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Telstra Corporation Limited (TLS) reiterated full-year guidance provided in August but said its top line growth guidance has come under some pressure from the strength of the Australian dollar. The telco expects continued top and bottom line growth and free cash flow of $6 billion this financial year.

CEO, David Thodey, said guidance also excludes the impacts of any Government regulatory review or NBN outcomes and any unexpected outcomes from any ACCC wholesale pricing determinations.

“In conclusion … these are challenging times for our company, our industry and our nation,” Mr Thodey said.

“A lot has happened in the last 6 months – and we still have significant work to complete in the coming months.”

Mr Thodey said expects the strength of the local currency to also have some impact on the company’s top line revenue growth.

In regards to the issue of the National Broadband Network, Mr Thodey said the company remains positively and constructively engaged with the Government, but is under no illusions as to the challenges it faces.

“This is an extremely complex negotiation as it covers so many different aspects of our business,” Mr Thodey said.

He assured shareholders at the company’s AGM that the Board and management would not agree to any proposals on the NBN, or separation, unless the company is convinced that it would deliver fair value.

In August Telstra reported a 10.3% increase to full year profit to $4.1 billion versus the previous corresponding period. Revenue rose 2.9% to $25.4 billion in the same period.  

As at 1100 AEDT, Telstra shares were up 2c to $3.24.

PanAust Limited (PNA) said it had achieved record monthly copper in concentrate production at its Phu Kham CopperGold Operation in Laos. The junior miner reported 25,256 tonnes of concentrate, including 5,687 tonnes of copper and almost the same amount of gold.

Woodside Petroleum Limited (WPL) said it has entered into an agreement for the issuance of US$700 million in corporate bonds into the United States 144A bond market. The company said the five-year bonds would be issued by subsidiary Woodside Finance Limited with a coupon of 4.5%. Woodside said funds raised would be used o repay short-term debt and for general corporate purposes including capital expenditure.

Bow Energy Limited (BOW) said it had entered an agreement to sell its interest in ATP 574P in Queensland’s Surat Basin to Victoria Petroleum NL (VPE). Bow said the consideration for the sale, including 3.75% interest in the Walloon Coal Seam Gas (“CSG”) and 18.75% to 63.75% interest in the deeper non Walloon CSG stratigraphic section, is $8 million in cash, 13 million fully paid shares in Vicpet, plus Vicpet’s share in Surat Basin tenements ATP 608P (24% in Stratton Block and 30% in Rookwood Block) and ATP 805P (15%). The company added that the sale gives Bow additional cash resources which will be used primarily to fund ongoing CSG exploration and appraisal drilling programs in its Bowen Basin tenements.

Saracen Mineral Holdings Limited (SAR) said gold reserves at its Carosue Dam Operations in WA have risen by 34% to 880,000 ounces, while overall gold resources are up by 18% to 3.04 million ounces. The company said the increases were a result of the inclusion of the Karari gold deposit into the project’s mine plan. Saracen said the inclusion of ore reserves at Karari would add at least two years production life.

Transfield Services Limited (TSE) said that it expected to achieve flat or modest NPAT growth, with continuing strong cash generation over the remainder of the current financial year. At the company’s AGM today chairman Tony Shepherd said that the future expansion of the business would be underpinned by focusing on sectors with good growth potential.

“We are seeing opportunities for future growth in liquefied natural gas and coal seam methane developments in Australia; in oil and gas and infrastructure in North America and the Middle East; in economic and social infrastructure in Australia and New Zealand; and in renewable energy in Australia,” Mr Shepherd said.

However, managing director and CEO Peter Goode also reiterated the commitment to the company’s founding sectors such as oil and gas and infrastructure.

“Our core business of delivering essential maintenance and upgrading services across a broad range of industries globally has served us well in challenging economic times.” Dr Goode said.

At 1044 AEDT, Transfield shares were up 18c to $4.27.

Coca-Cola Amatil Limited (CCL) reiterated its previous guidance of high single digit growth in both earnings before interest and tax and net profit after tax for the second half of the year. The beverage maker said strong first half trading performance has continued during the third quarter with good revenue and volume growth achieved across all business units.

In the company’s third quarter trading update it said it had achieved solid volume and revenue growth in the Australian beverage business, while positive signs were emerging in New Zealand resulting in solid volume growth in the third quarter.

