Earnings Summary: 15th August

Five companies reported earnings on Monday on the ASX: Ansell (ANN), iiNet (IIN), Leighton (LEI), UGL and Newcrest Mining (NCM).

Macrobusiness will be reporting on earnings and valuing the key companies throughout the earnings season. Remember to bookmark the overall update here.

Ansell (ANN)

Ansell, the manufacturer and distributor of healthcare protection products announced a 15% increase in profit for the full year of $US121.7 million. This is based on a sales increase of 11%.

The company declared a final, but unfranked dividend of 19 cents (AUD) per share along with a share buyback scheme of up to 5 million shares over the next 12 months.

Guidance was cautious, reflecting “uncertain global economic conditions”, but within 6-12% growth in earnings per share.

iiNet (IIN)

Telco iiNet announced a 12% increase in underlying profit for the year to $39 million, on a 48% increase in revenue. However, net profit was down 3% to$33.3 million.

IIN’s balance sheet has a 40% net debt to equity ratio, although this is likely to be expanded with an on-market share buyback program (up to 5% of issued shares for up to 12 months). Net tangible asset backing decreased to negative 40 cents per share because of using borrowed funds to expand the business.

Management consider the current share price (approx. $2.20 from a high of $2.80) undervalued, which is driving the buyback, but this is undermined by increasing the dividend 33% to 12 cents (for the year) fully franked.

Guidance for FY12 was not provided, although management consider the NBN to provide opportunities ahead.

Leighton (LEI)

The major contractor reported a $408.8 million loss for the year, compared with a $611 million profit last year, although revenue was up 4% and equity per share increased.

The losses were due to the Airport Link project and Victorian desalination plant project (covered earlier this year here) and impairment on investments.

Guidance for FY12 was provided at $600-650 million profit after tax based on a “strong level” of work at hand, up 11%, although this $1 billion turnaround is dependent on sound management at current projects and does not include any impact on the sale of its iron ore business.

No final dividend was announced.

Newcrest Mining (NCM)

The major gold producer announced a 63% increase in profit after tax of $908 million. Total revenue grew 46%, with gold sales increasing 42% (ounces) with revenue up 60% (based on $US1378 per ounce).

Total mine production costs increased 65% due to energy and labour prices and the inevitable strong AUD, with lower concentrate volumes also impacting royalties.

NCM noted an increase in gold resources of 9% to 147.5 million ounces, whilst copper increased 15% to almost 20 million tonnes.

The company provided guidance for FY12 of 3-8% increase in gold production with cash costs per ounce to be roughly the same as FY11. NCM also noted a 1c move in the AUD/USD rate impacted earnings before tax by $A36 million, although this is almost recovered by a $US10 per ounce rise in the gold price.

Note that the carbon tax is estimated to reduce net profit after tax by 1-3% (therefore only a 1c increase in the AUD/USD is the equivalent pain caused by the carbon tax – this has been a common thread throughout the reporting season so far!)

A five year guidance was also presented, with an approx. 50% increase in gold production slated to approx. 4 million ounces and a doubling in copper production.

The company declared a final dividend of 20 cents per share (unfranked) with the ex-dividend date of 26th September.

UGL Limited (UGL)

The engineering and maintenance company UGL announced a net profit after tax of $164.4 million for the full year, up 9% on the previous year. Revenue increased 5% whilst earnings per share increased 8% to 99 cents.

The company reduced its gearing over the year to 13.2% net debt to equity, although operating cashflow was impacted by mobilisation fees.

UGL’s order book grew through the year although it is still at FY09 levels, but pipeline work is increasing and the majority made up of maintenance contracts.

No guidance was given although the company expects positive growth in earnings.

UGL announced a final dividend of 38 cents per share, going ex-dividend on the 22nd of August.

Disclosure: The author is a Director of a private investment company (Empire Investing Pty Ltd), which may have a current interest in some of the businesses mentioned in this article. The article is not to be taken as investment advice and the views expressed are opinions only. Readers should seek advice from someone who claims to be qualified before considering allocating capital in any investment.