June 24, 2010
Caltex Australia Limited (CTX) said the strengthening Aussie dollar from last year would take a bite out of the company’s profits for the six months to 30 June 2010. The oil refiner said it was expecting, on a replacement cost of sales operating profit (RCOP) basis and not including significant items, would be between $140 million and $160 million, down around 50% from last year.
”The difference between 2009 and 2010 is largely attributable to exchange rate volatility,” the company said, noting that the most recent forecast was based on an AUD/USD exchange rate of between 84c and 87c.
Caltex said that Singapore refiner margins were stronger than expected due to the weakness in the Tapis crude price relative to other crudes.
"However, the higher average Australian dollar during the period, compared with the same period in 2009, negatively impacted the Caltex Refiner Margin," the company added.
From a production stand point, petrol, diesel and jet fuel production was expected to be in the vicinity of 4.4 billion litres for the six months to 30 June, down from 5.1 billion litres in the previous corresponding period.
At the close Thursday, Caltex shares were trading at $10.35.
June 24, 2010
Macquarie Group Limited (MQG) shares slumped nearly 4% Thursday morning after the investment banking giant said that the current economic environment was hurting parts of its business. The bank, however, said that it was still too early to quantify exactly what effect that would have on the current financial year.
The bank has also been hit by a number of key managers leaving the bank’s global operations due to a second-straight year of below market compensation.
However, the company noted it was well placed in the medium to longer term due to a range of factors, including a diverse mix of businesses across the globe and a strong balance sheet, capital and funding.
”Subject to economic activity continuing to increase across major markets, we expect continued growth in revenue and earnings across most businesses over time,” Macquarie CFO, Greg Ward, said.
At 1044 AEST, Macquarie shares were trading down $1.67 to $41.00.
June 22, 2010
Perpetual Limited (PPT) said this morning that managing director, David Deverall, would step down from his post. The diversified financial group said Mr Deverall would stay on as managing director until a replacement was found, or 31 March 2011, whichever came first.
At the same, the company’s chairman, Robert Savage, reaffirmed the guidance offered on 27 May in a letter to shareholders.
”We expect the underlying profit after tax (UPAT) for the 12 months to the end of June 2010 to be in the range of $65m to $75m,” Mr Savage said at the time.
Meanwhile, Mr Deverall said he was stepping down for personal reasons.
”After seven years and having steered Perpetual through the global financial crisis, I now believe it is time for a change,” Mr Deverall said.
”Perpetual has a strong balance sheet and has one of the best brands in the financial services market.”
Recruitment firm Korn Ferry had been appointed to find a replacement, the company said.
At the close Tuesday, Perpetual shares were trading at $30.40 each, in the vicinity of the company’s share price when Mr Deverall started.
Three years ago, prior to the GFC, the company’s share price reached an all time high of about $83.
June 21, 2010
AMP Limited (AMP) welcomed the New Zealand Commerce Commission’s decision to grant clearance for AMP to acquire the Australian and New Zealand operations of AXA Asia Pacific Holdings Limited (AXA). The Commerce Commission chair, Dr Mark Berry, said the Commission was satisfied that the proposed acquisition would not have, or would not be likely to have, the effect of substantially lessening competition in any of the affected markets.
"The Commission considers that competition from existing participants in the affected markets would be sufficient to constrain the merged AMP and AXA," the New Zealand competition watchdog said in a statement today.
AMP said the merger between AMP and AXA APH’s Australian and New Zealand businesses would create a fifth pillar in the financial services sector, creating a stronger wealth manager.
National Australia Bank (NAB) came in with a rival bid following AMP and AXA APH’s French parent AXA SA's original offer, however it was rejected by the Australian Competition and Consumer Commission.
NAB continues to negotiate with the ACCC for approval.
As at 1044 AEST, AMP shares were up 7c to $5.68, while AXA APH's shares were up 6c to $5.78.
June 17, 2010
QBE Insurance Group Limited (QBE) expects its half-year insurance profit margin to be at the lower end of its targeted range of 16% to 18%. In an investor update in London last night, the insurer said full year targeted investment yield on policyholders’ funds would be slightly higher than 3% guidance.
The company said 2010 is likely to be a tough year for the insurance market, however added that there were some encouraging signs that the company is at the bottom of the cycle for most classes with an upturn expected by the end of 2011.
Meanwhile, QBE estimated large risk and catastrophe claims would be of $555 million up until the end of May.
The company said this includes $108 million for the Perth storms, $91 million for the Chilean earthquake, $76 million for the storms in Melbourne and finally $29 million for the Deepwater Horizon oil disaster in the Gulf of Mexico.
In the previous corresponding period the catastrophe insurance bills totalled $458 million.
QBE said this year’s catastrophe insurance bill was within allowance of $1.1 billion.
As at 1020 AEST, QBE shares were down 13c to $18.82.
