Earnings Update: TLS, DMP, AWC, AQP

Five companies reported earnings yesterday on the ASX: Dominoes (DMP) Alumina (AWC), Aquarius Platinum (AQP), Telstra (TLS) and an update from Singapore Telecom (SGT).

Further, we saw sales updates from retailers David Jones (DJS) and Harvey Norman (HVN). David Jones announced a 10% drop in sales in the fourth quarter, with a full year drop of 3.4%, whilst Harvey Norman reported full year sales dropped 3.6%, experiencing difficulties with the high AUD and price deflation of consumer products.

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

Dominoes (DMP)

Dominoes Pizza posted a full year increase in profit of 19.5% to $21.4 million. Sales increased across all sectors, with a 13% increase in Australia/New Zealand and 5.9% in Europe.

Dominoes announced an increase in online/digital sales, currently at 40% of total sales and are forecasting this to increase to 60%.

The company opened 28 new stores in Aust/NZ and 25 new stores in Europe and were on track with their expansion in both areas in FY12. The company warned of higher labor and input costs but forecast 3-5% sales growth and a 15% increase in profit for FY12.

DMP declared a 11.5c final dividend, with an ex-dividend date of 24th August.

Alumina (AWC)

Alumina announced half year results with profit up 53% on the previous corresponding period, to $68 million. Revenue increased 27%, mainly because of aluminium prices, but this was offset by large increases in foreign exchange movements, and energy prices.

AWC is forecasting a 2.3 million ton capacity shortfall for aluminium production from 2011-2015 and is hoping to take advantage of these shortages.

The company will receive 94.5% assistance on the new carbon pricing policy and noted that a 1c upmove in the AUD/USD rate is a $24 million before tax loss, showing how sensitive the company is to energy and currency pricing.

Aquarius Platinum (AQP)
Revenue increased 45% to $682 million for the full year result for Aquarius Platinum. However, this resulted in a net loss of $10.4 million due to an asset impairment of its Blue Ridge mine. The net profit would have been $142.8 million.

A final dividend of 4 US cents per share was declared, with an ex-dividend date of 6 September.

The revenue increase was driven by increased production and a substantial rise in platinum prices. Cost of production increased 44% per ounce mined, reflecting higher labour and inflation costs in South Africa and Zimbabwe.

Telstra (TLS)

Australia’s biggest telco reported a profit for the full year to June 30 of $3.23 billion, a 16.8% drop on the previous year. Telstra expects a return to earnings growth, but only in the low single digits, with no impact of the NBN during the next financial year.

The final dividend has not changed at 14 cents per share, taking Telstra’s full dividend to 28 cents. Telstra gave guidance for no change in the dividend, which has not changed since FY2006 – five years of zero dividend growth, going into a sixth. Free cashflow dropped substantially ($5.5 billion from $6.2 billion).

Revenue increased marginally by 0.7% to $25.09 billion. Margins on mobiles and fixed internet have dropped sharply (from 35% to 32% and 40% to 33% respectively) were effectively unchanged.

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.

Comments

  1. “(Dominos) warned of higher labor and input costs but forecast 3-5% sales growth and a 15% increase in profit for FY12.”

    Sounds like they are expecting to increase prices substantially. Not a good sign for inflation.

    On the broader front, retailers sure are doing it tough. But it could be worse. Retail sales in Germany have been stagnant for 10 years.

  2. >Retail sales in Germany have been stagnant for 10 years.

    And Japan. But is that a bad thing? Less consumption (or more rightly put, a sustainable level of consumption because you actually have to pay cash instead of using your home as an ATM).

    • Sandgroper Sceptic

      It is a good thing! Germany has got a lot right, a property market that is not in a bubble, they actually make things worth selling and do not have rampant consumerism.

      Of course they need all their savings to bail out the rest of Europe…

    • “But is that a bad thing?”

      Not in itself. But @Sandgroper Sceptic, “Of course they need all their savings to bail out the rest of Europe…” All that restraint and that is the thanks they get for it!

      At least if Australians show the same restraint there will not be some bunch of carpetbagger spendthrifts waiting to snatch our savings.

    • +1 Prince. I just don’t see a consuming public as the basis for a vibrant economy – not unless you produce the goods in house – which is hardly the case here.

  3. Talk about glass half empty – Telstra’s result was an excellent one given the circumstances facing the company, yet your highlight was zero dividend growth and a drop in FCF. How about the hundreds of thousands of extra post-paid customers, the huge gains in market share for mobiles, the improvements in customer service, the yet to be realized benefits of the NBN…