Economy Delivers Strong Results

Sun Herald

Sunday February 7, 1999

By GILLIAN BULLOCK

A ROBUST economy over the past six months will deliver a swag of solid profit rises as the corporate reporting season begins tomorrow.

The six months to December will be stronger than this half although brokers believe the slowdown will not be as great as first thought.

Brokers predict better than expected results from Qantas and Coles Myer as well as many medium-sized companies including Brazin, Miller's Retail and Strathfield Car Radios.

But the days of big surprises are long gone now that companies have to provide continuous disclosure of any matter that could impact on their share prices.

Already Goodman Fielder and Seven Network have flagged weaker results in what is dubbed "the confession season".

This financial year, most analysts expect earnings per share growth of about 10 per cent.

Foster's will be the first major to post its results, tomorrow. Warburg Dillon Read equities strategist Tony Brennan predicts a solid result with before-tax profit expected to jump 25pc.

The result will not be so great at the bottom line because the company is no longer utilising tax losses.

The group could finally announce the sale of at least one of its loss-making Chinese breweries. Analysts also say Foster's is close to rewarding its shareholders with a capital return.

WMC (Tuesday) will continue to be hit by weak commodity prices and most analysts expect a profit of about $158 million for the year to December 31. The miner has changed its balance date from June to December. A comparable figure for 1998 is $243 million.

Profit for the Commonwealth Bank (Wednesday) is forecast to jump from $641 million to $680-700 million in the December half on the way to a full-year result of $1.3 billion-plus as the bank enjoys growing revenues with a good containment of costs.

Analysts say interest will be focused on what the bank does with its surplus capital and franking credits.

The money appears to be on the bank announcing another buyback, although others are favouring a special dividend.

But News Corporation is set to turn in a disappointing result with the market looking for profit to fall some 20pc in the half from $895 million in the previous corresponding period.

On Thursday, Coca-Cola Amatil should report just under $200 million for 1998, although some analysts are bearish about the outlook for 1999, pointing to continuing problems in the Philippines.

Lend Lease will report another solid result for the December half, analysts said.