ELEANOR HALL: And there’s more economic gloom in Australia as several Australian companies release their profit results.
Storage products maker Brambles, says it will cut 750 jobs in response to a half year profit which dropped by nearly one-third.
And investors in retail and resources conglomerate Wesfarmers will also suffer.
Finance reporter Sue Lannin joins us now with the details.
So Sue, what is the news from Wesfarmers?
SUE LANNIN: Well as flagged recently by the company Wesfarmers will cut its dividend for the half year and that’s as the company struggles to pay off around $20-billion in debt, most of that is from the Coles takeover.
So the half year payout has been cut from 65 cents to 50 cents per share; the company also says that the payout for the second half of the year will be no more than 50 cents, so bad news there for investors.
But despite the gloom, first half profit actually rose by 46 per cent to $879-million. Now that was in line with expectations it was helped by a jump in revenue from coal and retail businesses.
The chief executive Richard Goyder says Coles will take a hit of about $13-million from its insurance division because of the Victorian bushfires and he says volatile trading conditions will continue but there is still some optimism ahead.
RICHARD GOYDER: We’re in a difficult environment at the moment and so it is challenging for business. We expect to see continued improvement in Coles and the turnaround continuing to take effect, and we shouldn’t forget that both Office Works and K-Mart are also in turnaround mode, and there are a lot of things we can do with those businesses.
ELEANOR HALL: So some optimism there from the Wesfarmers chief executive Richard Goyder.
But Sue, no such optimism from Brambles, where they’ve announced job cuts.
SUE LANNIN: Yes Eleanor, now Brambles is the world’s biggest wooden pallet maker so they’re used to move and store products.
First half profit fell 28 per cent. Now because of that Brambles will cut operations worldwide and eliminate 750 jobs. And they’re saying for the future they’re expecting a further worsening in trading conditions in what they say is a challenging and volatile environment.
ELEANOR HALL: And now what about the banks? Any results delivered in that sector today?
SUE LANNIN: Yes, we had one of the big regional lenders, Bendigo and Adelaide Bank, so they say their half year profit fell, so that’s the net profit for the six months to December was down just over 27 per cent to $60.5-million- that’s the restated after tax profit. It fell because of costs associated with its merger with Adelaide Bank and also a rise in bad debts mainly due to four property construction loans.
Cash earnings though rose up 42 per cent to $122-million.
The news for shareholders – not so bad as with Wesfarmers – dividend was unchanged at 28 cents per share partly franked.
Unlike other banks that have flagged cuts the chief executive Rob Hunt says they’re not expecting to see pressure on dividends in the second half of the year.
ELEANOR HALL: So is there any good news out there?
SUE LANNIN: There actually is some good news out there Eleanor. The lending finance figures came out from the Bureau of Statistics, so personal finance – that’s the numbers for credit cards and personal loans – rose over the year to December by 4.1 per cent. Of course they rose also in December.
And lending by businesses actually increased by nearly two per cent in the year to December.
ELEANOR HALL: Sue Lannin our finance reporter, thank you.
Certainly it is time to look around at what other opportunities are out there. It may not be every ones cup of tea but check this out and see what you think.