Global stock markets tumble and crude oil prices surge to $99 per barrel after Russia orders troops into parts of eastern Ukraine.
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 4 in our series for 2022 and today’s date is Friday February 25.
First, I’ll be talking to Jussi Karjalainen at Valta Tech which automates Procurement Operations for businesses. And I’ll be talking to Indeed economist Callam Pickering about the latest jobs figures.
But now, let’s hear from Jussi Karjailanan.
Global stock markets tumbled and crude oil prices surged to $99 per barrel on Tuesday after Russia ordered troops into parts of eastern Ukraine. Wall Street also headed lower as traders returned from the holiday weekend. The Dow briefly dropped about 700 points, or 2%, in late afternoon trading before recovering a bit. The S&P 500) was down 1.4%, while the Nasdaq) shed 1.6%. European markets were volatile. The FTSE 100 in London recovered from earlier losses to finish flat, while France’s CAC 40 also was flat. Germany’s DAX tumbled 0.3%. Russian stocks rebounded, after crashing more than 10% Monday, and the ruble weakened against the dollar for the fourth consecutive trading session. Japan’s Nikkei 225 fell 1.7%, while China’s Shanghai Composite dropped 1%. Hong Kong’s Hang Seng Index fell 2.8%, its biggest daily loss in five month. In Australia, the S&P/ASX 200 fell 1.1% to 7,150.8 by 2350 GMT after closing 0.2% higher in the previous session. Nickel rose to $US25,000 a tonne for the first time since 2011, extending a rally driven by dwindling global inventories and concerns that tensions over Ukraine could disrupt supplies from key producer Russia.
Investors have shunned cryptocurrencies such as bitcoin as tensions between Russia and Ukraine have escalated, and are instead seeking refuge in the more traditional safe haven of gold. Gold has benefitted from the ratcheting up of tensions between Russia and Ukraine, as skittish investors have sought out safe assets in which to park their cash. Investors have long viewed gold as a store of value in turbulent times, which can often see the value of their other investments slump. Gold has gained more than 5% this month, easily outperforming bonds and equities. In trading last week, gold futures climbed above $US1900 a troy ounce, their highest level in eight months. This has prompted some analysts to predict that gold is on track to beat its August 2020 record of more than $2000. This marks a distinct change from earlier this year, when many analysts were tipping that the gold price would struggle in 2022, as rising US bond yields would dent the appeal of the precious metal, which, unlike bonds, doesn’t provide investors with regular coupon payments, In contrast, the price of bitcoin has been flat so far this month [bitcoin is presently trading at just under $US39,000]. What’s more, the bitcoin price – which climbed as high as $US45,855 just under a fortnight ago – has declined despite the growing geopolitical tensions.
With petrol prices at record highs and expectations of higher inflation, The ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – fell 1.4%, despite the easing of COVID-19 restrictions in parts of the country and the reopening of international borders. The survey’s inflation expectations index rose 0.1 percentage point to 5.1%, its highest level since December 2014.
Australia has recorded its fastest annual wage growth since before the pandemic. The Bureau of Statistics says base pay grew 2.3%.
Australia is welcoming travellers as the country reopens its borders for the first time in nearly two years. However, a sudden recovery seems unlikely given the turbulent climate in the travel industry. GlobalData’s Tourism Demands and Flows Database shows that in 2019, Australia received 9.5 million international visitors. Unfortunately, due to the Covid-19 pandemic, this fell to just 2.1 million international visitors in 2020. Finally, after almost two years of near-total closure to tourists, most of the nation opened to fully vaccinated arrivals from overseas at midnight local time on February 21, 2022. While this is a step in the right direction, Australia’s tourism industry still has a long journey ahead before it can recover from the impacts of the pandemic.
