Supermarket giant Woolworths beat analysts’ expectations this morning after recording a 5.1% increase in food and liquor sales for the year to June 27 to $34.7 billion, along with a 3.3% increase in comparable sales for the fourth quarter.
The company’s shares dropped over 2% this morning to $26.19 after the announcement was made.
Total sales were up 4.2% to $51.7 billion, up from the previous figure of $49.6 billion, although same-store food and liquor sales for the quarter were up by only 1.8%.
However, Woolworths chief executive Michael Luscombe said in a statement the results was pleasing, given the challenging retail environment.
“Our business-wide strategy to deliver optimum value for our customers has resulted in solid sales at a time when consumers are doing it tough and tightening the purse strings,” Luscombe said.
“In particular, our supermarkets division has responded well to customer demand for value and has further enhanced its position in the market.”
Meanwhile, Goldman Sachs announced its second-quarter profit plummeted by 82% to just $613 million, the lowest level since the end of 2008. The figure represents earnings of 78c per share, compared to analysts’ expectations of $1.99 per share, according to Bloomberg.
The announcement comes just after Goldman Sachs agreed to pay the US Securities and Exchange Commission a $US550 million lawsuit to drop fraud charges concerning its role in the financial crisis.
Revenue fell 31% to $8.84 billion from the first quarter, and represents a 37% decline from the second quarter of last year.
In the mining sector, giant BHP Billiton said it remains cautious regarding the short-term outlook on the global economy, despite recording an increase iron ore production.
Production totalled 31.24 million tonnes for the quarter to June 30, representing an 16% increase from the same period a year ago, while full year production was up 0% to 124.96 tonnes.
“Within China, measures introduced to reduce growth to more sustainable levels means volatility in commodity end-demand is likely to persist,” BHP said in a statement.
“BHP Billiton sees these measures as a normal continuation of China’s economic management policies.”
Australian economy set to expand, survey shows
The Westpac Bank-Melbourne Institute leading index of economic activity rose 0.4 points to 264.7 in May, indicating the economy is set to expand over the remainder of the year.
The index, which predicts the likely performance of the economy six to nine months in the future, actually recorded a drop in annualised growth to 6.7%, although economist Bill Evans said this was still above trend.
“That is consistent with the current momentum of the economy being above trend,” he said. “We are forecasting that the momentum of the economy in the second quarter is around a 3.5% pace.”
This continued growth would give the RBA reason to move the official interest rate up next month, although it has said inflation figures released soon will likely be the determining factor.
The survey comes just a day after RBA governor Glenn Stevens said in a speech the global outlook for the next year is uncertain due to the volatile pace of recovery in Asia and Europe.
“With some of the leading Asian economies seeking to slow down to a more sustainable pace, and European nations tightening fiscal policy, there is a bit more uncertainty just now about prospects for 2011,” he said.
“In Australia we have been spared the worst impacts of serious economic recession in terms of lost jobs, much as we will be spared the prospect of higher taxes that face so many in the developed world.”
The Australian sharemarket has opened higher this morning, given a boost from overseas markets and Wall Street where stocks closed higher overnight.
The benchmark S&P/ASX200 index was up 20 points or 0.46% to 4423.7 at 12.10 AEST, while the Australian dollar was up to US88c.
Commonwealth Bank shares were up 0.5% to $51.13, while NAB shares gained 0.2% to $24.16. Westpac also rose 0.3% to $22.43 as ANZ moved up 0.8% to $22.52.
National Australia Bank has said its asset services unit is looking to increase the scope of a partnership with asset management group BNY Mellon Asset Servicing into a joint venture.
NAB asset servicing executive general manager Leigh Watson told Reuters the time was ready for such a deal.
“We’re committed to strengthening our position in the Australian market,” Watson said. “Building on the already strong and successful relationship with BNY Mellon would put us in a good position to achieve this.”
Peabody, Yahoo post financial results
Coal mining group Peabody Energy reported a revenue increase of 24% to $US1.66 billion, although analysts were expecting $US1.68 billion. Second-quarter coal sales volumes of 59.7 million tonnes were ahead of levels recorded earlier this year.
“There is a lot to like about our position – the markets are strong, our operations are performing very, very well… the results are positive and our outlook continues to strengthen,” chief executive Gregory Boyce told analysts on a conference call.
Meanwhile, internet search giant Yahoo recorded a lower-than-expected revenue figure of $US1.6 billion for the three months to June 30, with net revenue also down to $US1.13 billion.
Chief financial officer Tim Morse told Reuters the company had experienced “big customer weakness” in display advertising. “It has definitely made us incrementally a little bit more cautious.”
Despite the lower-than-expected results from a number of companies reporting, the Dow Jones Industrial Average gained 75.53 points or 0.74% to 10,229.96.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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