The latest reporting season has been one of the weakest in years according to Shane Oliver from AMP Capital who said “Only 36 per cent of companies have surprised on the upside on earnings which is the worst result since 2012.”

On the downside 37 per cent have surprised on the lower side and just 59 per cent of companies reported an increase in profits while 29 per cent of companies also cut their dividend, the highest proportion for seven years.

“The weakness in the domestic economy is clearly evident this reporting season” said Mr Oliver. All eyes will be on the next set of GDP numbers due out Thursday.

On a brighter note the Future Fund posted an increase in assets of 11.5 per cent over the year and lifted total assets to $162.5 billion. The current asset mix includes 28.5 per cent in global equities, 21.1 per cent in alternative assets and infrastructure over 11 per cent in cash with just 7 per cent in Australian equity markets.

A few snippets from the past week include:

  • Locally listed shipbuilder Austal announced a record profit of $61.4 million on the back of a 33 per cent increase in revenue to $1.85 billion. The company has seven shipyards in five countries with a deal to build vessels for the US Navy with US revenue a large part of the firms success. Australasian revenue was up 65 per cent to $393 million as the company’s share price rose 14 per cent on the day.
  • According to a recent report in the Australian newspaper Whitehaven Coal “is likely to become the world’s first pure play coal company to report against the Financial Stability Board’s global climate framework”, as pressure comes from several directions on disclosing climate related risks.
  • The demand for listed infrastructure assets could rise over the coming months with some analysts suggesting some local infrastructure stocks are comparatively cheap with infrastructure assets having “highly durable cash flow streams and inflation protection built in” says Dan Foley from CBRE Clarion a $100 billion asset manager.
  • Macquarie Group has raised a billion dollars in an institutional share placement issuing 8.3 million new shares at $120 per share with proceeds to provide the group with added funds primarily for investment in the renewables, technology and infrastructure sectors. Eligible retail shareholders will be able to top up their holdings in a Share Purchase Plan.
  • Retailer Harvey Norman will have a $173 million capital raising to help pay down debt with concerns about a downturn factored into the decision. “I’m not saying this could happen soon or anything, but when it does, you like to be in a strong position” said Gerry Harvey.
  • Rural Funds Group recently announced a $33.35 million dollar profit and an independent report by Ernst and Young accountants had given the company a clean bill of health according to managing director David Bryant as the company’s share price continues to recover after a damning report by short-selling outfit Bonitas Research. The company has instructed lawyers to commence action against Bonitas.
  • Freedom Foods revenue increased 34.9 per cent as statutory net profit fell 9 per cent to $11.6 million on the back of some one-off costs.

Trade wise we bought some Capitol Health, NextDC and Reliance Worldwide. More commentary and charts on the Courier website Wednesday, cheers Charlie.

This column is designed to provide information of a general nature only and should not be taken as advice or a recommendation.

To order photos from this page click here