A strong interim profit result from Australia’s biggest resource company, BHP Billiton, has lifted the local stock exchange, offsetting some earnings disappointments.
The benchmark S&P/ASX 200 Index rose 9.9 points, or 0.2 per cent, on Tuesday to 5392.8, while the broader All Ordinaries Index added 0.1 per cent to 5402.2, as investors focused on a mixed bag of half-year company earnings reports.
There was no overnight lead from Wall Street, after markets in the United States were closed on Monday for the President’s Day public holiday. In the afternoon session a spike in Japan’s Nikkei following comments from the Bank of Japan was positive for sentiment.
Shares and the dollar were both supported by the release of minutes from the Reserve bank of Australia’s February policy meeting, which confirmed the central bank is likely to keep the official cash rate on hold at its record low of 2.5 per cent for many months.
BHP Billiton gained 2.3 per cent to $38.89 after beating expectations with a 69.4 per cent rise in interim net profit compared to the first half of last financial year. The company also continued to reduce costs and improve cashflow.
The resources giant did not lift its interim dividend by as much as some in the market had hoped, however, the chief executive Andrew Mackenzie flagged investors can expect higher capital returns at the end of the year.
“It is still early in reporting season, but so far most results from the large caps have been well received with share prices getting a lift,” Invesco Australia portfolio manager Nicole Schuderl said.
“Returning cash to shareholders is likely to remain a major focus as reporting season continues,” Ms Schuderl said. “Reducing costs will also continue as another area of focus, especially for mining and resources companies.”
Mining was the best-performing sector, up 1 per cent, boosted by the BHP result and strong iron ore and coal prices.
Rio Tinto rose 1.9 per cent to a near 12 month high at $70.88 as the spot price for iron ore, landed in China, rose for the fourth day in a row to $US124.40 a tonne.
The big four banks were split. Commonwealth Bank of Australia rose 0.2 per cent to $74.53 despite trading without the right to its $1.83 interim dividend on Monday.
Westpac Banking Corporation dipped 0.2 per cent to $32.86, ANZ Banking Group rose 0.1 per cent to $31.64, and National Australia Bank gained 0.8 per cent to $35.04 ahead of providing a quarterly update later in the week.
Telstra Corporation rose 0.2 per cent to $5.23. It was reported the telecommunications giant is set to axe 400 jobs from its Sensis directories business later this week.
Coca-Cola Amatil lost 5.3 per cent to $11.22 after departing chief executive Terry Davis delivered the company’s weakest profit result in nearly two decades. Slimmer profit margins on soft drinks and a $400 million write-down on fruit canning business SPC Ardmona contributed to a 82.5 per cent slump in interim net profit.
Packaging company Amcor fell 4.2 per cent to $10.33 despite showing interim net profit rose 21.9 per cent and flagging up to $2 billion worth of possible acquisitions.
Expectations for contractors to the mining and energy industry are low this reporting season due to a slump in demand from new projects. Three resource services companies surprised the market with better than expected interim results.
Monadelphous Group was the best-performing stock in the ASX 200, climbing 9.7 per cent to $17.10 after reporting a record half-year profit of $87.1 million, up 10.1 per cent on the previous corresponding period. MacMahon Holdings added 12 per cent to 14¢ after showing a new Mongolian contract helped it return to profitability in the half-year ended December. RCR Tomlinson rose 2 per cent to $2.98 after posting a 14.2 per cent increase in interim net profit and upping its interim dividend.
Other stocks that advanced following the release of half-year results included Challenger Ltd and Sirtex Medical.
Financial services group Challenger Ltd rose 3.3 per cent to a record $6.61 after showing a 25 per cent rise in interim net profit compared to the previous corresponding period.
Drug developer Sirtex Medical added 3.8 per cent to $14.96 after showing a 43.6 per cent rise in interim net profit. The company said results of a clinical trial into the broader application of its radioactive liver cancer treatment that were due for release in 2014 have been delayed until early 2015.
Pacific Brands was the worst-performing stock in the ASX 200, dumping 9 per cent to 65.5¢ after reporting a net loss of $219 million for the first half of fiscal 2014, compared to a $38.9 million profit in the previous corresponding period. The company sells iconic Australian clothing and footwear labels including Bonds, Volley, and Stubbies. Sales were up for the first time in five years but a $252 million write down linked to its struggling workwear division slugged the bottom line.
Other stocks that declined following the release of interim reports included Sonic Healthcare, Seven West Media, Asciano, and Arrium.
Pathology and radiology clinic operator Sonic Healthcare dipped 0.5 per cent to $16.90 despite narrowly beating analyst expectations for interim net profit.
Seven West Media lost 1.8 per cent to $2.14 after showing interim revenue dipped 1.1 per cent.
Asciano dipped 0.4 per cent to $5.74 after unveiling plans to merge its coal haulage and rail freight divisions as it reported a 4 per cent slip in first-half net profit.
Arrium (formerly OneSteel) fell 2 per cent to $1.75 despite interim net profit rebounded to $220 million, up from a $448 million loss in the previous corresponding period that had featured hefty write-downs.
Transport and logistics company McAleese crashed 34.6 per cent to an all time low of 72¢ after emerging from a trading halt to warn the market it now expects a $37.9 million loss for the current half-year period due to troubles with its Cootes Transport division. The stock debuted at $1.47 in November.