Talking Business podcast
February 12 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 2 in our series for 2021 and today’s date is Friday February 12.
First, I’ll be talking to Matt Riemann, founder and chief scientist at ShaeWellness and we’ll be talking about the company’s free 30-day AI-powered personalised health program to help businesses support employees in 2021, with the aim to provide mental, physical and emotional health support to those who may fall through the gaps in small to medium enterprises. And then I will talk to AMP Capital chief economist Shane Oliver on how we can expect the market to perform this year.
But now, let’s talk to Matt Riemann.
The world’s leading electric-car maker is getting behind the the world’s largest electronic currency. Tesla said it bought $US1.5 billion in bitcoin, a purchase that comes after chief executive Elon Musk has promoted the cryptocurrency and other digital-currency alternatives on Twitter. The electric-vehicle company also said it expects to start accepting bitcoin as payment for its products soon. When news of the purchase became public yesterday, the value of the world’s bitcoin rose by about $90 billion — while the value of Tesla rose by about $8 billion. Since Elon Musk owns more than 20% of Tesla, his own net worth went up by well over $1 billion as a result of the announcement. Tesla disclosed the bitcoin purchase in its latest annual report, saying the move aims to “diversify and maximise returns on our cash that is not required to maintain adequate operating liquidity.” Tesla said the purchase came after a board committee approved changes to company rules on investments, adding that it can also invest cash in gold bullion and gold exchange-traded funds among other assets. The bitcoin purchase, likely among the largest by a public company, comes after a rally in 2020 during which the price more than quadrupled. The cryptocurrency continues to experience big swings.
Business confidence has risen in January to be sitting well above the long-run average, as businesses anticipate further recovery in the economy. According to NAB’s Monthly Business Survey, business confidence rose 5 points in January to 10 points, while business conditions fell back to 7 points following a strong December. The fall in conditions was led by a fall in trading conditions and the employment index.
The Westpac-Melbourne Institute Index of Consumer Sentiment increased by 1.9% in February from 107.0 in January to 109.1 in February
Google has launched its News Showcase in Australia, a product that was announced in October 2020, but not introduced Down Under till now due to the company’s stoush with the government over the news media code. After ,much drama with Google telling a Senate hearing that it would pull its search service from Australia, the company launched the showcase on Friday with a number of publications, many from Australian Community Media, being featured in the initial version. The fact that it has launched just a day after Australian Prime Minister Scott Morrison had what was described as a “cordial” chat with Alphabet and Google chief executive Sundar Pichai means it must have been in the works for some time. Such an initiative could not be launched at short notice. Among the publications that have cut deals with Google are the The Canberra Times, The Illawarra Mercury, The Saturday Paper, Crikey, The New Daily, InDaily and The Conversation. The federal government has signalled it may consider amendments to its digital media code if Google can convince large media companies to sign up to its own news product, sparking a rush of last ditch negotiations between the search giant and publishers.
People in insecure work will be able to transfer their entitlements from one job to another, wage parity will be granted to labour hire employees, and gig economy workers will be entitled to minimum wages and conditions under a raft of changes Labor will implement if it wins the next federal election. And, in a move certain to rekindle arguments about union militancy, Labor leader Anthony Albanese will also promise to abolish the building sector watchdog, the Australian Building and Construction Commission, and the trade union regulator, the Registered Organisations Commission. Mr Albanese said the pandemic has exposed the escalating levels of job insecurity, caused by the failure of workplace laws to keep pace with the evolving nature of the workforce.
Fair Work president Iain Ross has opposed the Coalition’s plan to speed up approval of enterprise agreements, putting the tribunal head and Attorney-General Christian Porter at odds over a key element of the government’s workplace policy changes. Ahead of Senate inquiry hearings into the government’s industrial relations bill starting on Monday, Justice Ross said the proposed 21-day limit on the commission determining agreement applications was “unnecessary” and likely to have consequences contrary to the interests of -employers and workers. The intervention of Justice Ross will increase pressure on Mr Porter to make changes to the proposed laws and follows the Labor Party’s decision to oppose the entire bill, ensuring industrial relations is a key political battleground this year. On Sunday, Mr Porter pushed back against the criticism by Justice Ross, saying the government made “no apologies” for seeking to improve the timeliness of enterprise agreement making to help deliver pay rises for workers and productivity enhancements for employers. The government says the proposed new time limits on the commission are among a raft of changes in the bill designed to reinvigorate the troubled enterprise bargaining system.
But Iain Ross has been joined by Labour law experts who have warned that the changes threaten to tear a hole in the safety net, increase casualisation and worsen wage growth at a time when pay rises are necessary for the economic recovery. Twenty-three senior academics led by University of Adelaide professor Andrew Stewart joined to warn the proposed reforms on casual employment would increase disputes and red tape for employers, and declared their strong opposition to allowing enterprise agreements to temporarily leave workers worse off than the award minimum. The criticism, which will form part of a submission to a Senate inquiry, adds to the high-profile opposition to the reforms, with Fair Work Commission president Iain Ross also panning a proposed 21-day deadline to approve agreements as risking “unintended” consequences. The academics’ biggest opposition was to a proposal to exempt agreements from the better-off-overall-test for the next two years if there are exceptional circumstances, such as to deal with a crisis, by adding COVID-19 to the considerations. Professor Stewart said the provisions would apply beyond pandemic-induced crises and agreements could last longer than two years given they operate indefinitely until terminated.