Atlassian billionaire Mike Cannon-Brookes and his business partner Brookfield say they have set aside $20bn to transition AGL away from coal, vowing to continue to press their proposal with the energy giant’s investors despite the company immediately knocking back their $8bn bid. Mr Cannon-Brookes, whose private business Grok Ventures is a 20% stakeholder in the consortium with the Canadian asset manager Brookfield, said he made “no bones” that the play was about accelerating the world toward a zero-carbon economy. While the federal government remains concerned about the rapid fire exit of coal from the national electricity system, the tech titan blamed the fossil fuel for recent volatility as old plants including AGL’s near the end of their operating lives. In a statement to the Australian Stock Exchange, AGL said it had rejected the unsolicited preliminary offer of $7.50 a share, which offered a 4.7% premium on Friday’s closing price of $7.16. Including AGL’s debt, the offer was in the range of $8bn. The company said it was not in the best interest of shareholders. Speaking on Monday, Cannon-Brookes said the consortium would continue to work on the potential takeover, which would involve Brookfield and Grok Ventures acquiring AGL’s power generation and energy retail divisions, which include coal, gas and renewable energy generation assets. If successful, the new owners would aim to bring forward AGL’s exit from coal-fired power. The pair said they could make AGL Energy have net zero emissions by 2035, 12 years earlier than AGL’s plan. It would also halt a planned demerger that would have broken off the company’s fossil fuel assets into a separate entity, to be called Accel Energy. AGL’s immediate rejection of the takeover bid on Monday followed Scott Morrison and Energy Minister Angus Taylor warning about a spike in electricity prices if the country’s coal power fleet – including the company’s major Bayswater and Loy Yang plants – shut earlier than expected. A higher proposal, if accepted by AGL, would place Mr Cannon-Brookes and Brookfield on an election-eve collision course with the Morrison government. The Morrison government has reserved the right to invoke energy supply concerns under a national interest test to potentially stop the bidders who have pledged to shut down coal-fired power about a decade earlier than planned. Mr Taylor says the bid to accelerate closures “only compounds the risk” of power shortages.
And the profit reporting season continues. Coles’ sales rose 1% to $20.8 billion while EBIT fell 4.4% to $975 million and profit declined 2% to $549 million. Woolworths’ sales were up 8% to $31.9 billion but EBIT was down 11% to $1.38 billion and net profit declined 6.5% to $795 million.AUB Group reported underlying net profit after tax (NPAT) of $30.6 million for the half year, up 16.7% on the prior corresponding period. Reported NPAT was $29.7 million, up 27.7%.Medical device business Nanosonics has posted a full-year net profit up 160% to $3.9 million on total revenue up 36% to $60.6 million, versus the prior half-year period. Macmahon Holdings reported revenue of $809.7 million in the first half of the 2022 financial year, up 24% from the prior corresponding period (pcp). Underlying EBITDA rose 14% to $138.7 million. The company’s underlying net profit after tax climbed 4% to $31.7 million. On a statutory basis, its profit fell 92% to $3.3 million. Cochlear’s revenue increased 10% to $815 million. Underlying net profit rose 26% to $158 million, supported by a combination of strong sales growth and improved gross margin, with some benefit from lower‐than‐expected operating expenses. Statutory net profit was $169 million. Gold miner Regis Resources has reported an underlying net profit of $44 million on revenue up 18% to $488.8 million. Costa Group’s total revenue rose 4.8% to $1.22 billion while profit fell 22.6% to $52.2 million. G8 Education has reported a statutory net profit after tax of $45.7 million for calendar year 2021, compared to its net loss of $189 million in 2020. Judo Capital Holdings recorded a first-half loss of $16.1 million because of IPO costs, with a 39% increase in operating income to $99.4 million. Net interest margin was down 1.9% from 2.02% half-on-half, and 2.73% on an underlying basis, up from 2.65% half-on-half. Chorus’s revenue rose 1% to $NZ483 million while net profit advanced 56% to $NZ42 million. A2 Milk’s revenue dipped by 2.5% to $NZ660.5 million while profit declined 50.3% to $NZ59.6 million. EDITDA slid 45.3% to $NZ97.6 million. Bluescope’s sales revenue soared 62% to $9.4 billion while reported net profit climbed 398% to $1.6 billion and underlying EBITDA rose 219% to $2.5 billion. Reliance Worldwide reported net profit after tax