Coca-Cola Amatil said Indonesia achieved strong volume, revenue and earnings growth in the third quarter.

Looking at the divisions, the company said SPC Ardmona delivered solid volume growth in the third quarter in all major categories and remains on track to achieve its full year savings target of approximately $8 million from the rationalisation of its manufacturing sites in the Goulburn Valley.

Pacific Beverages delivered premium beer volume growth of approximately 50% in the year to date.

Coca-Cola Amatil said the impact of the higher Australian dollar on the translation of CCA’s overseas earnings is expected to reduce the reported earnings growth for the full-year 2009 by approximately 1%.

The company added that full year 2009 capital expenditure would be approximately 7.5% of revenue and expects to up-weight capital expenditure in 2010 to approximately 8.5%.

Coca-Cola Amatil said it would invest about $45 million in 2010 to commence the in-line blow-fill manufacture of PET bottles at its Northmead manufacturing facility, with the project expected to deliver cost savings by eliminating empty bottle storage, handling and transport costs as well as achieving a reduction in the amount of PET resin used to manufacture the bottles.

The company expects beverage cost of goods sold (COGS) per unit case for 2009 to increase by 5 to 6% on a constant currency basis and excluding Indonesia.

“The depreciation of the Rupiah against the US dollar and the mix impact of one-way-packs will result in double-digit COGS increases for Indonesia for the full year,” Coca-Cola Amatil said.

“CCA remains on track to achieve the recovery of its cost of goods increases for 2009.”

The company expects COGS increases for 2010 to be in the range of 5 to 6%, excluding Indonesia.

Last month Coca-Cola Amatil issued issued US$400 million in 5-year Notes in the 144A US market, with a coupon of 3.25%, which is equivalent to a spread of 95 basis points over the 5-year US Treasury Note. The company is now funded for all of its debt due to mature in 2010.

As at 1029 AEDT, Coca-Cola Amatil shares were up 2c to $10.30.

RBS – Round Up – 041109

Directors' Interest Notices
02 & 03 November 09

* Issue of Securities under Retail Entitlement Offer

Westpac Banking Corporation (WBC) posted a full year result its CEO described as “sound” during what was a tumultuous year. The company reported a 10.7% drop in net profit compared to the previous year to $3.45 billion.

Westpac said pro forma cash earnings of $4.63 billion, was down 8% for the year ended 30 September 2009.

CEO, Gail Kelly, said the company remained strong through uncertain times by being well capitalised, well funded and well provisioned.

The company also declared a final dividend of 60c per share, fully franked, with the total dividend for the year being down 18% on the previous year.

“We finished the year with a significantly stronger balance sheet and funding profile, a set of clearly positioned and strong brands and an improving reputation with customers,” Mrs Kelly said.

“The St George integration has also progressed very smoothly, adding strength and capability to the Group overall.”

The company reported a 13% increase in revenue to $16.76 billion, with impairment charges $2.1 billion higher than the previous year.

Mrs Kelly said customer numbers have grown for both St George and Westpac since the merger.

"Our multi-brand flexibility has enabled dedicated focus on different market segments including first home buyers, the self-employed and small business owners,” Mrs Kelly said.

Looking ahead, Westpac said there is continued uncertainty in global markets and recovery is likely to be gradual.

“From a sector perspective, credit growth is expected to remain relatively subdued as the impacts from the financial crisis continue,” the company said.

“Average funding costs are expected to continue to increase as the intense competition for retail deposits remains, and as wholesale funding is sourced at a cost well above pre-crisis levels.”

In addition, Westpac said as Government fiscal support begins to be scaled back and interest rates move upwards, ongoing caution is likely to be applied to consumer and business budgets.

However, the company said it enters the 2010 financial year with solid business momentum, with a strengthened balance sheet and excellent provisioning cover.

At the close of trade yesterday, Westpac shares were trading at $25.43.

Wall Street finished mixed on Tuesday after an early fall that saw the Dow down by as much as 86 points. Investors remained cautious ahead of the Federal Reserve’s statement on the economic outlook on Wednesday afternoon.

The Federal Reserve’s two day policy meeting began with the expectation that interest rates will remain at current levels.

In economic news, factory orders rose a slightly better than expected 0.9% in September. Factory orders decreased 0.8% in August.

