Talking Business February 19 2021
Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast app, the Apple Podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at www.businessacumen.biz.
I am Leon Gettler. My job is to review and monitor the week’s news in business, finance and economics. I bring it all to you, every week.
This is episode number 3 in our series for 2021 and today’s date is Friday February 19.
First, I’ll be talking to the boss from Booktopia Tony Nash about how his company is going after it listed in December. And then I’ll talk to RMIT economist Sinclair Davidson about the economic challenges ahead for the Morrison Government in what’s likely to be an election year.
But now, let’s hear from Tony Nash.
Struggling luxury car brand Jaguar will be fully electric by 2025, the British company said on Monday (Tuesday) as it outlined a plan to phase out internal combustion engines. Jaguar Land Rover, which is owned by Indian conglomerate Tata Motors, hopes the move will help turn around the fortunes of the 86-year-old Jaguar brand, which for many epitomises class but has struggled in recent years. The switch to an electric future will involve moving car production from JLR’s Castle Bromwich factory east of the central England city of Birmingham to nearby Solihull. Chief executive Thierry Bollore said the firm was “exploring opportunities to repurpose” the Castle Bromwich plant, leading to speculation it could be used for battery production. Jaguar Land Rover also said that the far more profitable Land Rover brand will produce its first all-electric model in 2024 as it, too, phases out internal combustion engines.
Amazon is back on top as the most visited retail website through the Black Friday sales in November and subsequent Christmas holiday trading, nudging Bunnings into second place, with Australian shoppers also browsing the net for sites offering home furnishings and price promotions. The latest online traffic data analysed by tech firm SEMrush shows that for the last quarter of calendar 2020, which was dominated by COVID-19 lockdowns and restrictions, online sites specialising in activities for the home and outdoors such as EB Games, Bunnings, Booktopia, Spotlight and Boating Camping Fishing did well. Such is the popularity of the Black Friday and Cyber Monday sales in November that they have dragged purchases typically made in December back a month to become increasingly important for all retailers. The added factor of the COVID lockdowns across Australia put a spotlight on online shopping, with SEMrush data finding that traffic to Amazon’s website spiked 75% in the December quarter. Amazon pushed Bunnings into second place, followed by Microsoft, Officeworks, JB Hi-Fi, Kmart, Woolworths, Ikea, Coles and Harvey Norman. Australians were also bargain hunting through the quarter, with electronics, bargain sites, and department stores all popular.
Payroll jobs increased by 1.3% in the fortnight to January 30 and are now at the same level as last year, pointing to a further recovery in the labour market despite recent COVID-19 outbreaks. All state and territories showed an increase in payroll jobs over the fortnight, leading most of the major bank economists to lock in expectations for a reduction in the official unemployment rate in January.
CPA Australia says future lockdowns are foreseeable as we continue to deal with the impacts of COVID-19. Businesses cannot continue to absorb losses created by snap lockdowns and border closures. CPA Australia says Federal, state and territory governments must work together to deliver a national response. Financial support should be standardised, scalable, targeted and rapidly deployed
Top hotels are pulling out of the quarantine program amid growing industry fears that the spate of recent coronavirus outbreaks leaking out via staff is causing reputational damage. At least a dozen hotels have withdrawn from the program, including Sydney’s Five Star Hilton and InterContinental hotels, and Melbourne’s Marriott, sparking warnings an assistance package may be needed to help the sector rehabilitate its image.
A new specialised quarantine facility will be built in Victoria following coronavirus outbreaks from the state’s hotel quarantine program, with Premier Daniel Andrews saying it was just a matter of how big and where. A 300-cabin proposal put forward by Avalon Airport is the most likely candidate for the new facility, with airport chief executive Justin Giddings saying the first 50 “cabins or caravans” could be built in just six weeks. Mr Andrews said the Howard Springs facility in the Northern Territory was a successful model that allowed people to go outside and get fresh air – it also has self-contained airconditioning units to reduce aerosol spreading. Adequate management of hotel quarantine has been a major issue for the Victorian government, with the latest COVID-19 outbreak linked to the Holiday Inn at Melbourne Airport growing to 19 cases on Tuesday. Avalon Airport, owned by Lindsay Fox’s company, Linfox, has put forward a concept proposal to the state government that would allow new arrivals to walk from the tarmac directly to an on-site quarantine facility.
In a separate proposal, Queensland businessman John Wagner said on Monday he was aggressively backing a quarantine facility next to Toowoomba’s Wellcamp Airport, which would charge the same fees as existing city-based hotels and potentially take up to 1000 returnees.
