The next five days will mark the first of two peak weeks for Australian June 30 earnings, with 64 ASX 200 companies reporting between this morning and Friday.
Up to last Friday, around a third of the ASX 200 had reported, with results on the whole being okay but not outstanding, except for JB Hi-Fi.
Major groups reporting this week will include GPT, Lend Lease (half-year), BlueScope, and Suncorp today; Ansell, Monadelphous, and Hub24 tomorrow; Santos, Breville, and IAG on Wednesday; Medibank Private, Sonic, and Stockland on Thursday; and Latitude on Friday.
AMP Chief Economist Shane Oliver says the key factors to watch are guidance on how consumers are coping with high interest rates and cost-of-living pressures, as well as indications of input cost pressures and pricing power.
He notes that this earnings season is critical in terms of guidance because, after two years of earnings declines, a rebound to 4.8% growth is expected this financial year.
However, so far, he and other analysts say the season “has been okay, with slightly fewer than normal upside surprises but also fewer than normal downside surprises, and an increase in the number of companies reporting profits or dividends up from a year ago compared to the December half-year reporting season.”
So far, 38% of results have surprised consensus earnings expectations on the upside, which is less than the norm of 40%. On the other hand, 32% have surprised on the downside, which is also less than the norm of 41%. So, while not great, it is okay.
Oliver says consensus expectations are for a 3.6% fall in profits in 2023-24, with a significant drop in energy sector profits due to lower oil, coal, and gas prices, and small declines in profits in the mining, consumer staples, IT, and financial sectors. Other sectors are seeing profit gains.
“The signal on consumer spending has been soft, with sales generally down and weak media advertising, though some, like JB Hi-Fi, have performed better than expected. CBA reported a less than expected fall in profits and continuing low but rising mortgage arrears, and NAB also reported increasing arrears.
“Overall, investors seem to be looking through the mixed picture with hopes for relief ahead from lower interest rates. Just bear in mind that there is a tendency for companies with good results to report early, so results may soften over the next couple of weeks.”