The Border Watch : January 28th 2014
Business ResMed unhappy with US results MELBOURNE: Sleep disorder equipment supplier ResMed is disappointed with the financial performance of its business in the United States, despite a profit rise. ResMed, which began in 1989 selling a device developed at the University of Sydney to treat sleep apnea, now develops and sells a range of devices around the world to treat sleep and respiratory disorders. ResMed’s net income in the three months to December 31 of $US86.6 million was up 11 per cent from the same period a year earlier. Net income in the first half of the 2013/14 financial year grew by 12 per cent to $US167.56 million. However, quarterly revenue in the Americas fell 2 per cent compared to the prior corresponding period, to $US206.6 million. “In the Americas, clearly we had some external headwinds, and we were not satisfied with the results,” ResMed chief executive Mick Farrell said. Sales in the key US market were affected by restructuring due to competitive bidding, increased competitor activity on pricing and the release of new products. Sales revenues from masks were flat and air flow generator sales revenue fell by 5 per cent. Mr Farrell said ResMed was also up against some very tough prioryear comparisons – flow generators were up 16 per cent in the same period in 2012 and masks were also up 16 per cent 12 months ago. He said it would be several months before the US market stabilises, but the number of new sleep disorder patients continued to grow in the US and many of ResMed’s US customers were picking them up. AAP Qantas CfO hits out at critics SYDNEY: The finance chief of Qantas has taken a swipe at the airline’s “armchair expert” critics and defended its profit-draining strategy of maintaining a 65 per cent market share. In a blog post on the Qantas website, chief financial officer Gareth Evans said criticism of the airline’s strategy and its financial troubles were based on a “fundamental misunderstanding of the aviation market and Qantas itself”. “There is never a shortage of armchair experts with theories on how to run Qantas and the cabin has been especially crowded “We plan to keep improving our competitive advantages, not walking away from them.” recently,” he said. “For many on the sidelines, it seems few businesses are easier to run than the national carrier.” He said the airline had faced a tough global economic environment, high oil prices and competition from Asian carriers with lower costs. And he defended the airline’s much criticised strategy of maintaining its 65 per cent market share against rival Virgin, which has been working to expand its capacity. “Stepping back from the 65 per cent would effectively be waving the white flag, not to mention abandoning our role in regional Australia and betraying the loyalty of our frequent flyers,” he said. “Imagine someone saying Woolworths should start closing stores in response to the threat from Coles. We plan to keep improving and strengthening our competitive advantages, not walking away from them.” In December, Qantas flagged a $300 million underlying loss for the six months to the end of 2013. The airline is cutting costs in response to the loss and has been lobbying the federal government for assistance. But Mr Evans said Qantas wasn’t a “lazy company seeking a government handout” and simply wanted the government to level the playing field with Virgin. He also rejected criticism of its move to expand budget carrier Jetstar into Asia. AAP Vodafone appoints new boss BRISBANE: The head of Vodafone in Romania has been selected as the new chief executive of the telco’s Australian business. Inaki Berroeta has been president and CEO of the Romanian division since 2010 and will take over as the head of Vodafone Hutchison Australia on March 1. He will replace Bill Morrow, who at the end of March will take the head role at NBN Co, the company behind the rollout of the national broadband network. Mr Morrow said his successor’s international experience would ensure a smooth transition. “Inaki is a great fit for the local team and his diverse background places him well to take Vodafone through to the next phase of its three-year turnaround,” Mr Morrow said. Mr Berroeta was Called up: Inaki Berroeta will be the new CEO of Vodafone in Australia. Echo unloads its Townsville casino MELBOURNE: Casinos operator Echo Entertainment Group is selling its smallest operation, the Jupiters casino in Townsville, to the privately owned Colonial Leisure Group for $70 million. Echo expects to make a pre-tax profit on the sale of the Townsville casino of about $8 million, after transaction costs. Echo operates The Star in Sydney, the Treasury in Brisbane, Jupiters Gold Coast and Jupiters Townsville. Colonial Leisure Group operates 15 hotels in Victoria and western Australia and has other assets in north Queensland. “(The) recent performance of Jupiters Townsville has been positive,” Echo CEO John Redmond said. “However, given the scale of operations and the size of the local market, we saw more limited expansion opportunities, and therefore strategic fit, with the group’s other assets.” 10 - The Border Watch, Tuesday, January 28, 2014 Picture: AAP previously the head of Vodafone in Malta and has held other positions in Spain and the United States. Reject Shop doing it tough PERTH: More than $155 million has been wiped from the market value of The Reject Shop after the discount retailer said it had a disappointing Christmas trading period. The company also expects a drop in full-year profit. AAP The Reject Shop had an unexpectedly poor Christmas trading period, with flat comparable store sales, particularly at those in major shopping centres which continued to drag down good growth generally in other locations. Sales across the six months to December 31 were disappointing, as heavy discounting and the weaker Australian dollar weighed on profits, The Reject Shop said. Shares in the company dropped by $5.40, or 32 per cent, to $11.50, reducing its market value to $331.5 million. It expects sales in the first half of the 2013/14 financial year to total $385.5 million, which is up 17.7 per cent from the same period in the previous year. But that is influenced by the opening of 33 new stores in the six months to December. Managing director Chris Bryce said the overall result was well below expectations. “This reflects flat overall comparable store sales for the half, resulting from an unexpected poor December trading period, coupled with a disappointing gross margin outcome,” Mr Bryce said. The company expects its annual net profit will be down from the previous year’s $19.5 million, within the range of $17 million to $18 million. The Reject Shop plans to open 12 new stores in the six months to June 30. AAP in Brief Hot summer dents Nufarm earnings MELBOURNE: Hot, dry weather during December and January in key growing areas has resulted in lower sales and depressed margins for Nufarm. The agricultural chemicals and seeds supplier said it expects to meet its firsthalf guidance for earnings before interest and tax of $50 million to $60 million, but towards the lower end of the range. “Unfavourable seasonal conditions persisted in Australia during December and January, with hot and dry weather in key growing regions,” Nufarm said. “This has resulted in unusually low sales activity and depressed margins.” Spending on WA oil and gas falls PERTH: Exploration spending in the West Australian oil and gas sector dropped by more than 10 per cent in the September quarter. The latest WA Resources and Economics Report shows that contributed to total expenditure on mineral and petroleum exploration falling by 6.2 per cent from the prior quarter. “The decline in total exploration spend is driven by the decrease in petroleum exploration, which fell by 10.6 per cent from the previous June quarter to $752 million,” the report said. Aurizon rail hauls record coal volume BRISBANE: Freight rail operator Aurizon has hauled a record volume of coal. The Queensland-based company, formerly known as QR National, said it had moved 56.2 million tonnes during the December quarter, marking an 11 per cent increase compared with the corresponding period in 2012 and a new record. Iron ore volumes were also up strongly, rising to 7.8 million tonnes during the final quarter of 2013, or an increase of 30 per cent on the equivalent period a year earlier. AACo appoints Strong as CEO AAP MELBOURNE: Beef producer Australian Agricultural Company has appointed its current general manager of marketing, Jason Strong, as its new chief executive. “Since 2012, Jason has had responsibility for AACo’s branded beef group, driving significant profit growth through improved efficiency,” AACo chairman Donald McGauchie said. Mr Strong, who joined AACo in November 2012, replaces David Farley, who retired in July.
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