BUSINESS FORECASTING – AUSTRALIA

Demerger option looms for Origin

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 28 & 22 : 2-May-16

The commencement of production at the Australia Pacific LNG project means Origin Energy’s oil and gas business accounts for the biggest proportion of its operations. This will strengthen the case for those who advocate that Origin should spin off its electricity and gas retailing arm, which boasts 4.3 million customers. However, Origin has some $A9bn worth of debt, which would make a demerger difficult to pursue at present, particularly given the continued weakness of the crude oil price.

CORPORATES
ORIGIN ENERGY LIMITED – ASX ORG, AUSTRALIA PACIFIC LNG LIMITED, AGL ENERGY LIMITED – ASX AGL, CREDIT SUISSE (AUSTRALIA) LIMITED, BG GROUP PLC, CONOCOPHILLIPS, CREDIT SUISSE (AUSTRALIA) LIMITED, UBS HOLDINGS PTY LTD, SANTOS LIMITED – ASX STO, HONY CAPITAL, ENN HOLDINGS, SINOPEC CORPORATION, BORAL LIMITED – ASX BLD, ALLAN GRAY AUSTRALIA PTY LTD

Pressure on dividends in bank earnings

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Original article by Clancy Yeates
The Australian Financial Review – Page: 13 & 16 : 2-May-16

The earnings and dividend payouts of Australia’s four major banks will come under scrutiny in the first week of May 2016, with three set to release their half-year results. Westpac is tipped to post an interim net profit of at least $A4bn, while the ANZ Bank and National Australia Bank are expected to report half-year profits of about $A3.58bn and $A3.34bn respectively. Hugh Dive of Aurora Funds Management says NAB is the most likely to reduce its dividend payout, although Mark Nathan of Arnhem Asset Management believes that all four major banks will leave dividends unchanged in the near-term.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AURORA FUNDS MANAGEMENT LIMITED, ARNHEM INVESTMENT MANAGEMENT PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED, UBS HOLDINGS PTY LTD, CLSA AUSTRALIA PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, RESERVE BANK OF AUSTRALIA, MOODY’S INVESTORS SERVICE INCORPORATED, WATERMARK FUNDS MANAGEMENT PTY LTD, DICK SMITH HOLDINGS LIMITED – ASX DSH, ARRIUM LIMITED – ASX ARI, PEABODY ENERGY CORPORATION

Coca-Cola Amatil feels heat of price cut

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Original article by Sue Mitchell
The Australian Financial Review – Page: 18 : 28-Apr-16

Coca-Cola Amatil’s 2016 interim results are likely to be negatively affected by the use of discounting to drive sales of carbonated soft drinks and bottled water. Analysts expect the company to announce weaker earnings for the half-year. Consumers’ preferences are changing. Figures from Retail World show that soft drink sales declined from 57.5 per cent of non-alcoholic beverages in 2008 to 50.5 per cent in 2015. Meanwhile, consumption of bottled water has increased from 10.4 per cent to 20.4 per cent.

CORPORATES
COCA-COLA AMATIL LIMITED – ASX CCL, RETAIL WORLD PTY LTD, AUSTRALIAN BUREAU OF STATISTICS, COLES GROUP LIMITED, WOOLWORTHS LIMITED – ASX WOW, PEPSI-COLA COMPANY, ASAHI AND COMPANY, SCHWEPPES AUSTRALIA PTY LTD, DEUTSCHE BANK AG

Rio set to OK $5bn Oyu Tolgoi expansion

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Original article by Matt Chambers
The Australian – Page: 20 : 28-Apr-16

There is growing speculation that Rio Tinto is poised to approve an underground expansion of the Oyu Tolgoi copper and gold mine in Mongolia. Deutsche Bank expects the expansion to be approved during the June 2016 quarter, which is consistent with Rio Tinto’s own stated time-frame. Deutsche suggests that lower construction costs could reduce the cost of the expansion to about $US4bn, compared with Rio Tinto’s $US4.9bn estimate in October 2014.

