Business investment falls 4% in June quarter, Woolworths profit jumps: Economy Roundup

Official business investment data released today shows capital expenditure activity dropped by a seasonally adjusted 4% to $26.1 million during the June quarter, representing a 4.8% drop over the year.

According to the figures, spending on buildings and structures dropped 3.9% in the quarter to $12.9 million, with that figure representing a 7.2% drop over the year.

Spending on equipment, plant and machinery also fell by 4.1% to $13.2 million in the quarter, while dropping by 2.4% over the year.

Supermarket giant Woolworths has posted a 10.1% increase in full-year net profit to $2.02 billion for the year to June 30, up from $1.84 billion, saying its 2011 financial year profit will grow by between 8-11%.

The company also said it plans to buy back $700 million shares off-market. This morning shares rose by 5.2% to $28.30 at 10.30 AEST.

“This is a good overall result at the higher end of our prior guidance in a challenging trading period,” Woolworths chief executive Michael Luscombe said in a statement.

The company said EBIT rose by 9.5% to $3.08 billion, while food and liquor sales rose by 5.1% to $34.68 billion.

Luscombe also announced Big W sales dropped by 9.3% in the fourth quarter, compared to a rise of 12.9% in the previous corresponding quarter.

Virgin Blue has recorded a $21.3 million net profit for the 12 months to June 30, compared to a $160 million loss recorded during the previous corresponding period.

The company said it will continue to develop alliances with partners overseas, and also said it will introduce the Airbus to its domestic fleet of aircraft.

“Achieving a $34 million net profit before tax in the current environment demonstrates that Virgin Blue’s domestic business has the capability to ride through market and economic volatility, and remain well-positioned to extend its reach in key markets,” chief executive John Borghetti said in a statement.

AGL Energy has recorded a 77% drop in net profit after tax to $356.1 million, but it believes a colder winter in southern states will keep the company moving in the 2011 financial year.

“AGL expects to deliver continued growth in underlying profit in the year ending June 30, 2011,” the company said.

“The start to this financial year has seen cooler, more wintery, weather in the southern states of South Australia, Victoria and New South Wales compared with the corresponding start to 2010,” it said.

“Highlights of this year were the very strong improvement in cashflow, which increased by $121 million compared with last year, and the strength of the balance sheet,” managing director Michael Fraser said in a statement.

Shares higher after weak Wall Street lead

The Australian sharemarket has opened slightly higher today, following a slightly positive lead on Wall Street despite new data showing a disappointing drop in new home sales.

The benchmark S&P/ASX200 index was up by 17 points or 0.4% to 4337.6 at 12.15 AEST, while the Australian dollar was down to US88c.

ANZ shares rose 0.7% to $22.35, while Commonwealth Bank shares gained 0.3% to $48.43. Westpac rose 1.8% to $21.43, while AMP also gained 0.8% to $4.92.

Meanwhile, Crown has recorded a net profit of $282.3 million for the year to June30, compared to a $1.2 billion loss recorded at the same time last year.

Revenue was up 1.9% to $2.34 billion. The company said in a statement the result was “reasonable”.
“Our local casino operations were adversely impacted due to a softening in consumer sentiment and corporate hospitality spending and a greater than expected impact of refurbishment works.”

“Specifically, premium table revenue at Crown Melbourne and main floor gaming revenue at Burswood were impacted by major renovations.”

Packaging group Amcor has recorded a 14% decline in annual net profit to $183 million, although revenue increased by 3.3% to $9.85 billion and profit after tax was up to $320.4 million from $251.2 million.

“The strong strategic fit of acquired assets provides an excellent growth platform for us to grow shareholder value,” managing director and chief executive officer Ken MacKenzie said in a statement.

Meanwhile, Insurance Australia Group has recorded a fall in full-year net profit from $181 million to $91 million, the worst performance in two years.

“Our focus for FY11 is to build on the strong performance we have seen from our largest businesses in Australia and New Zealand and to restore profitability in the UK, while continuing to pursue growth opportunities in our chosen markets, particularly Asia,” managing director and chief executive Michael Wilkins said in a statement.

BHP gives mixed outlook for commodities

Mining giant BHP Billiton has predicted a mixed outcome for short-term commodities in the year ahead, after posting a 116% increase in net profit to $US12.72 billion.

“There is strong physical demand for some commodities, such as copper, where consumers are restocking and premiums continue to rise,” the company said in a statement.

“Elsewhere, there is weaker demand for those commodities where short term demand is likely to be satisfied by inventory rather than primary supply.”

Gaming company Tatts Group has recorded a fall in annual net profit to $119 million from $277.4 million, saying the group suffered a number of one-off restructuring costs.

“It is also evident from previous results that the business is able to produce a reliable and consistent growth profile despite the odd disruption to one or more of its portfolio of businesses,” chief executive Dick McIlwain said in a statement.

Overseas, further fears over the American economy have come to light after new figures from the Commerce Department revealed new home sales fell by 12.4% in July. However, stocks on Wall Street edged higher despite the bad news, with the Dow Jones Industrial Average up by 19.61 points or 0.2% to 10,060.06.