It’s another week of earnings down under with most big names offering full year FY24 reports – or at least reports for the first half of the calendar year, depending on where they’re active.
Today we’re looking at A2 Milk, Westpac, Suncorp, and more.
A2 Milk
A2 Milk (ASX:A2M) has tanked nearly -20% on Monday after releasing its latest results – the company continues to foresee trouble in China, long tipped as the market that would make or break the company. A2 Milk is well known for offering a type of dairy product that, in theory, Asian consumers are better able to stomach.
Revenue and profit growth was higher than FY23 but not dramatically.
The COVID era knocked A2 Milk down from its all time highs just short of $20 per share to $5.73 at 12.30pm Sydney time on Monday. One year returns remain in the green even after today’s slump, up 34% YTD.
- Revenue: $1.67B vs $1.59B pcp (+5.2%)
- Earnings before tax: $234M vs $219M pcp (+6.9%)
- Profit after tax: $167M vs $155M pcp (+7.7%)
Reece Ltd
Reece Ltd (ASX:REH) has fallen -4.2% on the back of its latest results, but not as bad as A2 Milk. Similarly, Reece told shareholders on Monday it expects FY25 to “remain challenging” – that from CEO Peter Wilson.
Wilson did commend his own company for being able to turn over some growth in revenue through a weak FY24, though, growth wasn’t dramatic.
- Revenue: $9.1B vs $8.8B pcp (+3%)
- Earnings before tax: $681M vs $654M pcp (+4%)
- Profit after tax: $419M vs $388M pcp (+8%)
Westpac
Westpac Banking Corporation (ASX:WBC) has jumped 1.4% in lunchtime trades on the back of its latest earning report that saw Net Interest Margins (NIM) climb slightly – compared to sector leader Commonwealth where NIMs remain under downward pressure. Analysts tend to look at NIMs and CET1 ratios foremost when examining banks.
Notably, Westpac’s release on Monday is for 3Q24 and not a full year FY24 report. My colleague Caroline Smith wrote more on the numbers this morning.
- Unaudited profit: $1.8B (+6% vs 1H24 average)
- NIM: 1.82% (+3bps vs 1H24)
- CET1 capital ratio: 12% (above target operating range of 11% – 11.5%)
Bluescope Steel
Bluescope Steel (ASX:BSL) shares dipped -2.7% on Monday as the company also put its latest FY2024 numbers to the bourse.
There were a lot of red arrows in the building material giant’s latest earnings, with the market selling off in response. Adding to the negative vibes was a blunt assessment of the first half of FY25 ahead: US spot pricing, inflationary pressures (particularly electricity costs) and market trouble in Asia all came together to leave Bluescope mixed on outlook.
Australia is tipped to post a weaker result in 1HFY25 than 2HFY2024 whereas Chinese profits are expected to climb. US profits are tipped to fall by as much as -50%.
- Underlying earnings before tax: $1.34B (down -$269M vs FY2023)
- Free cash flow: $434M (down -$909M vs FY2023)
- Profit after tax: $806M (down -$204M vs FY2023)
Suncorp
Finally, retail insurer Suncorp Group (ASX:SUN) has made it into the green, up 1.8% heading towards early afternoon trades on Monday.
Notably, Suncorp has been quite vocal on climate change in recent history. The company has had to deal with 700K claims in the last 6 years related to “natural disasters” (exacerbated by the effects of all time high carbon emissions) and sees further risks to profitability.
Management state “the best way of reducing the price of insurance is to reduce the risk of claim.” Consider many insurers no longer cover homes above the Tropic of Capricorn.
“As I have outlined previously, the impacts of climate change, a reassessment and repricing of risk by global reinsurers, the town planning mistakes of the past and stubborn inflation have converged to put significant, multi- year upward pressure on insuring pricing. This has also had a material impact on profitability in home insurance returns on capital,” Suncorp CEO Steve Johnston said.
The cost of natural hazards to Suncorp continues to climb higher year after year since FY2020.
- Group profit after tax: $1.19B vs $1.07B pcp
- Natural Hazards: $1.23B ($125M below allowance)
- Net investment returns: $661M vs $451M pcp
- General insurance gross premium: $14.1B (+13.9% vs pcp)