Australian Stocks Fall; Suncorp, Net Drops

Darlington Musarurwa
24 Feb, 2009
New York City

Australian stocks fell. Suncorp reported today that its net profit after tax in the six months ended December 31 dropped 33% to A$258 million. The company also replaced its chief executive. Aristrocrat Leisure, the second largest slot machine maker reported second half net dropped 75%.

[R]3:00AM New York, 7:00PM Sydney - Suncorp’s profit falls 33% to A$258 million in the first half. Australian Consumer and Competition Commission assess Chinese investments.[/R]

Australians stocks fell fractionally as market weaknesses persisted on the back of dropping earnings and a management shake-up at Suncorp.

In Sydney trading ASX 200 index fell 0.6% or 19.6 to 3,331.60.

Of the ASX 200 index stocks, 72 rose, 109 dipped, and 19 were unchanged. Virgin Blue Holdings led advancers in the index shares with a rise of 14.6% followed by Emeco Holdings rising 12.5%.

Australia to Assess Chinese Investments

Australian Consumer and Competition Commission is currently inviting submissions from groups that are likely to be affected by Chinese investments in Australia.

Entities that are likely to be affected by $19.5 billion investment by Aluminum Corp. of China into Rio Tinto are expected to make their representations by March 5, while groups that will be affected by the A$2.6 billion acquisition of OZ Minerals by China Minmetals Group are expected to make submissions by March 12.

The ACCC is assessing impact Chinalco’s undertaking to purchase $7.2 billion of convertible bonds and extend $12.3 billion on shares in Rio Tinto’s mines.

Suncorp Profit Falls 33%

Suncorp reported today that its net profit after tax in the six months ended December 31 dropped 33% to A$258 million, and profit before tax and bad debts increased 39% to A$448 million.

General Insurance profit before tax in the period edged up 47% to A$253 million on strong growth written premiums.

The company noted that after the recent capital raising, core Tier 1 capital ratio has risen to 11% and the minimum capital adequacy ratio stood at 12.8%.

Suncorp also lowered its interim dividend to 20 Australian cents from 52 Australian cents a year ago.

Chairman John Story also announced a management shake-up in which chief executive officer John Mulcahy will leave the company on March 2. Chief financial officer Chris Skilton will assume the acting chief position.

In addition, Suncorp forecasts full year debt expense for the year ending June 30 to 100 to 130 basis points of gross loans, advances and other receivables.

In General Insurance, gross written premiums will be 4% to 6%.

Aristrocrat Leisure Net Falls 75%

Aristocrat Leisure Limited, the world’s second-largest maker of slot machines said second-half net profit fell 75% to A$30.8 million compared to net profit of A$121.3 million, a year ago.

Aristocrat Leisure Limited, in the last one year traded as high as A$11.05 in April 2008 and as low as A$3.31 in February 2009. Based on the yesterday’s closing price of A$3.60 the company has market cap of A$1.67 billion.

Gainers & Losers

Virgin Blue Holdings led advancers in the ASX 200 index shares with a rise of 14.6% followed by increases in Emeco Holdings of 12.5%, in HFA Holdings of 8.3%, in PanAust Ltd. of 6.9%, and Austar United of 6.5%.

Macquarie Countrywide led decliners in the ASX 200 index shares with a decline of 23.1% followed by losses in Goodman Group of 21.1%, in Ausenco Ltd. of 19%, in Duet Group of 13.9% and Macquarie Office of 12%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 107.60 or 1.46% to 7,268.56, Hang Seng index in Hong Kong decreased 376.58 or 2.86% closed to 12,798.52, CSI 300 index in China lower 108.63 or 4.51% closed to 2,301.85. ASX 200 index in Australia decreased 19.60 or 0.58% closed to 3,331.60. The KL Composite index in Malaysia higher 6.24 or 0.70% closed to 894.07.

The Kospi Index in South Korea decreased 35.67 or 3.24% to close at 1,063.88. SET index in Thailand closed lower 3.67 or 0.84% to 431.32 and JSE Index in Indonesia decreased 16.57 or 1.26% closed to 1,295.87. The Sensex index in India decreased 21.15 or 0.24% closed to 8,822.06.