Macro Intelligence: wrapping up Australia's reporting season

_{Article written by Juliette Saly (ausbiz)
Video hosted by Danielle Ecuyer (ausbiz)}

In this week's edition of IG Macro Intelligence, we explore the performance of corporate Australia during the February reporting season.

Zipping to profit

The buy-now-pay-later (BNPL) firm, Zip, transitioned to profitability, announcing 1H positive cash earnings as its revenue increased by 29%.

Group revenue rose by 28.9% to AUD 430 million as the BNPL firm effectively managed bad debts.

Cash earnings before tax, depreciation, and amortisation for the six months up to 31 December were AUD 30.8 million, compared to a loss of AUD 33.2 million in the prior corresponding period.

This outcome significantly surpassed expectations, with the market predicting a net loss of AUD 83.3 million, according to FactSet.

Furthermore, Zip reported a profit after tax of AUD 73 million for the period, including one-offs. Its adjusted loss before tax and one-offs was AUD 1 million.

CEO and Managing Director Cynthia Scott described the result as "outstanding".

ZIP reporting season highlights

Zip 15 minute time frame

Zip daily chart

Zip's report card

However, Zip's shares were heavily sold off following the announcement.

Nevertheless, the shares have increased by approximately 36% so far this year and have risen around 70% over the past 12 months. The shares have been trending higher amidst speculation that Zip is a takeover target.

Shares have been exhibiting a strong bullish trend, as indicated by multiple indicators, such as the 5-day moving average of the share price rising above the 20 and 50-day moving averages.

The average analyst recommendation for the stock is a BUY, improving from a moderate hold earlier in February.

Zip did not declare a dividend, as was anticipated.

Zip analyst ratings and future projections

Woodside Energy FY23 financial performance

Oil and gas producer Woodside Energy reported a 37% decline in FY23 profit due to write-downs and lower gas prices.

The underlying net profit for the year ended 31 December decreased to US$3.32 billion from US$5.23 billion in 2022, attributed to lower prices across all products. This result was higher than the expected US$3.09 billion.

A US$1.5 billion impairment charge, previously indicated by the company, saw reported net income decrease to US$1.66 billion from US$6.5 billion.

The oil and gas giant declared a final dividend of US60 cents per share, which was above estimates but significantly lower than US$1.44 a year ago.

Woodside Energy shares 2014 to 2023

Woodside Energy daily chart

Woodside Energy under the pump

Shares in Woodside Energy have fallen more than 10% over the past 12 months. Investor sentiment in the stock has diminished in recent weeks following the abandoned merger plans with Santos, leading to a bearish trend in its 200-day moving average.

The average analyst recommendation for Woodside Energy is a HOLD.

Woodside Energy analyst ratings and future projections

Corporate Australia's performance

FNArena's Corporate Results monitor indicates that Corporate Australia has performed better than expected during the February reporting season.

More than a third of companies have exceeded expectations, and over a third have met estimates. Around 27% or 67 of the 251 companies that have reported earnings to the ASX so far have missed estimates.

However, there have been slightly more broker downgrades than upgrades following the results, demonstrating that the market remains forward-looking, focusing more on future guidance than past results.

FNArena’s corporate monitor

Upgrades and downgrades