On Wednesday BHP and CBA announce their FY09 results. I am expecting substantial profit downgrades from both firms and cuts to dividends. However, a small minority of ASX300 companies remain on track to deliver increased earnings, and I have little doubt UGL is amongst these. I anticipate earnings to rise by 11% and final div to increase by 2c to 36c. I reckon the market is under-prepared for this result due on 18/08.
My hope is that UGL board will continue to reward shareholders and maintain payout at around 70% of holdings. This signal of confidence will (IMO) be strongly received by market and SP will break and remain above $12.00. My concern is management will note poor results and dividend cuts by BHP, CBA et al and deduce that this is opportune time to be conservative and follow suit. I disagree. It is a full month at least between results and company AGM. The extra 5-6 weeks will allow board to gain a better handle on how FY10 is shaping-up... and a frank & open account and forecast is the norm from CEO Leupen at the AGM. The leadup to AGM is the time to fine-tune forecasts and inform shareholders what to expect. Hence, I reckon we can expect UGL to produce an 8th consecutive year of double digit profit growth and dividends way above the ASX300 average. How many companies have done that? Can't wait till next Tuesday.
Mike Mennell PS. if UGL wins QLD rail contract prior to AGM then all-bets-are-off. And I mean ALL.
UGL Price at posting:
$11.78 Sentiment: Buy Disclosure: Held
