May’s Confession Season begins with a bang
The May 2016 Confession Season has begun with a bang. Already we have seen dividend cuts (ANZ), earnings savaged (SurfStitch), CEO resignations (CoverMore and SMS Management & Technology), an expected recurring hole in earnings (Telstra) and severe competition (Woolworths). A summary follows:
ANZ: Interim dividend cut from $0.86 to $0.80 per share as cash profit fell 24 per cent to $2.8 billion, including $717 million in charges, described as “specified items”, which it aimed to “reposition the group for stronger profit before provisions growth in the future”.
Cover-More Group: CEO Peter Edwards has resigned effective 3 July 2016 as “the strain of weekly interstate commuting from his home in Queensland was becoming unsustainable”
SurfStitch Group: “The Company anticipates that pro-forma EBITDA for the year ending 30 June 2016 will be between A$2 million and A$3 million” (down from A$18 million consensus).
SMS Management & Technology: “Jacqueline Korhonen today announced that she had resigned as CEO and director of the company, effective immediately. The Company expects full year EBITDA for the year ending 30 June 2016 to be in the range of $15.5 million to $16.5 million prior to any one off items” (down from $25 million consensus).
Telstra: Chief Executive Andy Penn and Chief Financial Officer Warwick Bray candidly laid out the long-term challenges arising from the completion of the national broadband network with Telstra incurring annual payments of $2 billion over the long term if NBN meets its target of eight million connected households by 2020. Telstra is facing a $2 billion to $3 billion recurring hole in its earnings from 2020. (With thanks to Tony Boyd from the AFR).
Woolworths: Same store food and liquor sales fell 0.9 per cent in the March 2016 Quarter after declining 0.6 per cent in the December 2015 Quarter and 1.0 per cent in the September 2015 Quarter. Woolworths new Chief Executive, Brad Banducci, said sales in supermarkets continue to be impacted by high levels of deflation, predominately from investments in price. This is code for Aldi and Coles are winning market share.
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anthony
:
most of the rally in ANZ shares occurred before rate cut
Carlos
:
And yet ANZ rose by 5% today!
Maybe the market was expecting profit falls to be worse.
David Buckland
:
Thanks Carlos, but I wonder to what degree the 9.9% intra day rally from $22.80 to $25.05 was related to the RBA cutting the cash rate to 1.75%, another record low.