Market Wraps

Earnings Wrap: QBE's bumper profit, AGL posts $1.2bn loss, Boral tops expectations

Thu 10 Aug 23, 9:48am (AEST)

Boral: Ekes out EBIT, revenue improvements in FY23

Building and construction supplies firm Boral (ASX: BLD) reported gains across the board for FY23, with earnings before interest, tax up 37.6% and revenues up 17.1%.

Statutory NPAT was $148.1 million for FY23, down 85% when compared to the prior year, as FY22 included $977.6 million of post-tax income from discontinued operations.

These primarily related to the profit recognised on the sale of the North American Building Products business.

The new chief executive Vik Bansal, who joined Boral in October from waste management heavyweight Cleanaway, said he was pleased to report the “clear improvement” across the entire business. He emphasised volume growth across all products, with a “disciplined approach to price, cost, and cash.”

Bansal was hired by Kerry Stocks and his family, who own 73% of Boral after a 2021 takeover.

Boral increased prices on quarrying products by 11% during the year, cement prices gained 8%, concrete prices lifted 12%, and asphalt was up 6%.The board has said it will not pay a dividend in FY23.

QBE: Huge profit growth but short of analyst expectations.

QBE Insurance (ASX: QBE) this morning delivered a first half profit number of $405 million, up sharply from $48 million a year earlier but short of the circa $478 expected by analysts.

Like other insurers, QBE rode a wave of higher premiums to its latest results, with premiums up 10.2% and gross written premiums (GWP) coming in at $12.80B – in line with expectations.

Net premiums earned came in at $7.98B, also broadly in line with expectations.

The company declared an Interim dividend of 14 cents per share (10% franked) – up from the prior period’s 9 cps - with the record date being 18 August, payable 22 September.

The results were negatively impacted by an increase in natural disasters, headlined by storms in America.

As for the outlook, QBE is looking for GWP growth of 10%, and a combined operating ratio (COR) of ~94.5%, which excludes the upfront cost of the $1.9 billion reserve transaction.

A measure of general insurance underwriting profitability, the COR compares claims, costs and expenses to premiums. If the costs are higher than the premiums (i.e. the ratio is more than 100%) then the underwriting is unprofitable.

Downer: In-line with pre-released earnings

Downer (ASX: DOW) released unaudited full-year results last week and there was little discrepancy between the unaudited and official results. 

  • Total revenue up 5.4% to $12.6bn

  • Statutory EBITDA loss of $227.3m 

  • Underlying EBITDA down 15.5% to $323.4m

  • Statutory net loss of $385.7m 

  • Underlying net profit of $174.2m vs. $174m guidance

  • Final dividend of 8 cents per share

“Downer’s FY23 full year results were below our expectations, but we are encouraged by our improvement in the second half and the good momentum we are carrying into FY24.” said Chairman Mark Menhinnitt.

FY24 was viewed as an “important transition year in our turn-around program as we address areas of underperformance, stabilise and reposition the business for future profitable growth.”

Despite the company flagging challenging external market conditions such as ongoing cost escalation, labour shortages and productivity issues, its FY24 outlook was rather positive:

Start the year with a high percentage of secure revenue and are targeting continued improvement in EBITA margin for FY24

  • 1H24 will be affected by the run-off of existing low margin contracts and the timing of our Utilities recovery, with stronger earnings targeted in the 2H24

  • Confidence in achieving $100 million of cost out, with full run rate into FY25

AMP: 1H23 profit was down and 2.5 cent dividend

The wealth management business reported a statutory net profit of $261 million for the first half of FY2023, down from $469 million a year earlier. The first-half result reflects the $209 million net gain from the sale of assets including its international and domestic infrastructure businesses and SMSF business SuperConcepts. The 1H22 figure was bolstered by the $390 million sale of the Infrastructure Debt platform.

  • Its AMP Bank division posted an underlying NPAT gain of 23.9% versus 1H22, which came in at $57 million for 1H23

  • Platforms business’s NPAT of $44 million was up 25.7%.The firm’s Advice business reported a $25 million NPAT loss, but narrowed by $5 million the losses of 1H22

  • Management also reported a $50 million provision for financial advice customer remediation payments, on the back of the Financial Adviser Class Action judgement of 5 July 2023

An interim dividend of 2.5 cents a share was declared, 20% franked. “While remaining committed to returning surplus capital to shareholders, given the current uncertainty surrounding the outcome of the Financial Adviser Class Action and other litigation matters, Tranche 3 of the capital return program has been paused. An update will be provided no later than 31 December 2023,” management said.

AGL reports $1.2bn profit dive for FY23

AGL Energy (ASX: AGL) reported a statutory loss of $1.26 million on Thursday, including $680 million in post-tax impairments related to earlier than anticipated coal plant closures.

But its underlying net profit of $281 million after tax came in slightly ahead of StreetAccount FactSet consensus expectation of $267.2 million.Revenue of $14.16 billion and adjusted EBITDA of $1.36 billion was also ahead of the consensus outlook of $13.96 billion and $1.35 billion.

AGL managing director Damien Nicks emphasised the firm’s strong second half after a “challenging” start to the year, which was marred by volatile energy market conditions and forced plant outages.

“We recognise that many Australians are struggling with broad cost of living pressures, including rising energy prices. We are committed to supporting our customers during this difficult time and will spend at least $70 million over the next two years to help our customers to manage cost of living pressures,” Nicks said.

AGL was called out recently by Platinum Asset Management’s Jodie Bannan as her – somewhat surprising – pick of ASX-listed energy transition plays.“We think electricity demand, as many would, will grow as customers shift away from fossil fuel consumption. And AGL is very well positioned to benefit from this transition here in Australia,” Bannan told Livewire Markets on Monday.

She’s positive on the company’s longer term outlook, on the back of “great commercial, industrial and retail customer bases” with “very low-cost assets and great infrastructure…we’d be holding on for a bit longer.”

AGL management declared a final unfranked dividend of 23 cents a share for FY23, payable on 22 September. This is consistent with the firm’s targeted dividend payout policy of approximately 75% of underlying profit after tax.Looking ahead, management reaffirmed its FY24 guidance:

  • Underlying EBITDA of between $1,875 and $2.17 billion

  • Underlying Net Profit after tax of between $580 and $780 million

These are expected to be partly offset by the closure of Liddell Power Station and higher operating costs.

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Written By

Glenn Freeman

Content Editor

Glenn is a Content Editor at Livewire Markets and Market Index. Glenn has almost 20 years’ experience in financial services writing and editing. Glenn’s journalistic experience also spans energy and automotive, in both Australia and abroad – including the Middle East – where he edited an oil and gas publication in the United Arab Emirates.

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