Suncorp boss resigns, Macquarie Group’s profit slump, shares flat: Economy roundup

While many Australians have their eyes on Canberra and the Rudd Government’s $42 billion stimulus package, corporate Australia is still caught in a tidal wave of bad news.

Suncorp chief executive John Mulcahy will resign his position after six years as the company embarks on a $900 million capital raising to shore up its balance sheet.

“With the capital raising under way, it is an appropriate time for the board to advise of our intention to commence the transition of leadership to focus on the next phase of the group’s development,” Mulcahy said in a statement.

Suncorp expects that group profit before tax and Promina acquisition items for the six months to 31 December 2008 will be in the range of $470 million to $500 million, while net profit is tipped to be $250 million to $270 million.

Meanwhile, Macquarie Group has shocked the market by announcing $900 million in new writedowns and says its full-year profit will halve in size in the 12 months to the end of March, the first fall in profit for the company in 17 years.

The company projects a 2008-09 profit of $900 million, with chief executive Nicholas Moore saying deteriorating market conditions are clouding the group’s outlook.

“Despite a scarcity of capital in the world, we continue to support our clients’ capital needs and provide opportunities and products which are of value to them. Opportunities for organic growth and acquisitions are being identified across the group.”

Qantas shares have fallen almost 18% after its $500 million capital raising. The news comes after the airline announced a 66% decline in first half profit to just $210 million from $618 million.

The Australian sharemarket has traded lower today after disappointing leads from Wall Street and the poor results at Qantas and Macquarie Bank.

The benchmark S&P/ASX200 index was down 9.2 points or 0.3% to 3428.7 at 12.15 AESDT. The dollar was down to US64 cents.

The banks were the biggest losers of the day. Commonwealth Bank shares have fallen 2.4% to $28.47, with NAB dropping 4.6% to $18.56. ANZ lost 4.4% to $12.69 and Westpac also fell 3% to $15.98.

Overseas, Wall Street suffered losses as Kraft Foods recorded disappointing food sales.

The Dow Jones Industrial Average fell 121.7 points or 1.51% to 7956.66.

Oil prices also fell slightly to $US40 a barrel.