of $US63.7 million for the six months ended December 31, down 3% on the prior comparable period. Altium’s revenue rose 27.8% to $US102.2 million while EBITDA advanced 28.9% to $US34.8 million and net profit rose 37.7% to $US22.9 million. MACA’s rose 80% to $841.1 million while EBITDA firmed 73% to $101 million. Net profit climbed 79% to $20.8 million. Ampol, the petrol station company, delivered an after tax profit of $560 million for the 2021 calendar year, reversing a loss in the prior year after generating record levels of fuel sales. Lend Lease’s revenue dipped 12.4% to $4.6 billion and it reported a $264 million loss, down from a $196 million profit in the same period a year ago. Super Retail delivered $110.8 million in statutory profit after tax, down 35.9% from the prior year, while sales edged 4% lower for the period. Cooper Energy’s sales revenue increased 96% to $95.4 million. The company reported an underlying net loss after tax of $6 million compared to the $17.4 million loss reported a year earlier. Latitude Group Holdings full-year net profit increased 255% (or 25% on a pro-forma basis) to $160 million on a 4.3% increase in volumes to $7.3 billion. Silver Lake’s revenue slid 3% to $307.6 million while EBITDA dipped 2% to $157.6 million and profit tumbled 32% to $44.5 million. Nuix reported a $2.3 million loss after tax (pro-forma) in the half-year ending December 31, down 124.5% on the prior year. Endeavour Group has reported net profit after tax of $311 million for the half year ended January 2, up 15.6% on the prior comparable period (pcp). Sonic Healthcare’s revenue climbed 7.3% to $4.8 billion while net profit climbed 22.1% to $835.3 million. Viva Energy’s revenue rose 28.1% to $15.9 billion while profit on a replacement cost basis firmed 473.7% to $191.6 million. Nib’s revenue rose 7% to $1.4 billion while profit climbed 25% to $81.4 million. Home internet challenger Aussie Broadband has swung to a net profit of $1.4 million on revenue up 46% to $229.3 million for the six months to December 31, 2021. Helloworld Travel’s first-half loss narrowed to $14 million from $14.9 million as revenue increased 45% to $40.3 million, and total transaction value 60% to $694.3 million. Senex’s underlying EBITDA rose 31% to $30.3 million, while its underlying net profit after tax was $2.1 million, up from $300,000. Group net profit before tax was $600,000 compared with a loss of $900,000 in the prior comparable period. GDI’s revenue from ordinary activities rose to $28.9 million, from $26 million a year ago. Funds from operation climbed to $15.4 million, up from $14.3 million a year ago. Tyro Payments its EBITDA of $2.8 million was below expectations, down 39% on the prior corresponding period. Oz Minerals’ revenue rose by $753 million to $2.1 billion while EBITDA climbed by $556.1 million to $1.16 billion. Net profit rose by $318 million to $530.7 million. SelfWealth’s net loss has widened to $2.4 million, compared with $432,990 in the prior corresponding half-year period. Uniti Group first-half revenue increased 98.4% to $109.5 million, and underlying pre-tax profit hit $58.4 million, up 137% from $24.7 million in a period of record earnings of $70.5 million.Virtus Health’s revenue rose 1% to $171.3 million while EBITDA dropped 35.7% to $37.9 million and profit slid 49.5% to $15.1 million. Internet connectivity business Superloop has narrowed its H1 FY 2022 net loss to $21.3 million, versus $18.9 million in the prior half-year period. Consumer finance and buy now, pay later player hummgroup has posted a cash profit of $27.8 million for the six months to December 31, versus $44.2 million in the prior corresponding period.. Estia Health reported a net loss of $8.1 million. Macquarie Telecom’s net profit decreased 48% to $3.7 million. Jumbo Interactive’s revenue rose 29% to $52.8 million while underlying EBITDA climbed 18% to $28.3 million and underlying NPAT rose 18% to $16.5 million. Alumina grew net profits after tax by a quarter for the full 2021 calendar year to $US187.6 million ($A260.9 million). Whispir has posted record half-year revenue of $39.4 million, up 70.4% over the prior corresponding period (pcp). Mining royalties business Deterra has nearly doubled its net profit to $61.7 million on royalty revenues of $92.8 million for the half-year to December 31, 2021. Monadelphous reported drop in statutory net profit included the reversal of a $6 million research and development tax incentive provision in the previous period. Excluding this reversal, interim net profit was up almost 18%, and earnings before interest, tax, depreciation and amortisation (EBITDA) rose almost 7% to $60.9 million. Meridian Energy reported net profit after tax of $145 million from continuing operations