HNN apologises for not being able to bring you the index for 20 February 2015 until now. The data provider, Yahoo Finance, experienced severe problems for data relating to 20 February 2015.
This report is thus based on activity for the two weeks to 27 February 2015.
The HNN Home Improvement Index itself has followed the pattern of many stocks during this reporting season. Frequently initial results have been met with some pessimism, followed by optimism, followed by more pessimism.
Woolworths, for example, traded mildly up in the days preceding its earnings announcement, then lost more than 10% of its value after the figures came out. Wesfarmers, with arguably much better results, hit a trough on the day it announced its earnings, recovered rapidly, and then began to decline again.
From 13 February to 20 February 2015 the index rose by 4.41 points, while the underlying ASX 200 climbed by over 49 points. From 20 February to 27 February 2015 the index fell 18.42 points, bringing it close to its level at the start of February.
Many of the companies reported their earnings during these two weeks, and these are summarised below. HNN has covered Wesfarmers separately, and while there is a summary provided, a more detailed treatment of Woolworths will be forthcoming.
Adelaide Brighton FY 2014 results
Adelaide Brighton has announced its financial results for FY 2014. Revenue came in at $1,337.8 million, up 8.9% over FY 2013. Underlying earnings before interest and tax and net profit after tax both increased by 8.5% to $245.2 million and $166.5 million respectively as compared to FY 2014.
Cement and clinker sales rose by 3%. New South Wales, Queensland, Western Australia and the Northern Territory reported strong sales. Sales in South Australia and Victoria were not as strong.
Results in NSW and QLD were driven by strong residential construction demand. Infrastructure and mining contributed to growth in WA and NT. The company made the comment that outside of residential construction, it found the construction market to be relatively subdued.
Cement accounted for 25% of revenues, followed by concrete and aggregates at 24%. WA contributed 25% of revenues, and NSW 21%.
The company commented that energy costs were the primary restriction on continuing profit growth, and that it is taking action to contain and reduce these. Adelaide Brighton sees 2015 as a good year, and forecasts price rises of 5%, though analysts believe this may be optimistic.Results announcement
Breville Group results FY 2014/15 first half
Breville has presented something of a "salad" of results, with North American earnings declining due to poor sales of juicers, while Australasian sales were acceptable and sales in the UK market good.
Unfortunately the overall results from the salad are not very good. Revenue declined by 5.6% over the previous corresponding period (pcp) to $293.9 million. EBIT was down 4.5% to $43.5 million, and net profit after tax (NPAT) fell to $29.7 million, a declined of 4.9%.
For individual markets, Breville reported only one positive comparative number, with EBIT increasing by 1.4% for the Australia and New Zealand market over the pcp. North America saw revenues sag by 10.8% and EBIT decline by 9.4%. The UK did see over 10% growth in revenues, but its "rest of world" segment still saw revenue decline by 4.3%.
Breville has provided future guidance that indicates it expects EBIT growth for the second half of FY 2014/15 of over 5% as compared to the pcp.Breville first half FY 2014/15 results presentation
BlueScope FY 2014/15 first half earnings
Please see HNN's article at:BlueScope results
Brambles first half FY 2014/15 results
The results for the first half of FY 2014/15 for Brambles were good from an operational perspective, though foreign currency exchange (FX) has taken some of the gloss from them. In fact, FX had such an impact that the company provided two sets of results, one real-world and the other results based on stable rates of exchange.
In the real-world, sales revenue came in at US$2,795 million, up by 5% over the pcp. Operating profit (a version of EBIT) was up 3% to US$466 million, and profit after tax rose by 2% to US$286 million. The stable FX numbers are all 3% to 4% higher than the real-world numbers.
Brambles CEO, Tom Gorman, outlined three areas of short-term focus to deliver longer term results: reducing cost; a new branded pallet solution for the US market; innovative use of new technologies; and expansion through unexplored segments and verticals, as well as new geographic areas.
