The ASX 200 reporting season for August 2017 was very good, although not great. Almost 91% of full-year reporting companies produced a profit, above the long term average of 87% but down from 94% in February 2017.
Of those reporting a profit:
- 71% lifted profits
- 29% reported a decline
- 91% of companies issued a dividend to investors
The exclusions were BHP, Commonwealth Bank and Telstra whose earnings lifted by 38%.
Company cash levels rose sharply by 24% on average to almost $113bn.
On the downside ...
The Australian dollar has not done any favours for the miners however impacting other exporters and import-competing companies. Retailers continued to express difficulties.
The latest economic growth (GDP) reading of 0.8% for the three months to June was better than 0.3% for March, however the economic recovery remains mixed but poised for recovery (eg. high levels of household debt and lower savings ratio), with some early positive signs of a recovery in respect to employment, business confidence and a stronger world economy (namely in Europe and Japan).
In summary ...
Corporate Australia remains in good shape. Most companies reported a profit and most lifted their profits. Cash holdings are high, and companies have been successful in raising revenues and trimming costs. They are well placed to deal with disruption, uncertain global politics and low inflation. The current dividend yield is 4.12% well above cash 1.50% pa.
Source: CBA Investment Research.
More information
For more information, please contact James Cavanough from Lantern Advisory on 07 3002 2690.