for the six months ended 31 December 2021, $82 million, or 36% lower than the same period last year. Pilbara Minerals’ revenue soared 393.6% to $291.7 million, a record for the company, while profit soared to $114 million, rebounding from a $21.2 million loss in first half of last year. Ramelius Resources’ revenue from ordinary activities fell 9% in the half year to $310.1 million, while EBITDA dropped 3% to $187.7 million. EBIT was down 10% to $106.3 million. The company’s net profit after tax fell 10% to $73.4 million. Mount Gibson Iron reported a net loss after tax of $65.6 million for the half-year ended 31 December 2021 on total iron ore sales of 0.7 million wet metric tonnes. Perseus Mining’s revenue rose 90% to $545.7 million while EBITDA climbed 101% to $252.4 million and net profit soared 159% to $126.9 million. Domino’s Pizza Enterprises first-half revenue increased 10.2% to $1.21 billion and net profit fell 6.9% to $89.1 million. PSI Insurance reported a 28% increase in underlying revenue to $119.7 million and 42% increase in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $40.7 million in the half-year to December 31. Footwear retailer Accent Group has posted a half-year net profit down 72% to $14.8 million on sales up 12.2% to $536.5 million for the six months to December 31, 2021. McMillan Shakespeare’s revenue rose 25.8% to $311.6 million while net profit rose 18.1% to $30.1 million. Underlying net profit was down 6.5% to $40 million. Regis Healthcare reported net profit after tax (before amortisation of operational places) of $10.6 million for the half-year ended 31 December 2021. Net profits for mining group St Barbara fell 62% to $13.9 million as revenue eased 9% lower to $325.6 million. Wisetech Global’s revenue rose 18% to $281 million while statutory net profit soared 74% to $77.4 million. Underlying net profit firmed 77% to $77.3 million. Fund manager Australian Ethical Investments has posted a net profit up 3% to $5.5 million on revenue up 35% to $35.2 million for the six months to December 31. Carbon Revolution reported first half revenue of $17.6 million, up 2.3% on the prior corresponding period. Underlying revenue increased by 39%. The company’s net loss after tax for the half year was $21.8 million compared to $14.8 million in the prior corresponding period. Stockland’s revenue climbed 0.5% to $1.188 million while net profit soared 149.1% to $837 million. Real estate investment trust Scentre Group boosted operating profits 10.8% to $845.8 million in the full calendar year of 2021. APA Group reported a net profit of $155.6 million, rebounding from a $15.5 million loss a year ago. HT&E’s net profit before tax climbed from $18.5 million to $32.6 million. Net profit after tax for Integral Diagnostics fell 48.7% to $10.2 million for the period, while revenues inched 5.7% higher to $181.5 million. Bubs Australia reported its first underlying EBITDA profit of $1.2 million, and record gross revenue of $38.5 million, up 73% on the prior corresponding period. Worley, the engineering company active in the energy industry, grew net profits after tax for the financial half year 90% to $114 million. Propel Funeral Partners Pro forma operating net profit after tax was up 30.4% to $7.8 million. Sydney Airport reported a loss of $266.9 million for the year. Universal Stores reported a decline in gross profit to $61.2 from $67.9 million for H1 FY2022. Servcorp’s net profit before tax was $16 million for the first half of the 2022 financial year, and statutory net profit after tax was $13.3 million. Healius revenue rose 44.2% to $1.34 billion while profit climbed 271.3% to $233.2 million. 29Metals full-year revenue increased 38% to $600.8 million and it reported net profit of $121 million. McPherson’s reported a 7% increase in sales revenue to $108.8 million in the first half, and underlying profit before tax of $6.7 million. Karoon Energy reported a statutory net loss after tax of $US97.7 million. Schaffer Corporation announced profit after tax of $6.5 million for the first half. Lycopodium generated revenue of $102.4 million and net profit after tax (NPAT) of $15.3 million for the six-months ended December 31, up 71% and 6.3% respectively.
And that’s it for this week. And next week I’ll be talking to Lambros Photios, Founder of Australian software development company Station Five who is warning Australian universities are failing to keep pace with advances in the IT industry fuelling a growing skills shortage in the sector. And I’ll be talking to AMP Capital chief economist Shane Oliver about his assessment of the profit reporting season so far.
In the meantime you can catch me on Facebook, Twitter Instagram and 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.