Sydney Stocks Rise; Westpac Net Up 33%

Darlington Musarurwa
16 Feb, 2010
New York City

Australian stocks closed higher after Westpac reported better than expected earnings. Westpac first quarter earnings surged 33%. Foster

[R]3:00 AM New York, 7:00 PM Sydney – Australian stocks closed higher after Westpac reported better than expected earnings. Westpac first quarter earnings surged 33%. Foster’s Group net declined 13% in the first half. Primary Health Care Limited plunged 12% after the first half revenues declined.[/R]

Australian stocks rose marginally after Westpac profit in the December quarter rose more than projected at A$1.6 billion.

The lender increased rates two times more than the hikes following the increases in the Reserve Bank of Australia’s reference rates.

In Sydney trading ASX 200 Index gained 0.5% or 22.3 to 4,567.80.

Of the ASX 200 index stocks 83 rose, 94 fell, and 23 were unchanged. Monadelphous Group led gainers in the index shares with a rise of 8.2% followed by Seek Ltd increasing 6.7%.

The Australian dollar edged up 0.6% to 89.34 US cents.

Reserve Bank Awaits Global Developments

Reserve Bank of Australia reported today in minutes of the monetary policy meeting of the board held on February 2 that the central bank elected to keep the key rate on hold at 3.75% in order to monitor developments on the domestic and international financial markets.

Board members did not regard outlook needed a rate increase at every meeting.

In addition, the central bank noted that withdrawal of the monetary stimulus will allow the board flexibility in later decisions.

“This allowed the possibility of waiting to receive some more information on how the economy was responding to the monetary tightening that had already occurred. Such a course would also allow time to monitor events overseas,” said the RBA.

Westpac Profit Rises 33%

Westpac Banking Corp reported today that profit in the first quarter ended December rose 33% to A$1.6 billion from A$1.2 billion in the same period a year ago, ahead of consensus bank analysts estimate of $1.25 billion.

Impairment charges dropped 50% in the period to A$400 million compared with A$800 million a year ago. Lending increased 1.7% in the review period.

The lender increased its rate by 45 basis points in December after the Reserve Bank’s 25 basis point increase, while its standard variable rate of 6.76% is above the rates offered by other large banks in the range from 6.49% to 6.66%.

Westpac chief executive officer Gail Kelly said stressed assets are now showing signs of stabilizing while the commercial property outlook has improved.

Foster’s Group H1 Profit Drops

Beer and winemaker, Foster’s Group first half profit dropped 13.5% to A$355.7 million from A$411.3 million in the comparable year ago period, falling the most since the December 2005 quarter.

A rising Australian dollar lowered EBIT by A$83 million.

CUB, the company’s Australian brewing business increased earnings before income and taxes by 6.6% to A$486.4 million. Revenue rose 4.7%.

However, earnings from wine in Australia and New Zealand fell 1.1% to A$37 million and in North America profit decreased 62% to A$43.8 million.

The company declared a first-half dividend of 12 cents, similar to last year.

ASX Movers

Primary Health Care Limited led the decliners in the S&P ASX 200 index with a loss of 11.8% followed by losses in iSOFT Group Limited of 11.2%, in Prime Infrastructure Holdings Ltd of 5.1%, in Crane Group Limited 3.6% and in Healthscope Limited 3.1%.

Monadelphous Group Limited led gainers in the S&P ASX 200 index with a rise of 8.1% followed by gains in SEEK Limited 6.7%, in Westpac Banking Corporation of 6.1% and in OneSteel Limited of 5.5%.

Other Movers

Commonwealth Property Office Fund closed unchanged at A$0.92 after the real estate investment trust said first-half net profit was A$33.4 million compared to net loss of A$298.6 million a year ago.

Foster’s Group Limited decreased 2.1% to A$5.44 after the maker of alcoholic beverages said first-half revenues fell 4.7% to A$2.40 billion from A$2.52 billion a year ago. Net profit for the first-half fell 13.5% to A$355.7 million or 18.4 cents per diluted share compared to net profit of A$411.3 million or 21.4 cents per share a year ago.

Macmahon Holdings Limited closed unchanged at A$0.64 after the civil construction and mine contracting company said first-half revenues fell 11% to A$656.3 million from A$734.8 million a year ago. Net profit for the first-half rose 52.5% to A$21.5 million or 2.92 cents per diluted share compared to net profit of A$14.1 million or 2.58 cents per share a year ago.

Mirvac Group rose 1.4% to A$1.45 after the residential developer said first-half revenues fell 13% to A$703.5 million from A$809.7 million a year ago. Net profit for the first-half was A$47.2 million or 1.66 cents per diluted share compared to net loss of A$645.7 million or 51.28 cents per share a year ago.

OneSteel Limited gained 5.5% to A$3.40 after the producer of the alloy said first-half revenues fell 28% to A$2.98 billion from A$4.12 billion a year ago. Net profit for the first-half fell 48.6% to A$117.4 million or 8.84 cents per diluted share compared to net profit of A$228.3 million or 23.85 cents per share a year ago.

Primary Health Care Limited plunged 11.8% to A$4.89 after the pathology services company said first-half revenues fell 1.3% to A$652.6 million from A$661.3 million a year ago. Net profit for the first-half rose 566% to A$76.6 million or 16.5 cents per diluted share compared to net profit of A$11.5 million or 10.0 cents per share a year ago.

Westpac Banking Corporation increased 6.1% to A$24.74.