The Border Watch : February 18th 2014
Business Market up on back of local earnings PERTH: Australian shares have finished higher, buoyed by local earnings results and offshore gains. Commonwealth Bank analyst Steve Daghlian said the market rose for the seventh trading session in eight trading days. “Strong gains out of US and European markets on Friday and promising economic data out of China on the weekend drove our market and pushed the mining sector up about 1.3 per cent,” Mr Daghlian said. Stocks were also buoyed by better-than-expected domestic earnings season. But the Commonwealth Bank took the shine off some of the gains, trading ex-dividend and closing more than 2 per cent lower. “It was probably a bit quieter than it could have been,” Mr Daghlian said. Around 50 of the companies on the ASX200 will release their earnings reports this week. Bendigo and Adelaide Bank lifted first half cash profit to $185.9 million, although its net profit was down almost nine per cent to $180.7 million due to oneoff charges. The big four banks were mainly higher with ANZ up 28c at $31.62, Westpac 16c higher at $32.91 and National Australia Bank 63c better at $34.75. But Commonwealth Bank was down $1.64, or 2.2 per cent, at $74.35, In the mining sector BHP Billiton is due to report its first-half results today. It was up 31c at $38.02, while Rio Tinto had lifted $1.64 to $69.54. Fortescue Metals, which is expected to release its results tomorrow, was up 12c at $5.82. fTA provision no deal-breaker Korean trade agreement levels playing field for Aussie investors CANBERRA: Trade Minister Andrew Robb is confident the terms of a free trade agreement negotiated with Korea won’t put the Australian government at risk of being sued by foreign companies. Mr Robb yesterday released the full details of the deal struck two months ago, lauding the benefits it will bring to Australian investors, particularly in agriculture, manufacturing and services industries. The Korean-Australian FTA will eliminate tariffs on nearly all exports into Korea, Australia’s thirdlargest export partner, with farm products expected to skyrocket. But the deal includes a contentious provision that allows Australian and Korean investors to take legal action if there is a breach of treaty obligations. Critics, including Labor, warn these so-called investor state dispute settlement provisions could threaten consumer rights and government’s ability to regulate in the public interest. But Mr Robb was adamant there were protections in the FTA to ensure the government would not be prevented from making future policy decisions in areas like public health and the environment. He said it was logical AAP that Australian companies should have a comeback if major investments were made into Korea but later the terms were breached. in Brief Writedowns force Aurizon profits fall SYDNEY: Freight rail operator Aurizon has suffered a 39 per cent slide in first-half profit due to asset writedowns and redundancy costs. Aurizon made a net profit of $107 million for the six months to December 31, down from $176 million a year ago. The company attributed the profit slide to $197 million in writedowns to its rolling stock and a review of infrastructure projects. The result also included $25 million in costs after 262 employees took voluntary redundancy packages during the half year. BHP tipped to post nearly $8b profit Breaking ground: Trade Minister Andrew Robb announces details of the free trade agreement with Korea yesterday. “It’s a protection for our investors,” he said, adding Australian companies had successfully taken legal action in the past. “It has been a very effective – little used – but very effective component, especially in countries where their legal system is not up to the standard that it might be.” He said ISDS provisions weren’t new, having existed in Australian trade deals for 30 years. Just one case had been taken against Australia – the legal challenge to the Gillard government’s introduction No ‘for sale’ sign on UGL’s property arm PERTH: Engineering and property services group UGL is hopeful of growing earnings in 2014 despite fielding offers for its property business. UGL says it has endured a complicated and challenging year and recently received several unsolicited offers after announcing plans to split its property and engineering arms by the end of 2014. The company’s commercially unsettling, extremely risky and unlikely to achieve a satisfactory outcome”. “We’re assessing the indicative “We’re not going down the path of offering this up with a for sale sign out the front for anyone who wants