The Dow Jones lost 17.53 points, or 0.18%, to 9,771.91, the S&P 500 added 2.53 points, or 0.24%, to 1,045.41 and the NASDAQ put on 8.12 points, or 0.40%, to 2,057.32.

Berkshire Hathaway put on 1.7% as Warren Buffet’s company said it would buy the remaining 77.4% of railroad operator Burlington Northern Santa Fe it does not already own for $44 billion. Burlington shares surged 27.5%.

The banks were higher. Bank of America and Citigroup were the best of the majors with gains of 1.2% and 1.3% respectively.

MasterCard shed 1.6% after saying revenue growth over the next couple fiscal years would fall short of its long-term objective. The company also reported quarterly earnings and revenue that beat estimates.

Intel dropped 2.7% following a broker downgrade on the chipmaker.

Tech majors Microsoft and Hewlett-Packard weakened 1.2% and 1.4%.

Stanley Works jumped 10.1% after revealing it would buy Black & Decker. B&D shares soared 31%.

Ford dipped 1.9% as most automakers reported a rise in sales in October in comparison to the previous month.

Energy heavyweight Exxon Mobil slid 0.6%, while ConocoPhillips added 1.5%.

NYMEX light crude oil for December delivery rose US$1.47 to settle at US$79.60 a barrel.

COMEX gold for December delivery rallied US$30.90 to settle at US$1,084.90 an ounce.

European Markets

European stocks lost ground following negative news out of the financial sector. Resource stocks tracked metal prices lower.

The UK benchmark FTSE 100 shed 67.29, or 1.32% to 5,037.21. The French CAC40 lost 55.21 points, or 1.52% to 3,584.25, while the German DAX fell 77.47, or 1.43% to 5,353.35.

Financials struggled after UBS posted a disappointing quarterly result. News that Royal Bank of Scotland would be joining the government's asset protection scheme also had a negative impact on the sector. RBS shares slumped 7%.

Lloyds rose 2.7% as a record rights issue means it would avoid the scheme.

HSBC and Barclays lost 3.3% and 2%, while Deutsche Bank and Commerzbank dropped 4.2% and 4%.

In France BNP Paribas and Societe Generale fell 4.3% each.

Xstrata and Anglo American weakened 2% and 1.3%, while Antofagasta shed 0.4%.

Aussie miners BHP Billiton and Rio Tinto lost 2.3% and 1%.

Energy majors BG Group and BP slid 0.8% each as Royal Dutch Shell and Total dipped 0.6% and 0.5%.

Automaker BMW dropped 6.3% after reporting a 74% fall in third quarter profit. Peugeot and Renault lost 2.6% and 1.5%.  

Japanese Markets 

The Nikkei 225 was closed for Japanese Culture Day yesterday. 

Hong Kong Markets 

The Hang Seng lost ground for its second straight session yesterday. Property developers retreated on the prospect of greater government control of property prices, while consumer focused stocks made ground on positive data out of the US. 

The Hang Seng shed 380.13, or 1.76% to 21,240.06.

Bank of China lost 2.7%. Bank of Communications dropped 1.8%, while HSBC shed 0.8%.

Heavyweight lender ICBC rose 0.9%.

Li & Fung added 0.8% and third-party mobile maker Foxconn International Holdings rose 0.6%.

Turning to the IPO’s, clothing retailer Trinity Limited showed Myer how it’s done, surging 49% on debut.

Property developers continued to decline. Sino Land fell 4.1% and Sun Hung Kai Property was down 3.6%.

New World Development slid 2.8%. 

The stock market traded both sides of the gain line Tuesday before settling 0.2% lower in lacklustre trading. Of the 11 sectors on the ASX/200, only information technology was more than 0.7% from where it started.

As was widely forecast, the RBA lifted official interest rates by 25 basis points to 3.5%, effective today. ANZ wasted no time in following suit, raising interest rates by the same amount.

At the close, the All Ords had fallen 6.3 to 4,540, while the ASX/200 shed 8.9 to 4,531.5. Only 1.5 billion shares worth around $3.1 billion had changed hands.

Among Materials and Resources stocks the gold miners made the inside running as the gold price jumped more than US$13 per ounce in New York last night.

Newcrest Mining added $1.26 to $33.38. Smaller rival Lihir Gold climbed 13c to $3.17.

The sector rose 0.4%.