The chief executive of Australian casino group Crown Resorts has quit amid a scandal over money laundering allegations within its casinos. Ken Barton’s departure follows that of several other company directors. Last week an inquiry found Crown was not fit to hold a gaming licence in New South Wales, meaning it cannot operate its newly built casino in Sydney. The report has also thrown doubt over Crown’s casinos in other cities. Crown, which is majority-owned by Australian billionaire James Packer, has been dogged by allegations of illegal activity for years at its casinos in Melbourne and Perth. Its operations overseas have drawn particular scrutiny after allegations that its junkets (paid-for trips) for Chinese high-roller gamblers were linked to organised crime groups. In her report last week, inquiry commissioner Patricia Bergin found Crown had been “facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals” connected to criminal groups. She recommended an overhaul of the company’s governance, beginning with the sacking of most of the board. Mr Barton has been with the company for over a decade, previously as chief financial officer before becoming chief executive in 2020. In addition to general management of the company, he has also been in charge of two accounts embroiled in money laundering claims. Commissioner Bergin found he had demonstrated a “breath-taking lack of care” when dealing with those allegations, and advised New South Wales state regulators that he was not suitable for the role. The inquiry’s bombshell findings have raised questions over the company’s future. It has also aimed focus at gaming regulators in Victoria and Western Australia (WA) for their failure to pick up Crown’s misconduct.
Crown Resorts has been officially informed by the gaming regulator that the James Packer-backed gambling giant is unsuitable to run a casino in NSW. The Independent Liquor and Gaming Authority (ILGA) has also “commenced the consultation process” into whether Crown can reach suitability to hold the licence following last week’s scathing report by former NSW Supreme Court judge Patricia Bergin, SC.
The Western Australia government will set up an independent inquiry with the powers of a royal commission to investigate Crown Resorts as the gambling giant’s license to operate in the state hangs by a thread. The state’s Gaming and Wagering Commission (GWC) recommended the far-reaching and powerful inquiry at a meeting on Tuesday night also attended by a high-ranking WA police officer. WA racing and gaming minister Paul Papalia said the government would act on the recommendation as soon as possible and give the inquiry all the power it needed. The WA government also backed a GWC recommendation to prohibit junkets at Crown Perth. In addition to the junket ban, the GWC will use powers under the WA Casino Control Act to force Crown to gain its approval before establishing gaming bank accounts. GWC said it wanted to consider the suitability of Crown to operate a casino in Perth in light of the damning findings of Bergin report. The commission, chaired by senior public servant Duncan Ord, also wants to probe the suitability of Crown associates and the appropriateness of Crown responses to the WA regulator prior to and during former NSW Supreme Court judge Patricia Bergin’s investigations in NSW. The WA inquiry will consider if legislative changes or additional regulatory control are needed to address “strategic risks” identified in the Bergin report.
And the profit reporting season continues. Westpac reported a first-quarter unaudited statutory net profit $1.70 billion compared to a second-half 2020 quarterly average of $550 million. National Australia Bank said that its first-quarter cash earnings were $1.65 billion, up 1% compared to a year ago. Super Retail reported a first half net profit of $172.8 million, up 201% compared to the same period a year ago. Revenue rose 23.1% to $1.78 billion. Aussie Broadband, has reported maiden first-half revenue 4.9% ahead of its prospectus forecasts at $157.4 million. EBITDA was $7.3 million, or $8.4 million adjusted for IPO expenses and its business and residential customers combined rose 31% to 342,634. Promedicus revenue rose 7.8% to $31.6 million in the first half of the year while net profit climbed 12.4% to $13.5 million. Charter Hall Group has reported first-half operating earnings of $129.3 million, 42.7% down on the 2020 first half. Invocare expects to report a FY20 net loss after tax attributable to shareholders in a range of $7.0 million to $12.0 million. JB Hi Fi’s December-half jumped 86.2% to $371.7 million. GPT Group reported a $213.1 million net loss in the year ended December 31, 2020, from a profit of $880 million a year ago. Gas producer Cooper Energy has swung to a net loss of $23 million on sales up 24% to $48.6 million for the half year period to December 31, 2020. Asaleo Care’s revenue rose 2.3% to $419.2 million while net profit climbed 46.2% to $32.3 million Charter Hall Retail REIT reported a first-half profit of $82.8 million, up 24.1% compared to a year ago. Seven West Media reported first half underlying group earnings before interest and tax of $152 million, up 29% ear-on-year, while underlying net profit after tax was $86.6 million, up 26.5%.Aurizon reported a half-year net profit of $267 million, down 22% compared to a year ago. Underlying net profit fell 1% to $267 million. Altium’z half year profit after tax from continuing operations fell 12% to $US16.6 million while