Dispatches from the profit trenches. The 2015-16 reporting season is turning out to be a bit better than expected — except for the black holes known as the resource sector such as Woodside, Rio Tinto and Newcrest, but not Oz Minerals, which boosted full-year profit and dividend. And then there’s retailing, where if you have listened to some, the woes of Dick Smith are somehow reflective of what is stalking the countries other retailers (well perhaps Woolworths, but not Coles or Bunnings, while Kathmandu, an earlier basket case, is back in the game). But yesterday we saw probably the best result of the season so far when discount retailer The Reject Shop revealed a 43% jump in interim profit, a 50% lift in dividend, and the shares leapt nearly 24% — after an 83% rise in the year to Tuesday. So a doubling in a year.
Insurance Australia Group handed out a special dividend to shareholders, despite a fall in earnings. The extra 10 cents a share bonus came from Warren Buffett, who last year did a deal on reinsurance and became a big shareholder in IAG, all but making it takeover proof. The Commonwealth Bank did well, and its profit margins remained fat in the half year at 56.3% (that’s operating profit before impairments as a percentage of total revenue). That was a sharp improvement from the 51% for the December 2014 half year. The latest CBA result was actually better than Rio Tinto’s Pilbara iron ore operations, which had a gross margin of 55.6% for all of 2015, down sharply from the 63.7% for 2014. — Glenn Dyer
All hail the fat cats at the ASX. So far, the outstanding performer has been the ASX — not the actual market, which is well under water so far in 2016, but the company that owns the exchange, ASX Ltd. Its gross margin in the half year to December rose to an ultra fat 77.37% from 76.66% a year earlier. And that’s before dividends and interest income; factor those in and the gross margin is even more obscene — 81.2% against 80.8%. — Glenn Dyer
Streaming Buffett. If you are a fan of Warren Buffett, you won’t have to travel to Omaha in late April for the annual meeting of Berkshire Hathaway (annual pilgrimage, some would say), as this year he has decided to webcast the annual meeting on April 30. Of course that means you will miss out on all the festivities that weekend, as well as the bargains from the hundreds of companies owned by Berkshire. Yahoo Finance, the US-based business news website owned by Yahoo, will webcast the meeting, according to a statement from Buffett overnight. Berkshire’s 2015 annual report and fourth-quarter results are due out late next week. The report will contain Buffett’s legendary annual letter to shareholders and the wider investment community. — Glenn Dyer
Impairments, write losses, losses update. Rio Tinto: US$3.3 billion of exchange rate and derivative losses, plus US$1.8 billion worth of asset impairments (A$7.2 billion) (nowhere near as big as the impairments at BHP Billiton). Aurizon: $426 million of impairment charges. Aurizon announced $240 million of impairments in December but has now added to that with an additional $186 million, mostly related to plans for its proposed West Pilbara Iron Ore Project in Western Australia (now abandoned, an Aurizon management and board act of silliness). And Peabody Energy: a lazy billion Aussie dollars of more for 2015. Total impairment charges last year of US$1.28 billion, including US$969.2 million (more than A$1.36 billion) “largely related to certain Australian metallurgical coal assets”. Bradken has been hit by the resources downturn, so impairment of plant and equipment and intangibles, $181 million announced this week for the December half year. Another lazy $9 billion or so — gone in a puff of red ink. — Glenn Dyer
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