Australian Stock Market Report – Midday 8/21/13

MID-SESSION REPORT
(12.30pm AEST)

The Australian sharemarket is a little higher after a 0.6 per cent slump yesterday. The All Ordinaries Index (XAO) is up 0.2 per cent. Most sectors are higher; however significant weakness in the mining and energy sectors is holding the market back.

BHP Billiton (BHP), the world's biggest miner and Australia's most profitable business announced a lower than expected US$10.88bn profit for the FY13 yesterday afternoon. This was due to high taxes, one-off costs and weaker iron ore prices (down 25 per cent from the February 2013 highs). BHP shares are down 2.4 per cent. BHP is accounting for 9pts of today's losses.

With no economic data of note today, the market is firmly fixed on the profit reporting season. We've already heard from the likes of Woodside Petroleum (WPL), Suncorp (SUN) and Iluka (ILU).

Australia's second largest oil and gas producer, Woodside Petroleum (WPL) is down by 2 per cent after announcing a US$942m underlying profit for the 1H13 (Jan-Jun 2013). This was largely in line with market expectations.

QLD based financial services company, Suncorp (SUN), announced a 32% fall in FY13 (July 2012 - June 2013) profit to $491m. The result was worse than consensus but in line with SUN´s own weaker guidance flagged mid-July. SUN´s bottom line has been impacted by Cyclone Oswald (as was QBE), the sale of its non-core bank assets ($632m loss) & a 76% drop in earnings from its life insurance business. A $0.30ps dividend and a $0.20ps special dividend were already announced by SUN at the end of July (thanks to the sale of its banking assets. The distribution was better than previous consensus). Looking ahead, a loss of around $480m is expected to be posted in 2H13 due to the express sale of its bank assets. SUN reiterated its 7-9% group growth over the next 2yrs. Its shares were largely unreactive to the result; however SUN rose 7.5% in July & is 21% higher since Jan.

At lunch, 1.04 billion shares have changed hands, worth $1.9 billion. 482 stocks are higher, 309 are in the red and 288 are unchanged.

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