revenue slipped 4% to $80 million. Nearmap narrowed its half-year net loss from $18.6 million to $9.4 million on revenue up 18% to $54.7 million. Beach Energy reported revenue of $726.3 million, down 23% on a year prior, while net profit after tax slid 54% to $128.7 million. Bendigo and Adelaide Bank’s statutory profit rose 67.3% to $243.9 million while cash earnings climbed 1.9% to $219.7 million. Ansell’s first half net profit rose 61.9% to $US106.5 million and while revenue rose 24.5% to US$937.8 million. E-commerce player Redbubble has lifted its net profit 1465% to $41 million for the half year to December 31, 2020, versus a $3 million loss in the prior corresponding period. SG Fleet reported first half profit of $25.4 million, ahead of its $24.5 million profit from the prior corresponding period. Sims reported a first-half net profit of $53 million, compared to a loss of $91.1 million in the year-ago period, Software player Rhipe Technologies has grown half-year net profit 17% to $3.8 million on sales up 18% to $179.5 million. Breville reported a first-half net profit after tax of $64.2 million, up 29.2% compared to a year ago. BHP Group’s statutory profit was $US3.87 billion on the back of $US2.2 billion of impairments and charges disclosed in January. GWA said half-year revenue fell 4.4% to $197.2 million and normalised EBIT (before significant items) dropped to $32.1 million from $38.1 million. Domain Holdings’ revenue fell 3.8% to $137 million while net profit rose 52.2% to $19.4 million. EBITDA rose 18.9% to $54.5 million. Lighting retailer Adairs has reported net profit up 233% to $43.9 million on sales up 34.8% to $243 million for the 26 weeks to December 27 2020. IVF business Virtus Health’s half year net profit doubled to $29.9 million, versus $15 million in the prior corresponding period. Class reported revenue of $25.9 million, up 27% from a year prior, while EBITDA climbed 29% to $10.4 million. Elmo’s first-half revenue rose 29.3% to $30.6 million and reported an EBITDA loss of $800,000, an improvement of $1.8 million from a year ago. Fish producer Tassal Group reported a first-half net profit drop of 32% to $27.6 million. Revenue rose 6.6% to $292.5 million. Accounting software provider Reckon has posted a full-year net profit up 19.8% to $9.7 million on sales up 0.3% to $75.6 million. Money3 has issued guidance for full-year net profit of $36 million. Four wheel drive accessories retailer ARB reported a half-year net profit of $54 million, up 113.5% compared to a year ago. Sales revenue rose 21.6% to $283.9 million. Ingenia said that half-year net profit rose 38% to $32.5 million, and underlying profit rose 24% to $32.8 million. Whitehaven Coal has added to the Australian coal sector’s tale of woe this reporting season with a $94.4 million loss for the six months to December 31. Moelis has reported full year earnings (EBITDA) of $52 million, up 18%, and net profit of $23.5 million, a 12.7% increase on the prior year.Carsales.com revenue slid 7% to $199 million and net profit was 14% lower at $61 million. Earnings (EBITDA) were 9% higher at $114 million. Evolution Mining reported revenue of $982.2 million, up 9% from the previous half, while profit rose 55% $228.7 million. Underlying net profit climbed 57% to $234 million. Travel business Webjet has revealed the results of international and state border closures with a 90% fall in revenue to $22.6 million on an EBITDA (operating income) loss of $40.1 million. Corporate Travel’s total revenue fell 67% to $74.2 million and it reported a loss of $36.4 million. It also reported an underlying EBITDA loss of $15.7 million. Coles reported first-half profit after tax of $560 million, up 14.5%. EBIT rose 12.1% to $1 billion. Dominos Pizza reported a 20.9% increase in revenue to $1.1 billion while profit climbed 37.9% to $95.4 million. EBITDA firmed 23.8% to $218.7 million. Treasury Wines reported a first-half net profit of $120.9 million, down 43% compared to $211.4 million a year ago. EBOS Group has reported first half earnings (EBIT) of $145.9 million, up 11.1% on the prior first half. Cedar Woods Properties revenue rose 31.4% to $169.2 million while profit climbed 119.8% to $22.4 million. Tabcorp revenues fell 1.5% to $2.87bn on the prior comparable period while statutory net profit after tax declined 7% to $185m. Vicinity Centres has suffered a $394.1 million loss for the first half of the new financial year. Software player Readytech reported underlying net profit up 9.3% to $4.7 million on sales up 13.4% to $21.8 million for the half-year to December 31, 2020. Netwealth increased first-half net profit 35% to $27.6 million and funds under administration of $38.8 billion in a record half of inflows. At February 15, this stands at $40.7 billion. Pact Group revenue rose just 1% to $894.4 million however reported net profit after tax climbed 44% to $49.9 million.
And that’s it for this week. And next week I’ll be talking to Colin Hewitt, the founder and CEO of . Float, a Scottish accounting software startup that opened an office in Sydney in 2019, and he will talk about the lessons businesses can learn from managing finances during so much uncertainty. And I will be talking to Indeed economist Callam Pickering about the latest unemployment figures.
In the meantime, you can find me on Twitter at talkingbizz, on Facebook and on LinkedIn. And if you want, leave a comment. Wishing you all a safe and healthy week and looking forward to bringing you Talking Business next week.