Reporting season 2022: How COVID impacted Wesfarmers, Transurban and Crown

Posted: 17 February 2022 10:55 am
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Reporting season is underway with investors gaining a snapshot of how businesses are actually performing.

Reporting season is continuing its hot week with some of the largest companies in Australia informing investors about their performance over the past 6 months.

Following a day highlighted by CSL and Treasury Wine, today investors found out how COVID-19 has impacted the gaming industry, retailers and Australia's largest telecommunications network.

Here is what you need to know about the market today:

Wesfarmers

The "most disruptive period of the pandemic" has seen retail and industrial conglomerate Wesfarmers report a 12.7% drop in profit, with the company cutting dividends accordingly.

In its statement to the ASX, Wesfarmers said its interim profits have fallen to $1.21 billion.

Investors will now receive 80 cents per share, down from 88 cents previously.

Wesfarmers Managing Director Rob Scott said that the solid financial result delivered in such a disruptive environment highlights the strength of the Wesfarmers portfolio.

"The first half of the 2022 financial year was the most disrupted period for our businesses since the onset of COVID-19, with extended government-mandated store closures and trading restrictions in Australia and New Zealand," he said.

The CEO highlights particular winners including Bunnings and Wesfarmers Chemicals.

However, he also notes lockdowns hurt much of the business's other retail assets.

"Relative to the Group's other divisions, Kmart Group and Officeworks results were more significantly impacted by COVID-related disruptions during the half. Kmart Group in particular was affected by temporary store closures between July and October 2021," Mr Scott told the market.

Wesfarmers fell 4.81% following the announcement to $52.27 per share.

Telstra

Leading telecommunications provider Telstra also announced slowing results.

Telstra states that total income fell 9.4% to $10.9 billion, with its earnings before interest, tax, depreciation and amortisation (EBITDA) falling 14.8% to $3.5 billion.

Net profits after tax are now down 34% to $0.7 billion, with the company paying an 8 cent interim dividend.

While the interim results fell, in its earnings guidelines Telstra expects earnings per share to pick up from 5.9 cents to 6.2 cents over the next 6 months.

CEO Andrew Penn said the results reflected the positive momentum delivered through Telstra's T22 strategy and put the company in a strong position as it transitions into T25.

"This was the second consecutive half of underlying growth," Mr Penn said. "The results show we have stayed disciplined and focussed on delivering what we said we would. The benefits of T22 are flowing through for our customers and our shareholders.

Shares in Telstra dipped 0.49% to $4.05 at the time of writing.

Crown

Gaming and entertainment group Crown has seen a spike in revenue, but it was not enough to offset the company's losses.

According to the company's statement, the impacts of lockdowns during the Delta outbreak and ongoing regulatory matters have severely impacted its bottom line.

As such, the business is reporting an FY2021 financial first half loss of $196.3 million.

But in better news, the business is reporting a strong uptick in revenue post lockdowns. According to its ASX statement there was a 34% growth in revenue to $778.6 million.

Crown's Managing Director and Chief Executive Officer, Steve McCann, informs investors of a difficult regulatory environment.

"While we do not underestimate current headwinds facing Crown, there is growing confidence we have turned the corner," he said

"All 3 of our domestic resorts are back open, with a vaccination strategy to combat COVID-19 providing a pathway forward for our staff, the business and the wider community.

"Importantly, we continue to build momentum on our company-wide reforms, accelerating work on our remediation plan and making significant advances across multiple regulatory processes," he told the ASX.

Shares in Crown are currently slightly up at $12.58 per share.

Transurban

Toll roads owner and occupier Transurban announced that the ongoing impacts of COVID-19 are hampering its business.

In its latest statement to the ASX it confirmed an interim net loss of $103 million, as motorists were unable to leave their homes, vastly reducing how often they used a motorway.

Adding to the company's woes is the Omicron variant, with Transurban confirming that the reintroduction of restrictions such as mask wearing has impacted traffic flows.

The company's EBITDA fell 4.1% to $805 million, less than some analysts had expected.

Chief Executive Officer, Scott Charlton notes the Group is continuing to invest for the long-term and actively managing the portfolio to support the sustainability of the business well into the future.

"We are investing in transportation networks that will be in operation for decades. In the past 10 years we have expanded from 7 to 21 assets across 5 markets, resulting in an average concession life of around 30 years."

Shares in Transurban are up 0.77% to $12.98.

MA financial

In one of the stronger announcements today, MA Financial (formerly known as Moelis Australia) reported surging profits and strong growth per share.

According to the company's ASX announcement, underlying earnings per share was up 52% on FY20 while FY21 net fund inflows nearly tripled to $1.1 billion from $0.4 billion.

Underlying Revenue of $232.4 million was up 45% on the FY20 result of $160.1 million, reflecting increased contributions from each division.

Asset Management grew Underlying Revenue by 57% on FY20.

Joint CEOs Julian Biggins and Chris Wyke told investors the FY2021 result was pleasing.

"The strength of our people and platform combined with our robust balance sheet has MA Financial Group well positioned to continue its strong growth momentum," they said.

Following today’s announcement shares are up 4.51% to $8.81.

At the time of writing Cameron Micallef owns shares in Telstra.

Interested in buying the Transurban or Telstra shares Compare share trading platforms to start investing in shares.

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