Australia's First-Quarter Company Profits Climb 7.6% (Update1)
By Hans van Leeuwen
June 4 (Bloomberg) -- Australian company profits rose at the fastest pace in almost two years in the first quarter as earnings climbed at banks and retailers including Westpac Banking Corp. and David Jones Ltd.
Gross operating profits increased 7.6 percent from the fourth quarter, the Bureau of Statistics said in Sydney today. The median estimate in a Bloomberg News survey of 20 economists was for a 2.9 percent gain.
Surging profits may prompt companies to expand and hire more workers, stoking economic growth. Record commodity prices and surging Asian demand have triggered a mining and energy boom. That's boosted consumer spending, buoying retailers' profits, and stoked investment and share prices, driving earnings at banks.
``The economy has accelerated and a range of industries such as retail and services have benefited,'' Su-Lin Ong, senior economist at RBC Capital Markets in Sydney, said before the report was released. ``Profitability may encourage a second wind in business investment that could drive faster growth.''
The Australian dollar rose to 83.18 U.S. cents at 11:33 a.m. in Sydney from 83.13 cents immediately before the report was released. The yield on the benchmark 10-year government bond rose 1 basis point to 6.09 percent. A basis point is 0.01 percentage point.
Inventories held by businesses climbed 1.4 percent in the first quarter. Economists had estimated a 0.2 percent increase.
Inventories
Business inventories decreased 0.5 percent and profits rose 17.1 percent from a year earlier. Company profits gained a revised 3 percent in the fourth quarter.
Gross operating profit measures earnings before tax, interest, depreciation and amortization. It excludes asset sales and foreign exchange gains or losses.
Australia's economy expanded 1 percent in the three months ended Dec. 31 from three months earlier, and economists expect the same pace in the first quarter. The government will release a report on first-quarter growth June 6 at 11:30 a.m. in Sydney.
Earnings at transport companies climbed 9.8 percent in the quarter, profits at retailers gained 5.5 percent and manufacturers' earnings rose 4.1 percent, today's report showed.
Miners are benefiting from record commodity prices and surging global demand, particularly from Asia. Minara Resources Ltd., Australia's second-largest nickel producer, in March reported a sevenfold surge in profit for the 12 months ended Dec. 31.
Miners Earn More
Australia's two largest mining companies, BHP Billiton Ltd. and Rio Tinto Group, reported 41 percent and 20 percent gains, respectively, in earnings for the six months to Dec. 31.
Companies servicing the mining industry or operating in mining regions are also experiencing earnings growth.
Orica Ltd., the world's largest explosives maker, said first- half profit jumped 70 percent on increased sales to mining companies.
``The record result from mining services underscores strong trading conditions in the global mining and resources market,'' the company said on April 30. ``We believe this trend will continue as customers in the resources sector strive to increase their volume of output, both from existing and new mines.''
West Australian Newspapers Ltd. posted a 33 percent gain in profit for the three months to March 31 as the state's commodities boom fuelled demand for real estate and job advertisements. The company publishes the only daily newspaper in Perth, the capital of the resource-rich region.
Business Lending
Resource companies' surging sales have boosted their investment, fueling a business lending pickup that has buoyed earnings at banks. Banks are also benefiting from rising share prices that have stoked earnings at their funds management units.
Australia & New Zealand Banking Group Ltd., the third-biggest Australian bank, reported profit in the six months to March 31 rose 16 percent to a record after it attracted more customers and boosted lending to individuals.
Westpac Banking Corp.'s profit in the same period climbed 12 percent to a record on corporate lending. St.George Bank Ltd., Australia's fifth biggest, said first-half profit rose 14 percent to a record on increased lending to companies and higher funds management earnings.
Macquarie Bank Ltd., Australia's largest securities firm, posted a 69 percent increase in profit for the six months ended March 31 from a year earlier, as it reaped higher fees from managing investment funds and arranging buyouts.
Retailers are benefiting from a pickup in consumer spending as the mining investment boom creates jobs at construction companies, driving the unemployment rate to a 32-year low and buoying confidence.
David Jones Ltd., Australia's second-biggest department store chain, in March said profit in the six months ended Jan. 27 surged 30 percent on demand for clothing and cosmetics.
Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer, said first-half profit rose 37 percent on demand for flat-panel televisions.
Flight Centre Ltd., Australia's biggest travel agent, said pretax profit rose 18 percent in the nine months ended March 31 compared with a year earlier.