to bid.” shares fell 85c, or 12 per cent, to $6.23 after chief executive Richard Leupen confirmed several private equity outfits had approached UGL yesterday. But, he said, UGL would not reveal the nature of the offers or conduct a formal sale process because it was “destabilising, proposals we’ve had,” Mr Leupen said yesterday. “We’re not going down the path of offering this up with a for sale sign out the front for anyone who wants to bid.” Mr Leupen added it was still unclear whether the proposals were “executable”. UGL said it increased its half- year profit by 13.5 per cent to $29.5 million with its diverse revenue base helping it weather challenging conditions in the local mining sector. UGL anticipates a full year net profit of around $120 million, which is at the lower level of previous guidance. 12 - The Border Watch, Tuesday, February 18, 2014 AAP of plain packaging for cigarettes. This deal is seen as the first step in the Abbott government’s trade agenda, with similar agreements being pursued with Japan and China and the broader Trans-Pacific Partnership still being negotiated. Mr Robb said the Korea deal levelled the playing field with Australia’s competitors like the US, EU and other Asian nations who signed FTAs with Korea years ago. “It has put so many of our traditional exports at a very severe disadvantage,” he said. Picture: AAP Korean investments in Australia will only go to the Foreign Investment Review Board for approval if they’re valued above about $1.1 billion – up from $248 million. However, no progress was made on rice, walnuts and honey because concessions were deemed too sensitive by Korea. Mr Robb is hopeful the deal will be signed within four months – pending examination by the parliaments of both nations – and in force shortly after. AAP Regional lender raises profit by 10 per cent SYDNEY: Bendigo and Adelaide Bank has lifted its cash profit almost 10 per cent as lower funding costs offset the impact of weak lending growth. Australia’s largest regional lender made a cash profit of $185.9 million in the six months to December 31, up from $169.7 million in the same period a year earlier. Chief executive Mike Hirst said the bank was facing a low growth environment that was likely to continue this year. “We’re seeing low growth due to subdued demand and an increase in people making additional efforts to pay down their debt,” he said. However, he said lower funding costs had helped lift the bank’s margins during the half, which was a key driver of the growth in underlying earnings. “Deposits are at pleasing levels and wholesale markets are working well,” he said. “We have a lot of flexibility in how Positive trend: Bendigo and Adelaide Bank’s profits are rising. we fund our business and this is reflected in our increased margin.” Bendigo’s deposits grew by $500 million in the six months to December to $42.7 billion. But Mr Hirst said increasing competition for fixed rate home loans could hurt Bendigo’s margins. “The margins we lock in with those fixed rates are marginally lower than we generate with out fixed mortgages,” he said. The bank’s shares were up 6c at $11.78. AAP MELBOURNE: Mining giant BHP Billiton is expected to have arrested a twoyear slide in the past six months, and shareholders may be rewarded with an increased dividend. However it is unlikely to match fellow miner Rio Tinto’s bumper 15 per cent dividend lift, or its degree of costs and spending cuts. Analysts expect BHP to today post an underlying profit of $7.89 billion for the first half of the 2013-14 financial year. Australian Property Group suffers fall SYDNEY: Australand Property Group has suffered a 25 per cent slide in fullyear profit to $135 million. The result was affected by writedowns on several commercial, industrial and residential projects, which were announced last November. Australand’s 2013 operating profit was up 4 per cent to almost $148 million, in line with guidance. Fairfax weekend papers go compact SYDNEY: Fairfax Media’s weekend newspapers will move to the compact format already used for weekday editions within weeks. Fairfax has announced the weekend editions of the Sydney Morning Herald and The Age would adopt the smaller size as of Saturday, March 1. New car sales down in January SYDNEY: Sales of new motor vehicles fell 3.5 per cent in January. There were 93,232 new vehicles sold in the month, compared with 96,573 in December, seasonally adjusted figures from the Australian Bureau of Statistics show. In the 12 months to January, new motor vehicle sales were down 3 per cent.
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