Australian Companies Profit Drop 7.8%

Darlington Musarurwa
31 Aug, 2009
New York City

Australian companies gross profits dropped 7.8% in second quarter form the first and declined 14.7% from the quarter a year ago. Reserve Bank of Australia reported today business credit fell 0.3% in July after falling 0.6% the previous month. Lending to businesses also slumped 0.7%.

[R]3:00AM New York, 7:00PM - Australian companies gross profits dropped 7.8% in second quarter form the first and declined 14.7% from the quarter a year ago. Reserve Bank of Australia reported today business credit fell 0.3% in July after falling 0.6% the previous month. Lending to businesses also slumped 0.7% in the review period from a year ago.[/R]

The benchmark stock index fell marginally in Australia as companies’ profits declined 7.8% in the second quarter ended June and business credit eased 0.3% in July, according to government reports.

Investors become cautious after a flurry of results showing falling profits.

In Sydney trading the ASX 200 Index fell 0.2% or 10.5 to 4,479.10. Of the ASX 200 index shares, 86 increased, 101 declined and 13 were unchanged. Ausenco led advancers in the index shares with a rise of 11.3%.

Company Profits Fall 7.8% in Q2

Australian Bureau of Statistics reported today the seasonally adjusted estimate for company gross operating profit dropped 7.8% in the June quarter compared with the three months to March, and declined 14.7% from the same period a year ago.

Wages and salaries shed 1.1% in the three months to June from the previous quarter, but remained unchanged from a year earlier.

Sales of goods and services in manufacturing dropped 1.1% in the June quarter and slipped 7.7% from the comparable year ago period, while inventories dipped 3.4% in the June quarter and fell 5.3% from a year ago.

Business Credit Decline Eases

Reserve Bank of Australia reported today business credit fell 0.3% in July after falling 0.6% the previous month. Lending to businesses also slumped 0.7% in the review period from a year ago.

However total credit provided to the private sector by financial intermediaries increased 0.2% in July from a rise of 0.1% in June.

Housing credit advanced 0.6% in July after increasing by the same margin in June, while other personal credit fell 0.2% in the month and slipped 6.4% from the same period a year ago.

The RBA notes that during the month of July, M3 rose 0.5% and broad money advanced 0.1%.

New Home Sales Rise 0.1% in July

Housing Industry Association reported today that the growth in new home sales was flat at 0.1% after gaining 0.5% in June. Sales in the new home sales in the first six months of the year increased 13% from the previous year on low mortgage rate and government stimulus measures.

Detached house sales jumped 0.3% in July and unit sales dropped 2%.

HIA chief economist Harley Dale said, “Housing finance figures point to an emerging recovery in trade-up buyer and investor numbers, but looking beyond first time buyer-related activity, we’re not as yet at a point where we can talk of a broad-based recovery in private new home demand.”

Gainers & Losers

Ausenco Limited the provider of professional engineering design advanced 11.2% to A$4.84.

Calliden Group Limited fell 10.2% to A$0.305 an insurer said first-half gross written premium rose 7% to $104.4 million from $97.6 million a year ago. Net profit for the first-half fell 33.3% to $2.4 million or 1.01 cents per diluted share compared to net profit of $3.6 million or 1.54 cents per share a year ago.

Carnarvon Petroleum Limited declined 12.5% to A$0.525 after the engaged in oil and gas exploration has completed its planned 2D seismic survey in block L20/50 onshore Thailand.

Energy World Corporation Limited an exploration company plunged 7.3% to A$0.505.

Felix Resources Limited lost 0.5% to A$17.26 after the coal miner and explorer said full-year revenues rose 67.2% to A$755.6 million from A$452.2 million a year ago. Net profit for the full-year rose 42% to A$267.6 million or 136 cents per diluted share compared to net profit of A$188.5 million or 96 cents per share a year ago.

PaperlinX Limited added 5.3% to A$0.690 after the paper manufacturer said full-year revenues fell 5.3% to $7.1 billion from $7.5 billion a year ago. Net loss for the full-year was $798.2 million compared to net profit of $72.2 million a year ago.

Transpacific Industries Group Ltd the principal activities include solid waste, including its collection rose 8.8% to A$1.36.

Earnings Review

Felix Resources reported today that its full year profit for the year ending June 30 jumped 41% to A$267.4 million from A$188.5 million a year earlier on high prices for steelmaking coal and power station coal.

ANZ said today profit in the 10 months ended July from the same period a year earlier. Net loans and advances grew 3% in the review period. Charges are however forecasted to increase 20% from A$1.4 billion recorded in the first half.