By Hans van Leeuwen
June 4 (Bloomberg) -- Australian company profits rose at the fastest pace in almost two years in the first quarter as earnings climbed at banks and retailers including Westpac Banking Corp. and David Jones Ltd.
Gross operating profits increased 7.6 percent from the fourth quarter, the Bureau of Statistics said in Sydney today. The median estimate in a Bloomberg News survey of 20 economists was for a 2.9 percent gain.
Surging profits may prompt companies to expand and hire more workers, stoking economic growth. Record commodity prices and surging Asian demand have triggered a mining and energy boom. That's boosted consumer spending, buoying retailers' profits, and stoked investment and share prices, driving earnings at banks.
``The economy has accelerated and a range of industries such as retail and services have benefited,'' Su-Lin Ong, senior economist at RBC Capital Markets in Sydney, said before the report was released. ``Profitability may encourage a second wind in business investment that could drive faster growth.''
The Australian dollar rose to 83.18 U.S. cents at 11:33 a.m. in Sydney from 83.13 cents immediately before the report was released. The yield on the benchmark 10-year government bond rose 1 basis point to 6.09 percent. A basis point is 0.01 percentage point.
Inventories held by businesses climbed 1.4 percent in the first quarter. Economists had estimated a 0.2 percent increase.
Inventories
Business inventories decreased 0.5 percent and profits rose 17.1 percent from a year earlier. Company profits gained a revised 3 percent in the fourth quarter.
Gross operating profit measures earnings before tax, interest, depreciation and amortization. It excludes asset sales and foreign exchange gains or losses.
Australia's economy expanded 1 percent in the three months ended Dec. 31 from three months earlier, and economists expect the same pace in the first quarter. The government will release a report on first-quarter growth June 6 at 11:30 a.m. in Sydney.
Earnings at transport companies climbed 9.8 percent in the quarter, profits at retailers gained 5.5 percent and manufacturers' earnings rose 4.1 percent, today's report showed.
Miners are benefiting from record commodity prices and surging global demand, particularly from Asia. Minara Resources Ltd., Australia's second-largest nickel producer, in March reported a sevenfold surge in profit for the 12 months ended Dec. 31.
Miners Earn More
Australia's two largest mining companies, BHP Billiton Ltd. and Rio Tinto Group, reported 41 percent and 20 percent gains, respectively, in earnings for the six months to Dec. 31.
Companies servicing the mining industry or operating in mining regions are also experiencing earnings growth.
Orica Ltd., the world's largest explosives maker, said first- half profit jumped 70 percent on increased sales to mining companies.
``The record result from mining services underscores strong trading conditions in the global mining and resources market,'' the company said on April 30. ``We believe this trend will continue as customers in the resources sector strive to increase their volume of output, both from existing and new mines.''
West Australian Newspapers Ltd. posted a 33 percent gain in profit for the three months to March 31 as the state's commodities boom fuelled demand for real estate and job advertisements. The company publishes the only daily newspaper in Perth, the capital of the resource-rich region.
Business Lending
Resource companies' surging sales have boosted their investment, fueling a business lending pickup that has buoyed earnings at banks. Banks are also benefiting from rising share prices that have stoked earnings at their funds management units.
Australia & New Zealand Banking Group Ltd., the third-biggest Australian bank, reported profit in the six months to March 31 rose 16 percent to a record after it attracted more customers and boosted lending to individuals.
Westpac Banking Corp.'s profit in the same period climbed 12 percent to a record on corporate lending. St.George Bank Ltd., Australia's fifth biggest, said first-half profit rose 14 percent to a record on increased lending to companies and higher funds management earnings.
Macquarie Bank Ltd., Australia's largest securities firm, posted a 69 percent increase in profit for the six months ended March 31 from a year earlier, as it reaped higher fees from managing investment funds and arranging buyouts.
Retailers are benefiting from a pickup in consumer spending as the mining investment boom creates jobs at construction companies, driving the unemployment rate to a 32-year low and buoying confidence.
David Jones Ltd., Australia's second-biggest department store chain, in March said profit in the six months ended Jan. 27 surged 30 percent on demand for clothing and cosmetics.
Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer, said first-half profit rose 37 percent on demand for flat-panel televisions.
Flight Centre Ltd., Australia's biggest travel agent, said pretax profit rose 18 percent in the nine months ended March 31 compared with a year earlier.
**Original Source = Bloomberg.com**
Atom Feed (xml)