After another year of remarkable volatility caused by the unpredictable news flow coming out of the European debt crisis, Australian investors have every reason to be sitting on their hands.
Is it any wonder total deposits have soared by almost $200 billion over the past four years as investors and consumers pay down debt, avoid risks and save like they haven’t since Gough Whitlam was in power? Despite constantly being told we’ve got the best performing economy in the developed world, many companies and investors aren’t enjoying the benefits.
The mining investment pipeline may have hit $600 billion, but the vast majority of this is foreign-owned and unless you are a Rio Tinto train driver earning $250,000, times are pretty tough.
Throw in the high Australian dollar, ongoing under-investment in infrastructure and rising union claims and it is hard to find many businesses that are going gangbusters besides those digging up dirt or abusing their market power in the locally-focused services sector.
So who did capitalise, and who lost out? The envelope please …
Best ASX performers of the year
The fastest way to destroy value is overpaying in takeovers, so it is always good to be a shareholder in the company being acquired. Foster’s shareholders this week collected a cool $10 billion from SAB Miller, which was way over the odds. And they have still got Treasury Wines which is worth $2.5 billion. The same goes for Axa Asia Pacific Holdings where minorities exited in March with a tidy $14 billion.
Since then both AMP and AXA’s French parent have seen their shares dive. In business, you’ve got to know when to hold ’em, and known when to fold ’em. Shareholders in Foster’s and Axa Asia Pacific Holdings should be thanking their boards for extracting lucrative exits.
Worst ASX performers of the year
Who would have ever thought the once mighty BHP Steel would be reduced to a demerged rump doing emergency capital raisings at 40c after losing $1 billion and getting flogged for overpaying its underperforming executives? While Bluescope Steel was hit by a perfect storm of soaring coal and iron prices, falling local demand and the high dollar, the simple lesson for investors was to avoid Bluescope — a stock which traded above $8 in 2007.
The same goes for surf and street wear darling Billabong, which traded above $16 in 2007 but is now back below $2 after this week’s latest shock profit warning. Once again, the high dollar and slowing retail sales were to blame.
Best-performing CEO of the year
Despite all his long lunches and crazy outbursts, Seven has never dominated the television ratings quite like 2011 — and David Leckie is the man who made it happen. After the merger of Seven with WA News, Leckie over-delivered on the promised profit for 2011-12 and it was the high-performing television business which did most of the heavy lifting.
The great survivor also fended off a messy court battle over James Warburton’s defection to Ten and has now anointed Tim Worner to run the television business. After almost 20 years at the top of Australian television, Leckie deserves to go out on a high with plenty of accolades.
Worst-performing CEO of the year
Lachlan Murdoch somehow managed to annoy everyone while getting overpaid to take an axe to Ten’s news and sports business. The hiring of James Warburton upset both Kerry Stokes and James Packer, and if Ten was really in such a mess you have to wonder why Lachlan paid $1.43 a share late last year to take a 9% parcel.
The stock is now wallowing at 88c after a woeful year. The handover to Warburton on January can’t come soon enough and then Lachlan can go back to comforting his father through the phone-hacking crisis and serving as the only non-executive director of News Corporation from the Murdoch family.
Gutsiest corporate move
Cameron Clyne and the NAB break-up campaign deservedly won plaudits for creativity and audacity. It was also a good corporate move which won truckloads of market share while reducing the risk of thoroughly deserved regulatory and political intervention. After all, Australians continue to suffer the world’s most expensive banking system — to keep the music going, cartel members need to be innovative. The Big Four made a record $32 billion before tax this year, so it pays to invest in some distracting PR.
Greatest acts of corporate bastardary
Unlike NAB, the Coles/Woolworths grocery duopoly appears to have no sense of proportion when it comes to risking regulatory intervention and staying on good terms with their suppliers. Even giants like Coke, Heinz, Goodman Fielder and Foster’s were put on the rack this year and completely done over on supplier terms.
Having the fattest margins of any grocery retailer in the world is clearly not good enough for Woolies, which now has a competitor run by a bunch of overpaid Poms who are trying to be even tougher. The result is supplier red ink all over the place and widespread destruction of brand equity as the duopoly aggressively role out their home brand strategy. New ACCC boss Rod Sims, suppliers and politicians are now mobilising and Bob Katter has even started a political party dedicated to breaking up the world’s most dominant grocery duopoly. When it happens, this friendless duo will have no-one to blame but themselves.
Lazarus award for corporate comeback
In March this year, Mark McInnes was rescued from purgatory by Solomon Lew after his ignominious 2010 departure from David Jones admitting to conduct of “a manner unbecoming of the high standard expected of a chief executive officer to a female staff member.” The hiring of McInnes as CEO of Premier Investment was a move that only an all-blokes board could do, but at least Solly has recently added a first-ever female director, Sally Herman. While McInnes appears to be behaving himself around female staff, he shows no restraint when it comes to lashing Paul Zahra, his successor at David Jones. He’s extremely lucky to have a top ASX job at all, let alone a licence to critique the performance of others.
CEO most deserving of the sack
After 58 years in the job, appalling governance, a trashed reputation and nearly two decades of share price under-performance, surely it is time for the independent News Corp directors to show Rupert Murdoch the door. After all, he’s turning 81 in March and the phone hacking scandal has revealed his “see no evil, hear no evil” approach to corporate ethics.
Alas, the completely undemocratic News Corp share voting structure allows Rupert to hand-pick loyal and compliant directors who seem completely unable or unwilling to move on a bloke whose family only owns 13% of the company.
“duopoly aggressively role out their home brand strategy” presumably with twenty sided dice
I think James deserve a mention in final year despatches Stephen.
He has been left like a shag on an exposed rock by his old man. He has
successfully implicated himself in possibly the most destardly expose of the press we have
seen in the past fifty years of the media.
Combined, the male progeny of Keith and Rupert Murdoch have used their
empire to distort and lie about economics, science,social policy and
politics throughout the English speaking world.
They have overseen the greatest debasement of the profession of
journalism in Austalian history. And that includes such venerable
old ducks like “Smith’s Weekly” and “The Argus”.
The Mrdochs have destroyed much of Fleet St credability and it is
Rupert Murdoch’s Fox that gives us the maelstrom that is todays
American polity.
I worry about what awaites the Indians and Chinese when this media
mafioso family get their unscupulous and unlawful ethics entrenched.
in their media .
And who wins the award for Foie-gras Goose of the Year?
Stephen Mayne, for swallowing Gunns’ propaganda in two hours of force-feeding.
Regurgitated next day on Crikey….
Lets hope the new ACCC head takes on Woolworths and Coles, cause the previous head was weak and incompetent at stopping Woolworths and Coles.
While I agree that the duopoly needs to be broken, I don’t think it is fair to blame the old head of the ACCC. It is very difficult to prove that actual collusion or monopolistic practices are taking place. No doubt, Woolworths and Coles have expensive lawyers to double check that every strategic move they make is within the boundaries of the law.