Guidance for the remainder of FY 2014/15 is for growth in the range of 9% to 12%.Brambles results presentation
Charter Hall Group
Charter Hall reports earnings for first half of FY 2014/15
Charter Hall reported positive results for the first half of its FY 2014/15. Operating earnings rose by 27.1% over the pcp to $48.4 million. Profit after tax came in at $39.9 million, up 39.6% over the pcp.
In terms of the company's investment in retail real estate, it has gained an additional 12 properties during the half, providing a lift in gross income of $41 million to $279 million, while the occupancy rate has increased by 0.1% to 98.6%.
The guidance provided by Charter Hall is:
Absent unexpected events, our FY 2014/15 guidance is 7% to 9% growth on FY14 operating earnings per security.
Acquires Porter Paints
DuluxGroup has acquired the family-owned Porter's Paints. For further details please see:Dulux acquires Porter's Paints
Fletcher reports earnings for first half FY 2014/15
Fletcher has reported a relatively lacklustre half. Revenue increased by 1% over the pcp to NZ$4327 million. Adjusted for the sale of Pacific Steel and Hudson Building Supplies, revenue growth would be 3%. EBIT before significant items rose by 3% to NZ$290 million.
Revenue grew by 6% in New Zealand, but fell by 3% in Australia. Rest-of-world numbers indicate growth of 8%. New Zealand accounted for 50% of the company's revenues during the half, but 69% of its EBIT. The corresponding figures for Australia are 37% and 17%.
Heavy building products under-performed for Fletcher, losing 9% in sales, while construction showed strong growth of 11% in sales over the pcp.Fletcher Building results
Harvey Norman Holdings
Results for first half of FY 2014/15
Harvey Norman has reported strong results. Excluding property revaluations, EBIT rose by 14.7% over the pcp to $214.34 million, while NPAT rose by 18.5% over the pcp to reach $139.13 million.
The company reported an improvement in profits from franchise operations driven by an increase in revenue and a decrease in support. Company-owned stores in New Zealand showed a 22.8% improvement over the pcp, while trading losses declined in Ireland and Northern Ireland.
The company believes the second-half of FY 2014/15 will show good results, based on lower petrol prices, growth in the housing market, low interest rates and infrastructure investment in New South Wales.Harvey Norman report
James Hardie releases results for its third quarter FY 2014/15
For the quarter, the company's net operating profit came in at US$48.6 million, a lift of 11% over pcp. For the first three quarters of the financial year the net operating profit was US$164.1 million, an increase of 8% over the pcp.
Earnings before interest and tax increased to US$66.9 million for the quarter, an increase of 21% over the pcp. For the first three quarters of the financial year, EBIT was US$223.2 million, up 14% over the pcp.
James Hardie CEO, Louis Gries expressed on concern over the lack of growth in the US residential housing market:
While our operating environment in the US has improved marginally compared to the prior corresponding quarter, we are yet to see the previously anticipated accelerated growth in the US residential market.
The company provided guidance that it expects for final quarter of its FY 2014/15 to be similar to the previous quarter, for the USA and Europe. It also points to some uncertainty in these markets. Net operating profit for the full-year is expected to be in the range of US$210 and US$222 million.James Hardie media release
First half FY 2014/15 report
Lend Lease surprised the analysts by producing a better than expected result. Analysts had predicted profit after tax (PAT) in the $305 million range, but Lend Lease returned $315.6 million in profit, an increase of 25% over the pcp. Earnings before interest and tax, depreciations and amortisations (EBITDA) came in at $467.3 million, an increase of 17% over the pcp.
Property development delivered PAT of $145.0 million, an increase of 12% over the pcp. Future work includes the acquisition of the final 50% of a joint venture in Armadale (VIC) and four new residential apartment buildings in Melbourne and the Brisbane Showgrounds in Queensland.
Construction brought in a PAT of $85.6 million, lifting 14% over the pcp, with a major contribution from European operations. Infrastructure development contributed PAT of $70.7 million, up 134% over the pcp.
