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Fast Five: ASX Reporting Season (CBA, IAG, TLS, WDS, BBN)

As Australian companies report their results, we’re launching a four-part series called Fast Five: ASX Reporting Season. In this first edition we’ll briefly cover Commonwealth Bank, Insurance Australia, Telstra, Woodside Energy and Baby Bunting Group’s results ending 30 June 2022.

Name Ticker Industry Group Market Cap Period Ended EPS YoY Growth
Commonwealth Bank CBA Banks $172b FY22 13.7%
Disclaimer: Market cap as of 11 August 2022

The Commonwealth Bank’s FY22 results came in strong on 10 August 2022. Cash Net Profit After Tax (NPAT) increased 9.4% to $9.7b, total assets increased 11.3% to $1.2b, and deposits increased 100bps to 74% of total funding. Since deposits are often the cheapest method of funding for a bank, an increase is considered to be a positive. So why did CBA end Thursday down 1.2% for the week? Simply put, the market is not concerned about past performance, but the future when it comes to banks. While CommBank was clear in its belief that Australia has some of the strongest fundamentals in the world right now, it highlighted the risk of plummeting consumer confidence and the expectation of a recession in the U.S. and UK.

In effect, Commonwealth Bank’s FY22 results were positive, but not enough to make the market overlook the looming macroeconomic turbulence.

Name Ticker Industry Group Market Cap Period Ended EPS YoY Growth
Insurance Australia IAG Insurance $11b FY22 $0.31
Disclaimer: Market cap as of 11 August 2022

Insurance Australia’s FY22 results released on 12 August 2022 were no surprise to the market as management released preliminary stats on 22 July 2022. The company had previously reported positive NPAT at $347m versus FY21’s $427m loss, and that insurance profit margin had declined to 7.4% compared to previous guidance of between 10% to 12%. The reason for this sharp miss in margin was primarily due to net natural peril costs exceeding the original allowance by $354m to reach $1.1b. For FY23, management has offered insurance margin guidance of between 14% and 16%. This includes a natural peril allowance of $909m.

FY22 continued to be a tough year for the Australian insurance industry as it continued to deal with COVID-19, and an increasing number of natural disasters. But IAG is confident that FY23 will see a return to some form of normalcy and, with significant balance sheet improvements completed in FY22, the company is feeling bullish.

Name Ticker Industry Group Market Cap Period Ended EPS YoY Growth
Telstra TLS Telecommunication Services $46b FY22 -7.7%
Disclaimer: Market cap as of 11 August 2022

Telstra’s FY22 results announcement on 11 August 2022 was accompanied by something investors had not seen in seven years: a dividend increase. That’s right, with a fully-franked $0.085 dividend announced, FY22’s ordinary dividend increased from $0.10 per share to $0.0135. The dividend increase came off the back of Telstra’s T22 strategy’s continued success. Total operating expenses declined 5.8% in FY22, bringing underlying EBITDA to $7.3b (8.4% year-on-year growth). With revenue and profitability up across most areas of the company, management expects the good times to roll into FY23 and has issued guidance of underlying EBITDA growth between 6.8% and 9.6% year-on-year.

Even before COVID-19, Telstra was in a tough spot, with an ageing network and high costs. However, the past four years have seen a rather successful implementation of its T22 strategy, and management is confident that FY22 saw the company turn a corner for the better.

Name Ticker Industry Group Market Cap Period Ended Production growth versus Q1 2022
Woodside Energy WDS Energy $60b Q2 2022 60%
Disclaimer: Market cap as of 11 August 2022

Woodside Energy’s Q2 2022 results announced on 21 July 2022 saw success all across the board. The company increased sales volume 51% compared to Q1 2022, and with an average realised price of US$95 per barrel of oil equivalent, revenue climbed 44% to US$3.4b. But the majority of Woodside Energy’s growth this quarter came from its merger with BHP’s former petroleum division, which also allowed its listing on the New York Stock Exchange (NYSE) and London Stock Exchange (LSE).

Woodside Energy is now the largest energy company on the ASX, and despite the vast majority of its growth in Q2 2022 resulting from its merger, high energy prices have continued to generate significant profits.

Name Ticker Industry Group Market Cap Period Ended EBITDA YoY Growth
Baby Bunting Group BBN Retailing $646m FY22 16.1%
Disclaimer: Market cap as of 11 August 2022

The Baby Bunting Group announced their FY22 results before the market opened on 12 August 2022. The year saw a number of important milestones reached, including sales exceeding $500m for the first time and online sales growing to account for 22.2% of total. Retail locations continued to perform as well; comparable same store sales (an important retail metric) grew 5% year-on-year, while in-store expenses declined 17bps. While not occurring in FY22, it’s worth noting Baby Bunting opened its first New Zealand store today, 12 August 2022, as the company starts to expand operations outside of Australia. Lastly, private label and exclusive products grew 18.3% to comprise 45.3% of total sales in FY22. This is where retail operations make the majority of their margin, so the continued success of the company’s private label strategy should help push EBITDA margins past 10%. 

If FY22 was a strong year for Baby Bunting, FY23 has started off even stronger, with comparable store sales up 15.3% year-on-year as of 10 August 2022 and total sales growing 19.3%. With its expansion plan in full swing, management is confident that this baby will keep growing.

This is not a recommendation to invest, as always do your own research

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