ASX heavyweights Australia and New Zealand Banking Group (ASX:ANZ) and Woolworths Limited (ASX:WOW) have released profit announcements this morning. ANZ released its FY15 full year results and Woolworths came out with a profit warning. Here’s what you need to know:
ANZ Posts Low Single-Digit Growth; Cash profit of $7.2bn up 1%
Australia and New Zealand Banking Group, commonly referred to as ANZ, posted statutory profit of $7.5bn up 3% compared to FY14. The all-important cash profit was 1% higher at $7.2bn. Total operating income rose 5% to $21.1bn. ANZ declared a final dividend of 95 cents which brings the total dividend to 181 cents, slightly up on last year’s distribution.
ANZ Chief Executive Officer Mike Smith is pleased with the “record result”. He commented: “In a constrained environment, we have continued to see growth in our core customer franchises in Australia, in New Zealand and in key Asian markets partly offset by the effect of macro-economic headwinds on the International and Institutional Banking Division.”
In the Australian division cash profit increased 7% driven by growth in customer numbers along with increased product sales. International banking declined 2% while the New Zealand Division grew 3%.
Mike Smith also reassured the company’s intention to pursue growth opportunities and warned of economic headwinds: “We are continuing to evolve our strategy and accelerate its execution to maximise value for our customers and for our shareholders.
There are significant opportunities for ANZ, however lower economic growth, intense competition, the growing cost of regulation and market volatility present headwinds for all banks.”
Woolworths Warns that Investments will Eat into FY16 Profits
Diversified retailer Woolworths released a profit warning to the ASX this morning. The company stated that it is making steady progress on its transformation, but investments will eat into FY16 profits.
Woolworths first quarter sales totalled $15.75bn, down 2.5% compared to the prior year. Australian Food and Liquor sales were $11.1bn, a 0.4% increase compared to 2015. Whilst sales in the home improvement section rose by 20%, petrol sales slumped nearly 30%.
Woolworths Chairman Gordon Cairns reassures that the board aims to make the “best long-term decisions”, however he wants to be “transparent about the impact on these changes”. As a consequence of the additional investments to boost sales in the long-term, Gordon Cairns expects NPAT to be between 20% and 35% lower. The new guidance is $900m to $1bn.
Woolworths has invested an additional $100m in the prior quarter to deliver lower prices.
Author: Simon Herrmann
Oct 29, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.