Australian Companies quarterly reports - Market impact and key insights
Written and accurate as at: Jul 31, 2023 Current Stats & Facts
During this eventful week in the news, we focus on the crucial takeaways from the recent quarterly reports of various leading Australian companies. Our attention is on their performance and the subsequent implications for the market. Among the companies being reviewed are Macquarie Group, Fortescue Metals, South32, Pilbara Minerals, Mineral Resources, Allkem, Iluka, Newcrest, Sandfire, Siteminder, Pro Medicus, Stockland Group, and several others. As these reports made their way to the market, their effects on stock prices have been diverse, leading to positive and negative movements.
Macquarie Group's AGM Update
Macquarie Group (MQG) recently reported its Annual General Meeting (AGM) update, revealing a substantial downturn in the first quarter compared to the previous year (PCP). As a result, the company reduced its FY24 guidance for its three largest divisions, leading to consensus downgrades of 8%. However, MQG asserted this was merely a mark-to-market adjustment reflecting subdued conditions in Q1, with no change to their outlook for subsequent periods. Investors are advised to consider MQG's track record when interpreting these results. Nevertheless, if asset sales, performance fees, and US natural gas volatility do not experience a bounce-back, there is a risk of further correction in MQG's stock price.
Fortescue Metals' Solid Q4 Performance
Fortescue Metals (FMG) reported a strong performance in the fourth quarter, achieving full-year shipments of 192 million metric tons (Mt) at the upper end of its guidance range. Costs were lower than expected at US$17.54 per wet-metric-tonne (wmt), surpassing the lower end of the US$18.00-18.75/wmt guidance. While pricing and net debt exceeded expectations, higher capex guidance and a slower Iron Bridge ramp-up caused street downgrades. FMG's developments with Fortescue Future Industries remain relatively undisclosed, but five projects are scheduled to reach the Final Investment Decision (FID) before the year's end.
South32's Improved Quarterly Performance with Impairment Charge
South32 (S32) reported a much-improved quarterly performance, although production aligned with downgraded guidance for the year. The most significant news came in the form of a US$1.3 billion impairment charge, representing 73% of the Taylor deposit's value in the Hermosa project in Arizona. The primary driver behind this impairment was higher capex, with further details pending.
Pilbara Minerals: Strong Quarterly Production and Cash Flow Yield
Pilbara Minerals (PLS) emerged as the leading lithium miner, delivering an impressive annualised free cash flow yield of 16% for the quarter. Operationally, Q4 was solid, and the company is on track to conclude a new downstream process by year-end.
Mineral Resources' Largely In-Line Quarterly Report
Mineral Resources (MIN) reported a quarterly performance largely in line with expectations, but the focus was on the amended Albemarle deal. MIN believes its exit from China will provide more flexibility to pursue mid-stream or tolling opportunities while significantly improving its balance sheet.
Allkem's Strong Production, But Miss on Sales and Pricing
Allkem (AKE) reported robust production at Olaroz, but sales and pricing fell short of expectations. The company's merger news remains pending, with the independent expert review scheduled for late September. Competition approvals are reportedly on track, and AKE continues to trade close to the deal terms.
Iluka's Improved Production Quarter, but Concerns Over Mineral Sands Price Outlook
Iluka (ILU) had a much-improved production quarter, but the focus was on the mineral sands' price outlook. While ILU guided to flat zircon pricing in Q3, an inventory build-up and concerns over increased supply might lead to lower prices unless China's stimulus can offset the impact.
Newcrest's Quarterly Performance and the Impending Merger
Newcrest (NCM) experienced a weaker year-end, with production 5% below consensus and all-in-sustaining costs (AISCs) 19% higher. However, the report lacked substantial commentary on FY24, resulting in muted changes to earnings forecasts. Newmont is acquiring the company, and the deal is expected to close by year-end, subject to a shareholder vote in October.
Sandfire's Positive FY24 Guidance Due to New Motheo Operation
Copper miner Sandfire (SFR) presented better-than-expected FY24 guidance, driven by the new Motheo operation in Botswana. The project was delivered on time and budget, and production is set to grow significantly over the next year.
Siteminder's 4Q23 Update and Positive Medium-Term Guidance
Siteminder (SDR) reported an update that surpassed expectations across all metrics. The company's cash burn almost halved to $5.3 million for the quarter. Management reiterated medium-term guidance for 30%+ organic revenue growth and introduced new FY24 guidance, expecting to be EBITDA profitable and FCF positive for 2H24. The market welcomed the announcement of new product launches in mid-CY24, positively impacting the company's stock price.
Pro Medicus' Positive Start to FY24
Pro Medicus (PME) began FY24 positively by signing a new entire product suite contract with a top-tier North American academic client. This development aligns with the sell-side assumption of 3-4 new contracts being signed annually, signalling a favourable start to the year for PME.
Stockland Group's Strategic Investment and Expected Profits
Stockland Group (SGP) recently made a $210 million acquisition of approximately 1200 land lease sites. Over the next five years, the company intends to develop these sites, which are expected to generate approximately $100 million in profits over the same period. This acquisition is complementary to Stockland Group's existing land lease business.