Investment management saw funds under management increase by 7% over the pcp. The division produced a PAT of $127.9 million, rising 12% over the pcp.
The company has confirmed its earlier guidance for full-year FY 2015 profit of between $604 million and $628 million.Lend Lease directors' report
Metcash acquires Southern Independent Liquor Group (Duncans)
Metcash announced it will acquire Southern Independent Liquor Group. According to the company's chairman, Frank Kraps:
Both SILG and ALM are focused on growing independent strength and we view the asset sale as a positive step toward building a stronger and more robust independent liquor retail sector. An Extraordinary General Meeting of SILG shareholders is to be held in March to obtain approval of the Asset Sale Agreement.Metcash acquires Duncans
Pact reports first half FY 2014/15 results
Packaging printing company Pact reported a rise in sales revenue to $635 million, an increase of 11.9% over the pcp. Earnings before interest and tax also rose by 2.3% to $76.7 million.
The reported earnings were below analysts' expectations for the year, raising fears it will not meet its earnings' guidance, especially as earnings are generally higher in the first half of the year in this industry sector. One cause of the reduced earnings was drought in some areas of New Zealand.Pact Group earnings reportFairfax Media report
Super Retail Group
Super Retail Group reports first half 2014/15 results
Overall sales grew by 5.7% for the half year over the pcp, reaching $1158.7 million. EBIT however, recorded a fall to $94.1 million, a decline of 7% over the pcp. NPAT also fell to $33.6 million, down 45.5% over the pcp.
The Auto division increased overall sales by 4% to $431.5 million, with same-store sales growth of 2.1% compared to the pcp. But overall EBIT fell by 1.6% to $44.2million. The company reported sales growth in all categories except for tools. Growth was positive for all states, except Queensland.
The company added six new stores, and refurbished 13, including two superstores.Investors' report
UGL reports results for first half FY 2014/15
Faced with a number of extraordinary items, UGL has reported a general decline in its fortunes. Operating revenue came in at $1957.2 million for the half, down by 12% on the pcp. EBIT also declined on the pcp, coming in at 56.5 million, down 28%.
Underlying NPAT fell by 41% on the pcp, reporting as $29.3 million. Reported NPAT came in at a loss of $122.5 million. One of the major impairment items was the need to make a provision of $175 million for losses on the Ichthys CCPP Project. The slowdown in resources added a further $57.8 million impairment.
Wesfarmers reports first half of FY 2014/15
For more details on Wesfarmers and Bunnings, please read the HNN report:Link
Westfield reports full year FY 2014 results
Westfield Corporation, which was formed on 30 June 2014, has reported its results to 31 December 2014. It currently has 40 retail centres in its portfolio, incorporating 7409 retail outlets, totalling $28.5 million in assets under management.
Current EBIT is $446 million from gross income of $518 million.
Woolworths reports first half FY 2014/15 earnings
HNN will be reporting more extensively on Woolworths/Masters in the coming week, but the following is a brief summary.
Group EBIT came in at $2129.2 million before significant items, an increase of 4% over the pcp. After significant items, which is essentially a $148.2 million charge for the restructuring costs of Big W, the EBIT is $1981.0 million, resulting in a decline in EBIT of 3.3% compared with the pcp.
For the Masters Home Improvement operation, the results were significantly worse than forecast by some reports. Rather than nearly matching the losses for the pcp, Masters recorded a loss of $112.2 million, a 56% increase on the loss of $71.9 million in the pcp. Masters did grow sales, however, recording revenue of $505 million, up by 28.5% on the pcp.
The Home Timber and Hardware Group recorded sales of $483 million, up 19.9% on the pcp. Its EBIT came in at $9.0 million, up from $7.5 million in the pcp, an increase of 20%, in part driven by acquisitions.
The managing director of Woolworths, Grand O'Brien, has affirmed his commitment to Masters, and repeated that he regards it as a long-term investment that is currently beginning to find its way.Woolworths results announcement