First, what is the ASX reporting season?
Twice a year companies listed on the ASX are required to release their earnings report. Reporting season is a good opportunity to reset and evaluate a company’s performance and it’s future growth potential. Earnings reports are released to tie in with Australia’s financial year (July-June). Therefore, in August companies release their full-year results and in February the half-year results are shared.
Explainer: What is Reporting Season?
Highlights from Reporting Season February 2021:
Afterpay reported a strong start to FY21 with the value of goods bought with Afterpay jumping 106% in the six months ending December 31, 2020 to $9.8 billion. And, revenue has risen by 89% in the past year, as well. Although, the company has yet to make a profit. Instead they reported a net loss of $76.5 million. Afterpay attributed this to their expansion into the UK market with Clearpay. The company’s expansion doesn’t look set to end there as Afterpayis looking to release a new app called Afterpay money in the not too distant future.
Kogan was one of the few companies that may have benefited from the Covid 19 lockdowns. In the first half of 2020, their profits jumped due to an increase in consumer spending online. And the trend continued with some impressive half-year results for FY21. While the company reached the milestone of three million active customers, it’s revenue also grew by 88% to $414 million. Black Friday sales proved to be particularly profitable for the online retailer, with seven of their top 10 trading days occurring in that period.
Rio Tinto shareholders are expected to receive a record dividend after the miner’s full-year profit rose 22%. Each share will earn shareholders $5.66. The company’s profit jumped from US$8 billion to US$9.8 billion. Higher iron ore prices and demand from China likely contributed to the company’s performance.
Australia’s largest company CBA actually reported a 21% loss in half year profits ending 31 December. However, this is a highlight of reporting season as results were better than they expected. What might have helped the bank, and other big banks, along was a boost in business lending, home loan lending and growth in customer deposits. The bank has declared a half-year dividend payout to shareholders of $1.50 per share, also beating market expectations.
Lowlights from Reporting Season:
Australia’s national carrier, Qantas, has had an especially tough year. Covid 19 hit the travel industry hard, and with travel restrictions still in place internationally, and sometimes domestically, the industry is yet to recover. Qantas reported losing $1.1 billion in revenue, down by 75%. With the vaccine roll out now happening in Australia and overseas, the airline is hopeful international travel can resume in October and domestic travel will increase to 80% pre-covid capacity by the end of the year.
The border closures also proved to be very tough on the travel giant, Flight Centre. To offset the damage caused by the pandemic, Flight Centre shut down more than half their stores worldwide and about 7000 jobs were lost. Despite this, the company reported losing $233 million for the six months ending December 31, that’s down from a $22 million profit the year prior. The company is hoping the Covid vaccine will see border restrictions lifted and consumer confidence in travel boosted.
It wasn’t all bad news for Flight Centre, their joint venture, Pedal Group, whose main brand is 99 Bikes, had a jump in sales. The company reported a half yearly profit of $18 million and is predicting it to climb to $45 million by the end of the financial year.
Thinking of investing?
If you are considering investing, bear in mind that past performance is not an indicator of future performance. It is always best to do your research and know exactly what you are investing into, check out our article on how to pick stocks for more tips.
Main image source: Freedomz (Shutterstock.com)
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