The Border Watch : April 1st 2014
Business rate rises tipped Economists expect interest rates to climb above three per cent in 2015 SydnEy: Economists predict a string of interest rate increases next year, with the cash rate expected to rise to 3.25 per cent. The board of the Reserve Bank of Australia meets today and none of the 13 market economists surveyed by AAP forecast any movement in the cash rate in the first half of this year. That’s mostly due to indications from RBA governor Glenn Stevens in recent months that he is not Half-year loss takes fun out of Funtastic SydnEy: Toy distributor Funtastic has suffered a $26 million half-year loss and says sales of some of its key brands have been disappointing. The company’s loss in the six months to January 31 was largely caused by a writedown of $24.2 million on its entertainment division, Madman, which is in the process of being sold. Funtastic also had higher costs in the period, while the weaker Australian dollar and poor sales of key brands, including Leapfrog, Power Rangers and Ben 10, also impacted its performance. The company made a $9.3 million profit in the same period a year earlier. Funtastic will not pay out an interim dividend, but chief executive Stewart Downs expects a better performance in the second half of its fiscal year. “Given our strengthening financial position and operating performance I expect to resume dividend payments to shareholders when we announce our fullyear results,” he said. An expected second- half improvement would see the company achieve earnings of between $19 and $23 million for the full year, Mr Downs said. It had earnings of $3 million in the six months to the end of January. Two expressions of interest have been lodged for the Madman business, which distributes DVDs and Blu Ray products and manages rights for films and television programs. Funtastic said it expected a sale would be completed by the end of July. Aside from the reduced value of Madman, the business also had a fall in earnings due to changes to its distribution model. “It was a disappointing first half domestically both for Funtastic Australia and Madman Entertainment,” Mr Downs said. inclined to cut the cash rate from its current record low 2.5 per cent. “On present indications, the most prudent course is likely to be a period of stability in interest rates,” he said after both the February and March board meetings. The RBA governor also increased expectations that the interest rate cutting cycle is over by delivering an upbeat view of the economy during a speech in Hong Kong last week. ‘We expect that the RBA’s next move is likely to be up.’ Mr Stevens said there were “promising signs” from non-mining sectors of the Australian economy, where growth is needed to offset declining mining investment. “There is encouraging early evidence that the so-called handover from mining-led demand growth to broader private demand growth is beginning,” he said. Four of the economists surveyed said the RBA’s first rate hike in four years will happen late this year, while nine said there will be one or more increases in the first half of 2015. Only two of the 13 economists surveyed said there would be another cut in the cash rate. The median forecast for the cash rate at the end of 2015 is 3.25 per cent. HSBC Australia chief economist Paul Bloxham is predicting the cash rate to start rising before the end of 2014. “With activity lifting, inflation already in the upper half of the target band and tentative signs that the labour market is also improving, we expect that the RBA’s next move is likely to be up,” he said. new home sales near three-year high SydnEy: New home sales are at a near three-year high, driven by a boom in detached house sales. Detached house sales jumped 6.9 per cent in February, according to data from the Housing Industry Association. That led to an increase in total new home sales of 4.6 per cent, seasonally adjusted – the highest level since May 2011. Sales of multi-units fell 6.8 per cent. The construction of detached houses creates more jobs than multi-units. “Both sales and building approvals for detached housing are signalling faster momentum ahead for this component of new dwelling construction, compared to what was evident in the first phase of the recovery,” HIA chief economist Harley Dale said. “This signal suggests more balanced growth ahead in the composition of new home building and adds a further positive dimension to the recovery for many of Australia’s manufacturers and suppliers.” Dr Dale said the housing recovery was spreading, having previously been dominated by NSW and Western Australia. In the three months to February, detached house sales in South Australia were up 32.5 per cent and 19.8 per cent in Queensland. AAP Sales bonanza: The Housing Industry Association says new home sales increased by 4.6 per cent in February. Fortescue wants to be safety leader PERTH: Fortescue Metals Group wants to become a world leader in mining safety, as it examines its use of contractors after two workers’ deaths. The contractors died in separate incidents at Fortescue’s Christmas Creek mine in WA in 2013, sparking multiple investigations and orders for the company to improve safety. Chief executive Nev AAP Power said the Pilbara iron ore miner had made a lot of safety improvements so far this year. 8 - The Border Watch, Tuesday, April 1, 2014 “We’re committed to making a step change in our safety performance and become global leaders in safety leadership,” he said. procedures for workers and was now exceeding industry standards in most cases, he said. A review of the company’s use of ‘We’re committed to making a step change in our safety performance.’ “We’re already global leaders in so many areas of the field and we want to now ensure that we’re also leaders in safety.” Fortescue has reviewed its lockout and isolation contractors was continuing, Mr Power added. “We consistently and constantly review across all of our operations to determine what’s the appropriate model to operate, whether that’s a contracting model or a direct employment model, and that process will continue into the future,” Mr Power said. Fortescue recently bought two crushing plants at Christmas Creek which were operated by contractor Crushing Services International. A 24-year-old man was crushed to death while carrying out maintenance work in Crushing Services International’s crushing plant in August last year. AAP Picture: AAP AAP in Brief Seven in takeover bid for Nexus Energy SydnEy: Billionaire Kerry Stokes’ Seven Group Holdings has lodged a takeover bid for debt-laden oil and gas company nexus Energy. The media and industrial services group plans to acquire all shares in nexus Energy for 2c each, which values the company at $26.6 million. nexus has offshore exploration and production assets in Victoria and Western Australia. Small banks ask for level playing field SydnEy: Four of Australia’s smaller banks have joined forces to call on an inquiry into the financial system to provide a level playing field against the big four. Bank of Queensland, Bendigo and Adelaide Bank, ME Bank and Suncorp Bank have launched a joint submission to the Abbott Government’s Financial System Inquiry, calling for a fairer regulatory environment. New business loyalty program for Qantas SydnEy: Qantas has unveiled a new loyalty program for small and medium-sized businesses, just days after the airline angered passengers with changes to its main frequent flyer offering. The airline’s new awards program, called Acquire, will allow businesses to earn points by booking flights through Qantas or spending money with the program partners. Inflation pressures build – survey SydnEy: Inflation has continued to rise, signalling the beginning of the end for the record-low cash rate. The Td Securities Melbourne Institute monthly inflation gauge rose by 0.2 per cent in March and by 2.7 per cent in the 12 months to March – the same as in February. The increase was driven by price rises for fruit, vegetables, meat, seafood, travel and accommodation. Dollar down ahead of cash rate decision BRISBAnE: The Australian dollar has lost ground as traders book in profits amid predictions the currency could soon bounce as high as US95c. At 5pm yesterday, the local unit was trading at US92.31c, down from 92.66c on Friday. OZForex chief currency strategist Jim Vrondas said the Aussie dollar was due for a pullback after last week’s strong rally, but there was a good chance it could climb to US95c on hints from the RBA of pending interest rate rises.
March 28th 2014
April 2nd 2014