SME confidence has risen during the March quarter, even taking into account the impact of the Queensland floods, the latest NAB quarterly SME survey has revealed.
Confidence has improved in the property, wholesale, transport and utilities, and manufacturing industries, while the construction and health industries recorded a decline in confidence.
“With the exception of health, confidence levels are now positive across all industries, and are strongest in property and transport and utilities,” the survey found. “Confidence levels increased across all major States. Confidence remained strongest in WA and Victoria, and was positive across the remaining States.”
Confidence improved the most for those businesses with turnover between $2-3 million, and mid-tier firms with revenue between $3-5 million.
However, although confidence is high, actual business conditions are less stable.
Conditions deteriorated for firms with revenue between $5-10 million, due to difficulties with trading, profitability and employment conditions.
“Transport and utilities and accommodation recorded the largest declines in business conditions, while conditions improved in health,” the survey found.
Conditions fell in all states except South Australia, while conditions “fell sharply” in Queensland due to post-food weakness.
Employers have said borrowing costs, declining demand, suitable labour, taxation and cashflow are some of the biggest issues they will face when making long-term decisions.
ANZ warns on challenging operating environment, shares fall
Shares in ANZ Banking Group have fallen after the bank reported a jump in underlying profit and lifted its dividend, but disappointed on statutory profit and labelled the operating environment as “challenging.”
“Parts of the Australian economy have hit a flat spot with consumers and businesses becoming more conservative after the financial crisis,” chief executive Mike Smith said this morning.
ANZ reported a record underlying net profit of $2.82 billion for the six months to March 31, in line with expectations.
Bad debts fell 27% to $703 million, while customer deposits lifted 4%, accounting for 60% of the bank’s funding.
At 11.34 AEST, shares in ANZ were down 1.53% to $23.93, underperforming a market down 0.9%.
Also in company news, Fairfax shares have come in for a beating after the media group tipped a 6% fall in earnings before interest, taxation, depreciation and amortisation for the 2011 fiscal year.
Fairfax, which owns the Sydney Morning Herald, The Australian Financial Review and 3AW radio station, also told the market new sales revenue for the second-half to date was down 4.5%, in line with previous guidance.
Newly appointed chief executive Greg Hywood said the overall softness was “consistent with trading conditions reported by major clients” and reflected poor consumer sentiment.
“Revenues have also been directly affected by the flood conditions experienced in key markets early in the second half and the continuing impact of the Christchurch earthquake.”
Its results will also be impacted by a one-off redundancy payment of $25 million, with the company set to outsource sub-editing duties to Pagemasters, which is owned by AAP.
Fairfax shares were down 7.25% to $1.2 at 12.00 AEST.
Outdoor goods and equipment retailer Kathmandu has recorded a 31.6% increase in like-for-like sales in the 13 weeks ending May 1, the company announced in a statement.
Same-store third quarter sales were up 23.2%, while sales for the year-to-date were up by 23.1%. Same-store sales for Australia and New Zealand stores were up 20%.
“Clearly this has been a particularly good period for us, but it was in comparison to a relatively poor performance for the same period in 2010,” chief executive Peter Halkett said in a statement.
He also told Business Spectator that the company is forecasting strong year-on-year sales and profit growth.
The Australian sharemarket has opened weaker today, following a negative night on Wall Street where stocks dropped after the news that Al Qaeda terrorist leader Osama Bin Laden had been killed by the American military.
The benchmark S&P/ASX200 index was down 43 points or 0.9% to 4781.8 at 12.00 AEST, while the Australian dollar has opened higher, despite yesterday’s fall, at $US1.09.
AMP shares fell 1.83% to $5.37, as NAB shares lost 0.99% to $27. Commonwealth Bank shares fell 1.04% to $53.19 as Westpac lost 1.09% to $24.51.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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