Beats Exceed Misses in Australia’s Profit Season: Earnings Wrap

(Bloomberg) --

Australian companies that have reported so far this earnings season have seen more beats than misses, though the outlook for FY21 remains subdued, with little profit growth expected, according to analysts.

• ASX 200 forward consensus earnings estimates down 1.7% since the start of August, according to Bloomberg data
• Over half of ASX 200 companies reporting have offered FY21 guidance: Bloomberg data

Here’s what analysts are saying:

Citi:

• Earnings across market are in-line with analyst expectations, with the exception of banks
• Low interest rates, build in liquid assets and accelerating cost pressures driving weaker bank profits
  • Aug. 12, Commonwealth Bank Pays Dividend Even as Profit Declines
  • Aug. 14, National Australia Bank Profit Falls as CEO Warns of Hurdles
  • Aug. 18, Westpac First Australian Bank to Scrap Dividend as Covid Bites
  • Aug. 19, ANZ Bank Pays Reduced Dividend, Increases Bad-Debt Charge
• Analysts have cut FY21 dividend forecasts for banks, miners, health care and REITs; AMP, Newcrest and Woodside reported higher-than-expected dividends and have seen FY21 payouts upgraded
  • Aug. 13, AMP Surges After Dividend, Focus on Asset Management Unit
  • Aug. 13, Woodside’s $4 Billion Loss Highlights Australia Energy Pain
  • Aug. 14, Newcrest’s Annual Profit Jumps 34% on Gold Price, Copper Output

Morgan Stanley:

• While earnings beats have outweighed misses, aggregate earnings still lack growth
• Companies that declined to issue guidance and saw in-line and/or better-than-expected FY results have performed best
• Large-cap industrials seem to present the most guidance disappointment, while materials have “fueled the revision pulse”
• Earnings direction still needs to negotiate growth challenges as stimulus rolls off, demand signals normalize, difficult 1HFY21 growth comparables loom

Macquarie:

• Better-than-expected earnings results mostly coming from firms outside ASX 100; FY21 EPS downgrades concentrated in large caps
• Industrials have the highest share of net earnings beats
• Over one-third of companies still withholding guidance, most in real estate and industrials
• Wisetech, Goodman Group, Amcor, CSL, Brambles in “rare club” of ASX 100 firms guiding for growth
  • Aug. 13, Goodman Group FY Operating Profit View 1.7% Above Est.
  • Aug. 19, Wisetech Surges Most in Two Years as Earnings Target Tops Ests
  • Aug. 19, CSL Surges to Highest in Three Months on FY21 Guidance
  • Aug. 20, Brambles FY21 Growth Targets Lower Than Expected: Jefferies

UBS:

• Price reactions have been largely positive; Investors rewarding earnings beats more than punishing misses
• Results show stronger-than-expected top-line performance and cash flows, though costs were weak with a number of companies noting virus expenses likely to remain high through FY21
• FY21 EPS weakness led by industrials and financials, while resource stocks have seen positive revisions given rising iron ore prices

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