ASX reporting season wrap: The best and worst results plus FY25 outlook

Macquarie says Australian companies delivered a positive earnings surprise overall, as control measures and pricing power helped protect margins in a slowing demand environment.

Below, we highlight some of the key takeaways from Macquarie's Australian Reporting Season Wrap.

The Best and Worst

Australia's corporate earnings fell 4.4% in FY24, which was 1.1 percentage points better than what the analysts had expected going into results.

At the sector level, most earnings turned out to be a little more resilient than expected but still flagged year-on-year declines.

• Resources had the largest upside surprise, with EPS growth 2.9 percentage points better-than-expected (but still a 17% year-on-year fall)

• Banks were more resilient than expected (but earnings still down 1.4% year-on-year)

• REITs were the biggest disappointment, with aggregate EPS 2.1 percentage points lower than expected

• Industrials was the only sector to deliver growth

In terms of individual companies, only 5% managed to report both an EPS beat and FY25 upgrade. This included:

• Block (ASX: SQ2)

• JB Hi-Fi (ASX: JBH)

• Telstra (ASX: TLS)

• Lynas Rare Earths (ASX: LYC)

A higher percentage of small caps had beats plus upgrades, including:

• Hub24 (ASX: HUB)

• Temple & Webster (ASX: TPW)

• Service Stream (ASX: SSM)

• Perseus Mining (ASX: PRU)

• Sandfire Resources (ASX: SFR)

In the ASX 200, 16% of results missed FY24 earnings expectations and had consensus FY25 downgrades. Towards the large end of town, this included:

• QBE Insurance (ASX: QBE)

• NIB Holdings (ASX: NHF)

• Dexus (ASX: DXS)

• Seek (ASX: SEK)

• Cochlear (ASX: COH)

• A2 Milk (ASX: A2M)

• Other: WOR, AZJ, BSL, WHC, APA, ORG

Top Themes

#1 Conservative guidance: More than 40% of companies guided below consensus due to uncertainties over interest rates and the US election.

#2 Global cyclicals underwhelmed: This was largely due to weaker-than-expected margins and sales as well as headwinds from the rising Australian dollar.

#3 Dividend surprise: Reporting season ended with a modest aggregate dividend beat of 2 percentage points. "The stronger dividends towards the end is a positive signal for investors, as it shows some confidence in the outlook despite the conservative guidance," the report said.

FY25: The Recovery is Gone

Before reporting season, Macquarie was expecting ASX earnings to bounce almost 10% in FY25, largely due to higher commodity prices. This has now been reduced to 0.1% in response to the results, soft guidance and commodity outlook.

"Resources have again been the biggest disappointment, as FY25 EPS growth was >20% back in April, and now we are forecasting a fall of 3%," the report said.

"Energy, Media, Utilities, Mining, Health and Capital Goods all had consensus downgrades to 2025 EPS of 5% or more."

"There were only four sectors (Tech, Telecom, Banks, Financial Services) where aggregate earnings upgrades were greater than 1%."

Although downgrades to FY25 earnings are concerning for markets, they are not unusual early in the financial year when uncertainty is highest. Analysts expect these downgrades to ease by year-end, barring a further slowdown in growth that could trigger additional cuts during the November AGM season.