Sydney: ANZ, Woolworths Rise; QBE Drops

Darlington Musarurwa
26 Feb, 2010
New York City

Positive earnings drove the market sentiment. Higher commodities prices also contributed the gains in the benchmark index. ANZ profit surged 16% to A$1.6 billion in January. Woolworths first half profit increased 11.4% to A$1.1 billion.

[R]3:00 AM New York, 7:00 PM Sydney – Positive earnings drove the market sentiment. Higher commodities prices also contributed the gains in the benchmark index. ANZ profit surged 16% to A$1.6 billion in January. Woolworths first half profit increased 11.4% to A$1.1 billion.[/R]

Australian stocks gained 1% driven by financial and commodity stocks as ANZ Bank reported that profit in the four months to January gained, placing the lender on track to reach a six-month annualized net profit of A$2.4 billion.

In Sydney trading ASX 200 Index climbed 1% or 43.6 to 4,637.70. Gold prices added 1% to $1,108 per ounce and crude oil prices jumped 0.4% to $78.5 per barrel.

Of the ASX 200 index stocks 90 gained, 88 dropped, and 22 were unchanged. Eldorado Gold-CDI led gainers in the index shares with a rise of 5.5% on rising gold prices.

The Australian dollar increased 0.2% to 88.98 U.S. cents.

ANZ Profit Gains 16% in January

ANZ reported today that net profit for the four months ended January 31 rose 16% to A$1.6 billion from the same period a year earlier on higher earnings in core business and lower provisions for loans losses.

Income growth in the period was 8%, while group margins gained 14 basis points on the second half of 2009 reflecting a recovery of higher funding costs and more sustainable pricing for risk.

The provision charge in the period was A$670 million, but the full year charge is expected to be “modestly higher.”

So far in the year, loan loss provisions are down 35% compared to average run rate in the fiscal 2009.

Customer deposits increased 2.5% from the end of financial year 2009 driven by increases in Australia retail demand and strong performance in Asia Pacific institutional deposits.

ANZ Chief Executive Officer Mike Smith said, “There are however good reasons for caution about the outlook at this early stage of the year. We are already seeing a sovereign debt crisis in Europe and there is likely to be further volatility as the global financial crisis continues to work its way through the system.”

Woolworths Profit Rise 11.4% to A$1.1 billion

Woolworths reported today that its net profit in the 27 weeks ended January 3 advanced 11.4% to A$1.1 billion.

Sales, excluding petrol, increased 6% to A$27.2 billion and rose 4.2% including fuel.

The retailer increased interim dividend 10.4% to 53 cents per share or A$657 million.

Woolworths also said after the completion of the A$400 million share buyback program announced today, the company’s balance sheet and credit matrix will remain strong.

Net profit in the current fiscal 2010 is estimated to grow in the range of 8% to 11% as sales are projected to grow in the upper single digits.

ASX Movers

QBE Insurance Group Ltd led the decliners in the S&P ASX 200 index with a loss of 6.9% followed by losses in Eastern Star Gas Limited of 5.6%, in Energy World Corporation Limited of 5.4%, in Whitehaven Coal Limited 4.7% and in Toll Holdings Limited 4.2%.

Woolworths Limited led gainers in the S&P ASX 200 index with a rise of 5.4% followed by gains in AGL Energy Limited 4.1%, in Infigen Energy of 4.0% and in Australia and New Zealand Banking Group Limited of 4.0%.

Other Movers

AGL Energy Limited advanced 4.1% to A$14.37 after the natural gas wholesaler posted a 22% rise in first half underlying profit and has maintained its full year guidance as it expects a weaker second half.

Australia and New Zealand Banking Group Limited rose 4.0% to A$23.14 after the lender four month results showed underlying profit climbed 16% to A$1.6 billion in the period to Jan. 31.

Crown Limited climbed 2.1% to A$8.00 after the casino owner swung to a net profit for the first half of fiscal 2010, after solid growth in its Australian casinos.

Harvey Norman Holdings Limited rose 1.5% to A$3.83 after the furniture and electronics retailer said first half revenues fell 7% to A$715.6 million from A$770.4 million a year ago. Net profit for the first half rose 60% to A$158.9 million or 15 cents per diluted share compared to net profit of A$99.3 million or 9.4 cents per share a year ago.

Infigen Energy gained 4% to A$1.28 after the wind power producer was upgraded to “neutral” from “underperform” at Credit Suisse Group AG.

Newcrest Mining Limited the gold producer added 1.9% to A$31.34.

Perpetual Limited increased 2.7% to A$36.32 after the fund manager was upgraded to “neutral” from “underperform” at Credit Suisse Group AG.

QBE Insurance Group Ltd dropped 6.9% to A$21.40 after the insurer said 2009 net earned premium rose 10% to A$12.15 billion from A$11.09 billion a year ago. Net profit for the year rose 6% to A$1.97 billion or 192.8 cents per diluted share compared to net profit of A$1.86 billion or 205.5 cents per share a year ago.

Woolworths Limited increased 5.4% to A$26.84 after the retailer earnings increased and announced plans to buyback A$400 million of stock.