CORPORATES
RIO TINTO LIMITED – ASX RIO, DEUTSCHE BANK AG, TURQUOISE HILL RESOURCES LIMITED

BHP joins Rio in cutting iron ore output

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Original article by Matt Chambers
The Australian – Page: 19-20 : 21-Apr-16

BHP Billiton has reduced its forecast for 2015-16 iron ore output in Western Australia by 10 million tonnes, to 240 million tonnes. The downgrade has been attributed to factors such as inclement weather and a railway upgrade and maintenance project. Rio Tinto recently advised that issues associated with its rail automation program will reduce its Pilbara iron ore production in 2017. BHP’s Pilbara operations produced 61.5 million tonnes of iron ore in the March 2016 quarter.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, JP MORGAN AUSTRALIA LIMITED, DEUTSCHE BANK AG, METAL BULLETIN LIMITED, UBS HOLDINGS PTY LTD, INVESTEC AUSTRALIA LIMITED

Robot train glitches hit Rio output

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Original article by Amanda Saunders
The Australian Financial Review – Page: 17 & 22 : 20-Apr-16

Rio Tinto has advised that its global iron ore shipments for the March 2016 quarter totalled 80.8 million tonnes. Shipments from the Pilbara region of Western Australia rose by 12 per cent year-on-year to 79.9 million tonnes. Meanwhile, Rio Tinto expects iron ore production in 2017 to be within the range of 330 million to 340 million tonnes, which represents a decline of up to 20 million tonnes. The lower guidance is said to be linked to problems with its Autohaul driverless trains project.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, UBS HOLDINGS PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, DEUTSCHE BANK AG

Rio, BHP could cut iron ore guidance

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Original article by Amanda Saunders
The Australian Financial Review – Page: 20 : 19-Apr-16

BHP Billiton and Rio Tinto will shortly release their production data for the March 2016 quarter. Paul Young of Deutsche Bank forecasts that BHP’s output of its four main commodities will be flat or lower than previously. Glyn Lawcock of UBS says BHP may have to reduce its iron ore production guidance for 2015-16, as it may not meet its full-year forecast for its Pilbara operations for output of 270 million tonnes. He also expects Rio Tinto’s iron ore production to have fallen.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, DEUTSCHE BANK AG, UBS HOLDINGS PTY LTD, SAMARCO MINERACAO SA, FORTESCUE METALS GROUP LIMITED – ASX FMG

Executives retain appetite for deals

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Original article by Joyce Moullakis
The Australian Financial Review – Page: 15 : 18-Apr-16

A new report by law firm Herbert Smith Freehills and the research division of the Financial Times shows that takeovers remain on the agenda for many companies. The survey of senior executives found that 75 per cent of respondents who are based in Australia expect to pursue mergers and acquisitions in the next three years, although only 33 per cent expect to make acquisitions that will boost group revenue by at least five per cent.

CORPORATES
HERBERT SMITH FREEHILLS PTY LTD, FINANCIAL TIMES GROUP, DEALOGIC (AUSTRALIA) PTY LTD, ASCIANO LIMITED – ASX AIO, CBH LIMITED, INTRALINKS INCORPORATED

Brexit would be ‘regrettable for Australia’

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Original article by James Chessell
The Australian Financial Review – Page: 1 & 2 : 18-Apr-16

BHP Billiton CEO Andrew Mackenzie says there would be few implications for the resources giant if the UK votes to leave the European Union. However, he warns that it would deter future Australian companies from listing on the London stock exchange, as they would not have the same level of access to the broader European market. Rio Tinto chairman Jan du Plessis also believes that the UK should remain in the European Union. The referendum will be held on 23 June 2016.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, AUSTRALIA. DEPT OF FOREIGN AFFAIRS AND TRADE

Bank bad debts to rise $1.2b, UBS downgrades earnings

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Original article by James Eyers
The Australian Financial Review – Page: 18 : 15-Apr-16

Australian banks’ exposure to corporate failures will affect their financial results when they are reported in early May 2016. Jonathan Mott, an analyst at UBS, wrote in a note to clients that total exposures to companies such as Arrium, the Wiggins Island Coal Export Terminal, Dick Smith, McAleese and Slater & Gordon would be around $A899 million for National Australia Bank, $A809 million for Westpac, $A688 million for the ANZ Bank and $A657 million for the Commonwealth Bank.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, UBS HOLDINGS PTY LTD, DICK SMITH HOLDINGS LIMITED – ASX DSH, SLATER AND GORDON LIMITED – ASX SGH, ARRIUM LIMITED – ASX ARI, PEABODY COALTRADE AUSTRALIA PTY LTD, McALEESE LIMITED – ASX MCS