Mirabela Nickel climbed 2c, or 0.7% to $2.75 after reporting in the afternoon it had produced the first nickel from its Santa Rita nickel project in Brazil.

BHP Billiton was up 3c to $36.74, while Rio Tinto added 2c to $62.81, despite their UK counterparts adding around 3% overnight.

Fortescue was unchanged at $3.72. Sims Group, which has been volatile in recent sessions, eked out an 5c gain to $20.48.

The big four banks hugged the gain line with little volume traded. Banks and Financials was 0.5% lower.

ANZ dipped 1c to $22.70, while CBA rose 37c to $51.28.

NAB traded 51c lower at $28.39.

Macquarie Group drifted 48c, or 1% lower to $47.07. The stock is down around 20% this month.

Insurers were mostly flat, with the exception of QBE, which slumped 86c, or 3.9% to $21.29.

Westfield lost 22c, or 1.8% to $12.12, countering gains from many of the other Property Sector stocks.

GPT Group rallied 4.3% while the sector dipped 0.1%.

The Energy sector shed 0.5%. Oil Search was unchanged and Santos eased 4c lower to $14.76, while Origin lost 17c to $15.79.

Woodside lost 54c to $47.70.

On a day when gambling is the order of the day, Tabcorp and Tatts shed 1c to $7.04 and 4c to $2.41 respectively.

Myer clawed back some ground from yesterday's poor outing, rising 6c to $3.81.

Other retailers ran strongly as well, with David Jones up 5c to $5.30. JB Hi-Fi climbed 60c to $20.90.

West Australian Newspaper shares added 21c, or 2.9% to $7.51. Ten minutes before the jump in the Melbourne Cup the group reported a third quarter profit of $22.9 million, down 22.9% from the prior corresponding period.

Fairfax drifted fractionally lower.

Overall, the Consumer Discretionary sector rose 0.1%.

Consumer Staples was 0.6% down. Wesfarmers fell 28c, or 1% to $26.92 and Woolworths dipped 12c to $28.13.

Among Industrials the heavyweight trifecta of Leightons, Toll and Asciano galloped ahead with 01.4%, 1.3% and 2% gains respectively.

The broader sector added 0.3%.

Brambles remained flat, while Qantas dipped 1c lower to $2.68. CSR slid 3c to $1.795.

Telstra shed 2c to $3.22, with the broader Telecommunications sector down 0.7%

The Information Technology sector put on 2.2%, with Computershare up 24c to $10.62, while IRESS added 11c to $7.60.

Around the region, the Nikkei 225 was closed, while the Straits Times Index edged 2.8 points higher to 2,648.2. Across the Tasman, the NZSE50 fell 24.7 to 3,159.0. The Hang Seng lost 154.3 to 21,465.9.

Spot gold was trading at US$1063.20 per ounce, and the Aussie was buying US$0.9019. 

RBA hikes rates to 3.5%
As was widely predicted the Reserve Bank of Australia (“RBA”) today confirmed that official interest rates would climb by 25 basis points to 3.5%. In justifying his decision the RBA Governor Glenn Stevens said that the economy continued to recover faster than previously forecast, with particular strength shown by Australia’s regional trading partners.

WAN profit down 23% in 3Q
West Australian Newspapers Holdings reported a post-tax profit of $22.9 million for the three months to 30 September, down 22.9% from the previous corresponding period. The group cautioned that despite the stronger result revenue levels would remain subdued at least for the remainder of the calendar year. 

At the close, West Australian News shares were up 21c to $7.51.

Macmahon, Leightons extend MOU
Macmahon Holdings said it had extended its Memorandum of Understanding with Leighton Holdings to extend its business co-operation agreement first signed in 2007. The MOU helps Macmahon expand its business in Australia and overseas, the company said.

At the end of the day, Macmahon Holdings shares were trading up 4c to 57.5c, while Leightons shares were up 39c to $34.84.

Air New Zealand to acquire 14 Airbus A320's
Air New Zealand said it would acquire 14 new Airbus A320 aircraft, to replace its current domestic jet fleet of 15 Boeing 737-300 aircraft. The company said at list prices, the cost would be in excess of US$1 billion, however Air New Zealand had secured the aircraft at a discount that reflects the current market conditions.

At the close, Air New Zealand shares were up 8c to $1.08.