Crown Resorts has been deemed unsuitable to operate a new Sydney casino at Barangaroo after a months-long public inquiry which exposed allegations of money laundering. Crown’s new casino has already been built, but is now unlikely to open James Packer’s behaviour was described as “intolerable” by Commissioner Patricia Bergin, in a report which calls into question the billionaire’s ability to invest in licensed gambling in the future. Andrew Demetriou’s testimony was “unedifying”. John Alexander’s take on his relationship with James Packer is “blind to reality or lacking in candour”. Robert Rankin’s stint as Crown Resorts chairman was “lacklustre”. Allegations of criminality within the casino’s operations were first raised by media in 2014 James Packer lieutenants Guy Jalland and Michael Johnston have subsequently quit the Crown board. A final report from the Crown probe, commissioned by NSW’s Independent Liquor and Gaming Authority (ILGA), was tabled in State Parliament. The report decried the casino’s “corporate arrogance” about its systemic issues In it, Commissioner Patricia Bergin — a former chief judge in the NSW Supreme Court — said the company needed to make sweeping cultural changes if it wanted to be considered a suitable operator in the future. It effectively means the casino component of Crown’s new $2.2 billion new skyscraper on Sydney Harbour will almost certainly be blocked from opening, however, Commissioner Bergin’s recommendations must still be officially adopted by the ILGA.
Vocus Group has confirmed receiving a $2.4 billion on-binding indicative takeover offer from Macquarie Infrastructure and Real Assets Holdings (MIRA) for $5.50 a share. It is the third time the telecommunications outfit has fielded a takeover talks since 2018. Vocus owns a vast fibre network infrastructure and has consumer-facing internet service provider brands such as Dodo Services too.
Australia’s advertising market contracted by $1.1 billion as the COVID-19 pandemic crunched global spending in the west by $9.9 billion, reversing two years of growth across the US, UK, Australia, New Zealand and Canada.Ad spend was down 15% in Australia, according to numbers from Standard Media Index, which tracks media agencies. SMI, which also tracks product category ad spend trends, revealed across the combined markets the largest growing category was unsurprisingly pharmaceuticals, which was globally up 17%, driven by a surge in spending in the US.
Furniture retailer Nick Scali has said it will repay $3.6 million in JobKeeper payments after succumbing to pressure on Australian companies that pocketed wage subsidies while also paying increased dividends. Just last Thursday chief executive Anthony Scali defended the company’s decision to keep the subsidies it received in the December half – in which it recorded a 90% increase in profits and lifted its interim dividend by 60%
Fast fashion retailer H&M will close three stores in Australia this year but has denied reports it plans to shut about 15% of its network after a drop in sales during the pandemic. An H&M spokeswoman said the global retailer planned to close another two of its 49 Australian stores in March – H&M Townsville and H&M Rockhampton – after closing its Chatswood store in January. She denied that as many as seven stores could close.
And the profit reporting season has started. CBA announced a 10.8% slide in first half cash profit to $3.9 billion Sigma Healthcare expects to report underlying full year EBITDA of around $80 million, which would be a 35% increase over the previous year. Three years after Amazon set up shop in Australia, the online juggernaut’s sales doubled to more than $1 billion in 2020, fuelled by the accelerating shift to e-commerce during the pandemic. According to accounts lodged with the corporate regulator, Amazon Commercial Services clocked up revenues of $1.21 billion in the 12 months ending December, almost double the $562.1 million in revenues the previous year. Suncorp’s net profit after tax fell 23.7% to $490 million, as last year’s results included gains from the sale of Capital SMART and ACM Parts. SCA Property has flagged a return to pre-pandemic earnings as the shopping centre owner delivered a 14.1% increase in first half net profit of $102.9 million on higher valuations. James Hardie said that third-quarter adjusted EBIT rose 57% to $US167.9 million after sales rose 20% to $738.6 million. Net operating profit rose 50% to $68.6 million. Dexus, the country’s largest office landlord, reported a statutory profit which fell 55.5% to $442.9 million after Dexus recorded a lower amount of net revaluation gains than it did in the last year’s first half. Boral announced that net profit after tax was up 18.2% to $161.4 million for the December half. Challenger Financial Group’s net profit rose 1% to $222.8 million in the six months ended December 31 from $220.4 million in the year-earlier period. Revenue climbed 5.5% to $1.29 billion from the year-earlier $1.22 billion. Insurance Australia Group has cut its interim dividend after reporting a $460 million loss for the first half of the 2021 financial year. Northern Star Resources has reported an underlying net profit after tax $194.4 million for its first half ended December 31. The record result is 63% above the previous first half. Mineral Resources’ EBITDA reached $763 million, up 131% on the prior corresponding period, CIMIC is targeting net profit of between $400 million and $430 million in the 2021 financial year as it looks to grow earnings from $30.1 billion of work-in-hand. Funds administration provider Praemium says its international business is enjoying strong momentum early in 2021 as it reported a 113% increase in first half net profit to $16.4 billion, with Australian platform revenue increasing 52% to $16.9 million. Centuria Capital has posted a net profit down 46% to $41.4 million on revenue up 46% to $116.3 million. Saracen Mineral Holdings’ first half underlying profit after tax rose 85% to a record $148 million while statutory net profit after tax climbed 74% to $120.5 million. Internet connectivity business Megaport has doubled its half-year loss to $38.4 million on sales up 39.3% to $36.04 million. ALE Property’s statutory profit increased 232% to $68.1 million as valuations rose 4.4% to $1.22 billion.
And that’s it for this week. And next week 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.
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.