a fall of 39.6% followed by losses in AWB Ltd of 25%, in Australia Wealth Management of 10.9%, in Babcock & Brown of 8.3%, and CSR Ltd of 6.9%.