ASX 200 reporting season: Results, outlooks, & key financial insight

The Australian reporting period begins in earnest this week. In this week’s extra edition of Investor Spotlight, we discuss the results of the companies that have already reported, look ahead to what to expect in the weeks ahead, and analyse the ASX 200 index.

Company results trickle in: hit and miss

The first batch of ASX company results has come through, with the numbers largely in line with expectations. According to FNArena’s corporate results monitor, eight companies had reported by the 4th of August, with most results meeting expectations.

Corporate results monitor chart

The noteworthy disappointment was Rio Tinto, which, as we deliberated upon in our previous week's conversation, let down stakeholders with an outcome demonstrating a 42.5% downturn in annual comparative profits. The mining conglomerate distinctly failed to meet projected profit figures, recording a Net Profit After Tax (NPAT) of $US5.1 billion in contrast to anticipated figures of $US5.6 billion, leading to a diminished dividend distribution of $US1.77 for each share.

Conversely, the fund manager, Janus Henderson Group, seemed to surpass estimates for most financial metrics. Nevertheless, its stock declined post-results, and brokers have since downgraded the company’s rating, predominantly due to the consistent fund outflows the business has observed.

Companies like ResMed and Block have also reported in recent days and have likewise let down investors with their results.

ASX reporting season ramps up

While many of the companies that have reported results so far this season are listed overseas, the pace is set to quicken with the first group of ASX-listed companies scheduled to deliver earnings in the week ahead.

According to trading house MPS Markets, approximately 13% of the ASX 300 will report in the week ending the 11th of August.

ASX 300 earnings calendar

The focal point of the week will surely be the full-year financials of the Commonwealth Bank of Australia. As we previewed last week, the CBA is anticipated to disclose a dip in profits for the latter half of the year but compensate shareholders with a more generous dividend, rounding the full-year dividend to $4.33.

At the same time, Suncorp’s results will pique interest and could reverberate throughout the financial sector. Last week, the Australian Competition and Consumer Commission rebuffed ANZ's bid for Suncorp’s banking division. Investors will be keen to hear what Suncorp has to say about the decision and its potential ramifications for its strategic and financial outlook.

The reporting season's forecast remains subdued

Overall expectations for ASX-listed company profits are muted for this reporting period. Based on an analysis by Macquarie Research, the earnings per share is projected to drop by 0.4% across the market. This decline is chiefly attributed to a decrease in resource sector profits, as commodity prices adjust after their rally in 2022.

Conversely, banks are projected to announce a relatively sturdy earnings growth, and industrials are expected to see growth in earnings throughout the financial year 2023.

On a broader scale, investors will keep a close eye on companies susceptible to domestic demand, particularly those in the consumer discretionary sector. Concerns about dwindling consumption loom as the consequences of the RBA’s notably stringent monetary policy adjustments impact the Australian economy.

ASX 200 falls as reporting season intersects with macroeconomic risks

The ASX 200 has retreated over the past week, in the lead up to the reporting season and a typically weak stretch for global equities. The resurgence of volatility in global bond markets has affected equities, as valuations recalibrate in the face of rising yields worldwide. Propelled by robust US data, augmented Treasury issuance in the US, and Fitch’s downgrade of the US credit rating, the 30-year Australian bond yield surged to a new cycle peak nearing 4.5%.

Australian 30-year bond chart

IG client sentiment

Based on trading activity from IG’s clients, the sentiment towards the ASX 200 is ambivalent. The Australia 200 has a slight net short position of 52%, implying traders remain uncertain about the market's trajectory.

IG client sentiment chart

In the midst of this turbulence, the ASX 200 has maintained its long-term range. The market encountered resistance at 7480/7500 and has since retreated below the support/resistance threshold of 7400. Significant downside support is pegged around 7050.

Australia 200 weekly chart