June 16, 2010
UK based investment company, Guinness Peat Group Plc (GPG), has announced it will spin-off its Australian interest as a separately listed entity on the Australian Stock Exchange. The decision to restructure comes following a comprehensive review of the company’s corporate structure, with the float revolving around one of its core subsidiaries, thread manufacturer Coates, the company said.
”GPG Group holds a large portfolio of assets, but within the current structure their collective value is obscured by corporate complexity and geographical diversity,” the company said.
Despite flagging the spin-off of Coates, GPG said the effect of the global financial crisis was still too raw, and the float would be at least two years away.
GPG said it had also considered a liquidation of assets here, however concluded that this wouldn’t be in the best interests of shareholders.
At 1114 AEST, GPG Group shares were up 0.5c at 55c.
June 6, 2010
National Australia Bank Limited (NAB) subsidiary Great Western Bank (“GWB”) announced the acquisition of certain assets and liabilities of TierOne Bank from the Federal Deposit Insurance Corporation (FDIC) for US$76 million. The company said the acquisition includes all of TierOne’s approximately US$1.9 billion in deposits and US$1.9 billion in loans under an agreement where the FDIC absorbs 80% of credit losses arising on the loan portfolio and related assets.
NAB said the loss share agreement has a term of 10-years for residential mortgages and five years for all other loans.
“The acquisition is earnings accretive and the GWB loan portfolio remains more than 100% deposit funded following the acquisition,” the company said.
“It is estimated the acquisition will require less than 10 basis points of Group tier 1 capital.”
NAB Group Executive Asia, New Zealand and the United States, Andrew Thorburn, said the acquisition increases Great Western’s distribution and customer base in selected states that together have an agricultural output greater than Australia’s.
NAB said GWB has an option to acquire TierOne branches at fair market value, or assume the relevant leases, and to make employment offers to TierOne employees.
TierOne has 59 branches in Nebraska, nine in Iowa and one in Kansas.
“Great Western Bank has a strong risk framework supported by the appropriate local and NAB Group resources to manage the acquired loan portfolio, which has been reviewed in detail,” Mr Thorburn said.
“We announced our intention to acquire part of TierOne in 2009 and this is an excellent opportunity to continue to grow our business in the United States on the base of attractive core deposits.”
At the close of trade Friday, NAB shares were trading at $24.36.
June 4, 2010
National Australia Bank Limited (NAB) said it is considering the possible divestment of the North Wealth.net investment platform business of AXA Asia Pacific Holdings Limited (AXA). The company said this was part of the process of gaining ACCC approval in regards to NAB’s proposed acquisition of the Australian and New Zealand businesses of AXA.
In April the ACCC opposed the proposed acquisition.
NAB said it is in preliminary discussions with AXA APH, the ACCC and other interested third parties in regard to the possible divestment, however added that at this stage there is no assurance that such a possible divestment would occur or that it would address the concerns raised by the ACCC.
As at 1058 AEST, NAB shares were down 89c to $24.20, while AXA APH shares were up 5c to $5.97.
June 3, 2010
QBE Insurance Group Limited (QBE) said it has significant external reinsurance protections in place for claims such as the current catastrophe in the Gulf of Mexico. The company made the statement in response to market rumours regarding QBE’s exposure to the disaster.
QBE said its market update last week regarding 2010 large individual risk and catastrophe claims reported to 28 April included the company’s maximum exposure to claims on policies exposed to the Gulf of Mexico disaster including the spill itself.
The company also responded to rumours regarding IAG’s recent announcement on UK motor liability claims.
QBE said it recently reviewed its claims reserves and confirmed that the reserves held at 31 December 2009 are adequate.
The company said these claims reserves included an allowance for the anticipated higher bodily injury claims being experienced in the UK.
As at 1046 AEST, QBE shares were 51c to $19.14.
June 1, 2010
Insurance Australia Group Limited (IAG) this morning said it would take a one-off, pre-tax charge of around $365 million, with a full-year insurance margin of 6% to 7%, down from 9.5% to 11%. IAG said the writedowns were ‘due to a significant deterioration in UK claim experience, in particular bodily injury claims.’
Looking further down the track the insurer said next year’s FY11 insurance margin guidance would be around 10.5% to 12.5% as business conditions improve.
Managing director and CEO, Michael Wilkins, said the increasing cost of personal injury claims had been noticed as far back as 2007, however actuaries only recently uncovered the full extent of the effect of the claims.
“Our immediate priorities have been to ensure our UK business is appropriately reserved, our exposure to this issue is limited through reinsurance, and that we have an appropriate programme of remedial actions,” Mr Wilkins said.
Mr Wilkins expressed disappointment that injury claims would wipe 5% off its insurance margins.
”Encouragingly, all other businesses within the Group are performing at least to expectations,” Mr Wilkins said.
“Following our strategic reset in July 2008 the underlying performance of our business has steadily improved and we remain confident this will continue into FY11.”
The company noted that guidance was based on claims from natural disasters not exceeding a budgeted $435 million.
At the close Tuesday, IAG shares were trading at $3.61.