Earnings Summary – 16th August

Seven companies reported earnings on the ASX on the 16th of August: CFS Retail Property Trust (CFX), Commonwealth Property Office Fund (CPA), James Hardie (JHX), Onesteel (OST), OZ Minerals (OZL), Carsales (CRZ) and Tabcorp (TAH).

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

CFS Retail Property Trust (CFX)
The retail property trust announced an increase in net profit to $532.6 million for the full year with net property income up 13%, including the impact of acquiring the DFO centres.

The trust announced significant debt restructuring throughout the year including $1.7 billion of debt re-negotiated, diversifying funding sources and reduced overall gearing to 27%

Occupancy rates stayed stable whilst retail sales increased 4.5% whilst the trust noted that most retail stores in administration (Borders, A&R, Colorado) have been re-leased or under offer.

CFX provided guidance of 3% retail sales growth for the next financial year, but noted continued challenging retail sales conditions and the impact of a strong AUD.

Commonwealth Property Office Fund (CPA)

The fund announced a full year profit of $197.7 million including a 14% increase in distributable income, whilst increasing assets by 24%

The fund conducted debt restructuring throughout the year including $1.5 billion of debt re-negotiated and maintaining a low gearing level of 26%

CPA maintained their high distribution policy, declaring a 2.75c final distribution, for a total of 5.5c per unit, whilst providing guidance for a 5.65c per unit distribution for FY12, which may include a special distribution due to capital gains.

James Hardie (JHX)
The major fibrecement producer announced first quarter FY12 results, with net profit down some 99% to just over $1 million, or down 3% to US$39.4 million excluding ASIC, asbestos and tax expenses.

Driving profits down included very subdued US and Australian housing construction markets, higher input costs and the impact of the AUD.

Management gave guidance for full year FY12 (ending March 31 2012) earnings in the $US126 to 140 million range, excluding asbestos, ASIC and tax expenses, and fully dependent on a housing recovery in the US and a stable AUD/USD exchange rate.

Onesteel (OST)
The major steel maker reported an annual net profit of $230.3 million, down 11% on the previous year, although revenue had increased 15%.

The steelworks at Whyalla lost $185 million, whilst the iron ore business earned over $524 million. The company announced 400 job losses at its manufacturing and distributions divisions.

A final unfranked dividend of 4c per share was declared, and did not provide earnings guidance due to “uncertainty”, particularly due to the high AUD and the international economy.

OZ Minerals (OZL)

OZ Minerals announced half year results of $113.9 million net profit after tax, a large reduction on the previous corresponding period. Underlying profit was $189.1 million, in comparison to $230.5 million for the same period.

The main reason for the downgrade in profit was due to class action settlement, FX losses and impairment on investments.

Management noted increased operating costs with higher volumes. A 16% appreciation of the AUD wiped out all the gains from market prices in copper and gold during the period.

Revenue increased 7% to $632 million, whilst operating cashflow remained strong, exceeding the same period last year.

The company announced an unfranked dividend of 30c per share, whilst also announcing an on-market share buyback program of up to $200 million, due to the large cash reserves on the balance sheet.

Tabcorp (TAH)

The gambling entertainment company Tabcorp announced an increase in net profit of 13.9% to $534.8 million but a demerger impact created a net loss of $6.8 million.

Revenue increased 2.9% during the year whilst operating expenses were controlled at a 2% increase as the business consolidated its gaming market share.

The company noted a strong increase in online/mobile wagering growth and have been awarded the Victorian Wagering and Betting License for 12 years. The license arrangement is to be funded via existing debt facilities and dividend reinvestment programs.

A final fully franked dividend of 19c per share was declared, with a target dividend payout of 50% to 80% of net profit in the coming fiscal years.

Carsales (CRZ)

The online automotive sales business announced a $58.3 million net profit, an increase of 35% on the previous year. This was on the back of an increase in revenue of 26% and maintaining margins at 55%.

Volumes increased across the range, with enquiries on new cars up 29%, double digit growth in private ad volumes and advertising revenue increasing 51%

The company noted that “80% of all time spent looking at automotive classified website around Australia was done on a carsales owned site”.

CRZ declared a final fully franked dividend of 10.5c per share.

Empire Investing considers CRZ a “Very Good” company and based on these solid results will provide a valuation shortly.

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.

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