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    BHP   AU000000BHP4


Delayed Australian Stock Exchange  -  12:10 2022-12-02 am EST
45.76 AUD   -1.55%
12:52pBHP files Vale defence and contribution claim in dam collapse lawsuit
12:33pBHP Files Contribution Claim Against Vale in Connection With English Proceedings
12/01Australian shares fall as bleak U.S. data dims risk appetite
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Australia companies split: miners boom, airlines turn up, retailers slump

08/25/2022 | 03:03am EST
FILE PHOTO: People are silhouetted against the Sydney Opera House at sunset in Australia

SYDNEY (Reuters) - Australia's companies are split, with big miners and airlines expecting higher profits on soaring commodities prices and a rebound from COVID-19, while supermarkets, banks and manufacturers are hurt by inflation and stagnant wages.

Annual business results and profit forecasts reveal a divide in the world's 13th-biggest economy between companies, largely international, that collect on rising prices and those, largely focussing on the domestic consumer, that are forced to absorb the higher costs.

Australia, the world's top coal exporter, has benefited from sanctions and freight blockages linked to Russia's invasion of Ukraine, which have driven up demand - and prices - for coal and other commodities.

Miner BHP Group Ltd, Australia's biggest company, recorded its highest profit since 2011, while Whitehaven Coal and South32 Ltd reported earnings jumps on Thursday. "Coal prices are at record levels and customers are focussed on energy security now more than ever before," said Whitehaven chief executive Paul Flynn, adding that prices the miner received for a tonne of coal more than tripled in a year.

Qantas Airways Ltd, Australia's largest airline, posted a nearly A$2 billion ($1.4 billion) annual loss as operational problems plague the industry but forecast record demand for flights, which it said was unaffected by fare increases after nearly two years of closed borders. Its shares rose 8%.

"Supply chain bottlenecks are easing and demand for international travel has exploded as COVID restrictions have been eased or removed," said Matthew Simpson, senior market analyst at Stone X Financial.

At the same time, though, "eye-watering levels of inflation are forcing central banks to hike interest rates at their most aggressive pace in decades and business sentiment is heading south as consumers get further squeezed."

The Reserve Bank of Australia has raised interest rates every month since May, with more hikes expected as the central bank tries to curb inflation forecast to peak late in the year at 7.75%, about three times the rate of wage growth.


Higher prices and interest rates are hitting consumers and the companies that supply their daily needs.

Number one grocer Woolworths Group, a standout stock during COVID restrictions, said customers were going without staples - like red meat, whose prices have surged as livestock numbers have been ravaged by extreme weather.

Higher shelf prices, along with rate rises, have encouraged "shopping to budgets rather than to items", Woolworths said. Its shares fell 4%.

"There comes a point where you can't pass it on to customers and you have to just take a low margin," Woolworths CEO Brad Banducci said on an analyst call.

Woolworths and smaller rival Coles Group Ltd ring up two-thirds of Australia's grocery sales.

Banks, which also face the full cross-section of people, now face intense competition as rising interest rates throttle demand for mortgages, their main earner. Commonwealth Bank of Australia, the biggest home lender, said it was seeing signs that cost-of-living pressure was eroding consumer confidence.

Discretionary retail is also being hit.

Electronics retailer JB Hi-Fi Ltd said sales rose 10% in July, the first month of its financial year, but did not say how that translated to profit, while analysts flagged softening demand.

The country's biggest standalone buy-now-pay-later company, Zip Co, said its annual loss nearly doubled to A$1 billion as it took an A$821 million impairment charge, citing "reduced forecast growth rates".

While higher interest rates hurt consumer-facing businesses, wholesale energy prices, up 141% since a year ago as the Ukraine war squeezes supply, have darkened the outlook for building materials makers, which also face weaker demand due to a property downturn.

The biggest, sheeting materials maker James Hardie Plc, raised its profit outlook four times last year as ultra-low rates spurred a homebuilding boom. It now expects its first annual profit decline in five years due to soaring raw materials and freight costs.

($1 = 1.4391 Australian dollars)

(Reporting by Byron Kaye in Sydney; Additional reporting by Jamie Freed and Praveen Menon in Sydney and Jaskiran Singh in Bengaluru; Editing by William Mallard)

By Byron Kaye

ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
BHP GROUP LIMITED -1.55% 45.76 Delayed Quote.41.64%
COLES GROUP LIMITED -0.18% 16.78 Delayed Quote.-6.47%
COMMONWEALTH BANK OF AUSTRALIA -1.36% 106.95 Delayed Quote.7.35%
FEEDER CATTLE FUTURE (GF) - CMG/C1 0.75% 182.425 End-of-day quote.8.51%
LIVE CATTLE FUTURE (LE) - CMG/C1 0.13% 153.25 End-of-day quote.9.56%
QANTAS AIRWAYS LIMITED -0.80% 6.17 Delayed Quote.24.15%
SOUTH32 LIMITED -2.33% 4.19 Delayed Quote.4.49%
WHITEHAVEN COAL LIMITED -1.52% 9.74 Delayed Quote.278.93%
WOOLWORTHS GROUP LIMITED -0.43% 34.45 Delayed Quote.-8.97%
X FINANCIAL 4.46% 2.2773 Delayed Quote.-24.34%
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Financials (USD)
Sales 2023 53 035 M - -
Net income 2023 14 565 M - -
Net Debt 2023 3 337 M - -
P/E ratio 2023 10,6x
Yield 2023 6,57%
Capitalization 158 B 158 B -
EV / Sales 2023 3,04x
EV / Sales 2024 3,17x
Nbr of Employees 45 295
Free-Float 96,9%
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Technical analysis trends BHP GROUP LIMITED
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Mean consensus OUTPERFORM
Number of Analysts 18
Last Close Price 31,15 $
Average target price 28,28 $
Spread / Average Target -9,21%
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Mike Henry CEO & Non-Independent Executive Director
David Mark Lamont Chief Financial Officer
John Kenneth Norman MacKenzie Chairman
Laura Tyler Chief Technical Officer
Edgar Basto Chief Operating Officer
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