Around the Traps ... with THE FERRET 07:56, Monday, 11 April 2005
Sydney - Monday - April 11: (RWE Australian Business News) - ***************************
Ask HOUSEWARES INTERNATIONAL (HWI) shareholders what's more important, the results of a strategic review or a profit warning, and we bet it's the profit warning every time.
However, the company obviously thought otherwise.
It wasn't until after eight sentences of "clarification of future focus to enhance shareholder value" guff that we got to the part about this year's profit being expected to fall from $23.9 million to between $20 million and $21.5 million.
Specific guidance on next year (FY06) will be given "when the board has greater clarity on market conditions and as the restructure progresses".
The good news is that the restructure is expected to result in an increase in the Homewares Division's profit before tax of between $1.3 million and $1.8 million in FY06 and $3.8 million and $4.3 million in FY07.
Housewares shares fell 20c to $1.72.
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McGUIGAN SIMEON WINES (MGW) warns net profit will be in the range of $35 to $40 million for the year to June 30, compared with $40.2 million last year, due to an oversupply of grapes and the high Australian dollar.
Chairman David Clarke said on Friday that the need for the downgrade had only just emerged.
He could hardly have said the need emerged several months ago and the company only decided to tell the market now.
The profit fall for the year could be slight but sellers were particularly savage with the shares, slashing the price 99c to $4.19.
The stock hit a record $6.22 only two months ago.
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It wasn't all bad for the David Clarkes of this world.
The one who is chief executive for RINKER GROUP (RIN) was warning the market on Friday that profit for the year to March 31 will be higher than expected, thanks to the strength of US markets.
And while investors were particularly savage on the aforesaid McGuigan, they were particularly enamoured of Rinker, lifting the stock 58c to $11.49 (the record of $11.92 was set on March 3).
Rinker's EBIT is now expected to be up between 46 and 48 per cent for the US subsidiary, Rinker Materials Corp, and around 20 per cent for the Australian subsidiary, Readymix.
This was an upgrade on previous guidance for the US operations while Readymix profit expectations were unchanged.
Construction activity remains strong in both the US and Australia.
In the US, commercial construction continues to strengthen while infrastructure construction remains at high levels and the next six-year federal transportation spending legislation nears completion.
"Whilst we are trading at very strong levels in the US and Australia, our expectations for the current year results (to March 2006) are that we will deliver some further improvement," Mr Clarke said.
"We expect around 15 per cent growth in trading EBIT for Rinker Materials in US dollars, while Readymix profit should be steady in Australian dollars."
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Getting back to wine, though, and former shareholders of BRL Hardy must be thinking thank you for the takeover, Mr CONSTELLATION BRANDS (CBR).
Otherwise the company could well have been squirming like McGuigan.
Constellation on Friday reported record sales (up 15 per cent) and profits (25 per cent) for the year to February 28, following which it will make a 2-for-1 split.
And the good times are expected to continue.
EPS rose 8 per cent to $2.70 and the company is predicting a range of $3.09 to $3.21 this year.
Wines sales rose 19 per cent, beers 7 per cent and spirits 10 per cent.
Demand for California and Australian wines continues to increase in Europe and Constellation Brands continues to benefit from this consumer trend.
Branded wine net sales in Australasia were up 28 per cent, benefiting from one additional month of sales from Hardy in fiscal 2005 and 9 per cent from currency.
Constellation shares rose 9c to $7.01.
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It's a sure sign the property boom is over (for the time being anyway) when the real estate industry attacks the same media that had been helping whip up a frenzy just a year or two ago.
A report in Ferret's local paper had industry insiders whingeing that "the media's unrelenting focus on weekly auction clearance rates is putting an artificial brake on the real estate market".
We can't remember real estate agents having a problem with the media's "unrelenting focus" on auctions when they were hot and prices were climbing each week.
And judging by the number of houses selling for well over a million in Ferret's hardly upper-crust suburb, the market still looks pretty healthy to us.
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It's happy days at GRAVITY DIAMONDS (GRN) with the shares up seven days in a row, from 54c on March 30 to 76.5c on Friday (up 5.5c on the day).
After the close of trading the company announced that first drillholes in the Northern Territory Project had hit diamondiferous kimberlites, that a "big exploration program" had been initiated to generate further kimberlite targets, and that results from the Republic of Congo sampling would be available later this month.
We don't know if these factors caused the rise or the listing that day of Gravity Diamonds on the AIM market in London.
The company hopes to attract a wider global focus and attention to its diversified diamond exploration activities.
It seems to be pretty well globally focused already.
About 58 per cent of Gravity is held by European investors while BHP BILLITON holds 9.6 per cent and management 4 per cent.
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