BUSINESS FORECASTING – AUSTRALIA

Mag queen tips Bauer will axe Pacific titles

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Original article by Lilly Vitorovich
The Australian – Page: 19 : 4-May-20

Bauer Media completed a $40m deal to acquire Seven West Media’s Pacific Magazines division on 1 May. Magazine industry veteran Deborah Thomas expects Bauer to suspend the print editions of some Pacific titles due to the coronavirus-induced downturn in the advertising market. Four of the print editions of Bauer’s own titles were recently put on hold, and some industry executives doubt that several of them will resume publication. Bauer has also stood down or laid off up to 140 employees in Australia, while its New Zealand operations were shut down in April.

CORPORATES
BAUER MEDIA AUSTRALIA PTY LTD, PACIFIC MAGAZINES PTY LTD, SEVEN WEST MEDIA LIMITED – ASX SWM, BAUER MEDIA KG, BAUER MEDIA (NZ) LIMITED

Are Australia’s big four banks equipped for recession?

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Original article by Ian Verrender
abc.net.au – Page: Online : 4-May-20

The general expectation is that Australia’s major banks will ride out the coronavirus-induced economic downturn relatively unscathed. However, contrary to popular opinion, the nation’s financial system did not cope well with the global financial crisis; indeed, the federal government had to underwrite bank loans and guarantee deposits. Meanwhile, Australia’s banks now have significant exposure to the residential and commercial property sectors. With unemployment likely to reach double digits, there will be growing pressure on already heavily indebted households; demand for office space will also fall as more people become jobless or work from home permanently, which will in turn reduce commercial property values.

CORPORATES

Bad debts hang over Westpac dividend plans

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Original article by James Frost, Aleks Vickovich, James Eyers
The Australian Financial Review – Page: 15 & 19 : 4-May-20

Westpac’s dividend payout is likely to be a key focus for investors when its half-year financial results are released on 4 May. Westpac has already advised of $1.6bn in impairment charges for coronavirus-related loan losses. Matt Williams of Airlie Funds Management says Westpac should not pay an interim dividend, arguing that investors expect companies to preserve capital in the current environment. David Walker of Clime Asset Management in turn expects Westpac to pay a much lower half-year dividend and opt for a dividend reinvestment plan.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AIRLIE FUNDS MANAGEMENT PTY LTD, CLIME ASSET MANAGEMENT PTY LTD

Fortescue upbeat as cash rolls in

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Original article by Nick Evans
The Australian – Page: 16 : 1-May-20

Fortescue Metals Group has advised that it ended March with a net cash position for the first time since it commenced iron ore exports in 2008. It had a net cash position of $US100m, compared with net debt of $US2.9bn previously. Fortescue’s production report for the March quarter also shows that its shipments rose by 10 per cent to 42.3 million tonnes during the period. It now expects total shipments of up to 177 million for 2019-20; its previous guidance was for export volumes of up to 175 million tonnes.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG

Westpac braces for virus shock

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Original article by Joyce Moullakis
The Australian – Page: 17 & 21 : 29-Apr-20

Westpac has advised that its half-year accounts will include a pre-tax impairment charge of $2.24bn. This includes a $1.6bn provision for coronavirus-related loan losses. However, CEO Peter King says the bank is well-positioned to absorb an increase in loan losses, while Westpac does not expect the impairment charges to have much effect on its common equity tier-one capital ratio. Westpac is not expected to undertake a capital raising, having raised some $2.77bn from investors in November. Westpac will release its interim results on 4 May.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC

Air travel could struggle to take off again

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Original article by Hans van Leeuwen
The Australian Financial Review – Page: 11 : 23-Apr-20

The International Air Transport Association has warned that Australia’s aviation industry could take some time to recover when coronavirus restrictions are eased. The IATA notes that a rebound in business confidence after the number of new infections declined in late February saw domestic air travel in China quickly return to about 45 per cent of its previous level. The IATA’s chief economist Brian Pearce notes that in contrast, Australia’s domestic flights have not yet resumed despite the fact that the nation’s rate of infection has slowed considerably.

CORPORATES
INTERNATIONAL AIR TRANSPORT ASSOCIATION

TV networks brace for potential 30 per cent fall in ad revenues despite rising viewership

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Original article by Rod Myer
The New Daily – Page: Online : 21-Apr-20

The coronavirus lockdown has prompted a spike in ratings for TV news bulletins as Australians seek information on the pandemic. Think TV CEO Kim Portrate says there has been strong growth in audiences for traditional linear TV, broadcast video-on-demand and subscription video-on-demand services. However, TV networks’ revenue is being hit by a sharp fall in bookings from advertisers; Jane Ratcliffe from Standard Media Index estimates that ad revenue could fall by 25-30 per cent in April.

CORPORATES
THINK TV, SMI MEDIA INCORPORATED

NAB reveals $1.4bn writedowns

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Original article by Joyce Moullakis
The Australian – Page: 16 : 21-Apr-20

National Australia Bank has advised that its cash profit for the six months to 31 March will be marred by writedowns totalling $1.14bn. This includes a $188m provision for customer remediation and an impairment charge of $742m associated with its software capitalisation policy. Westpac recently warned that its half-year results will include some $1.43bn worth of write-downs. Meanwhile, analysts expect the major banks’ loan losses and dividend payouts to be a key focus for investors when their interim results are released.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

BHP iron ore shipments steady as Vale falls short

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Original article by Peter Ker
The Australian Financial Review – Page: 23 : 21-Apr-20

BHP will release its quarterly update on 21 April, and analysts estimate that its Pilbara iron ore shipments totalled 68 million tonnes in the first three months of 2020. This means BHP should be on track to achieve its full-year guidance for iron ore exports. Fortescue Metals Group also seems set to achieve record export volumes for the year. Brazilian iron ore giant Vale recently advised that it produced 59.6 million tonnes of iron ore fines in the March quarter, which is well below its revised target of 68-73 million tonnes.

CORPORATES
BHP GROUP LIMITED – ASX BHP, FORTESCUE METALS GROUP LIMITED – ASX FMG, VALE SA, RIO TINTO LIMITED – ASX RIO

Energy companies face huge asset writedowns

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Original article by Perry Williams
The Australian – Page: 13 & 14 : 20-Apr-20

The price of Brent crude oil is trading at around $US28 a barrel. Energy industry sources have warned that Australian oil and gas producers may have to announce significant full or half-year impairment charges if the oil price remains subdued for the remainder of 2020. Allan Gray Australia Simon Mawhinney says $U30 a barrel is not sustainable for the industry. Futures market pricing suggests that the long-run oil price may average $US44 a barrel until 2023.

CORPORATES
WOODSIDE PETROLEUM LIMITED – ASX WPL, SANTOS LIMITED – ASX STO, OIL SEARCH LIMITED – ASX OSH, BEACH ENERGY LIMITED – ASX BPT, ALLAN GRAY AUSTRALIA PTY LTD