FY2018 results

Results for FY2018 generally met expectations, with earnings growth of companies in the ASX200 up around 9%, against expectations of 7%.

Banks and telcos’ earnings were held back, industrials averaged 5%, however resources and energy companies performed strongly with earnings up over 20%.

Dividend growth was pleasing at +2% on average, solid balance sheets and restrained capital expenditure provided flexibility for directors to allocate more free cash flow to shareholders via dividends and share buy backs.

Sales revenue growth

However, sales revenue growth underwhelmed, reflecting a lack of inflation and difficulty of raising prices in an increasingly competitive environment. There are increasing cost pressures occurring, from regulations, energy and imported raw materials for example, that will not lead to further real employment growth, and a “cost out” theme may develop over the next year as companies compete in a low growth environment. Households remain laden with debt proving a headwind for consumer-facing sectors and the overall economy. Amazon’s entry into the retail or consumer discretionary sector will be disruptive.

Our approach

We seek quality companies to invest in, with reliable free cash flow and a competitive advantage, for inclusion in our client portfolios.

If you require assistance with investment decisions please contact Ian or James to ensure you are making a sound decision. Phone 07 3002 2690.

Disclaimer:
The information contained in this article is of a general nature and does not take into account personal circumstances. Before making any decisions based on the factual information contained in this document please consult with your financial adviser.