NAB profit — ignore the guff. Plenty of talk this morning about how the National Australia Bank’s 2014-15 profit and about how well it did with big rises in cash earnings/profit — up 15% or more. That’s business media writers mixing earnings figures, including and excluding a series of one-off items in the year, which are linked to the revamp and sale of the troubled UK banking operations (all announced in August with the $5.5 billion capital raising). They ignored the message from the unchanged dividend of 99 cents a share (meaning the results were not as brilliant as the media made them out to be) and the performance figures from the bank’s major business units. For example, earnings from the Australian bank, NAB’s core business) were up just 3%, on a 4% rise in revenue. NZ banking operations had a 2% rise in earnings in NZ dollars over the year, and a rise in problem loans from the Kiwi dairy industry; the NAB’s wealth operation had a 27% jump in earnings (but to just $464 million) and UK banking profits were flat. Cost-control was good.
The MLC wealth and insurance business is being broken up and the insurance side sold into a joint venture to be 80% owned by Nippon Life of Japan for $2.4 billion. That will generate a loss of $1.1 billion, which will disrupt comparisons in the 2015-16 results. The separation of the MLC insurance and super business will cost an estimated $440 million, according to the NAB’s report this morning. NAB’s net interest margin dipped four points to just 1.87 cents in the dollar. So another year of confusing financial results as the great clean-up at the bank continues. But the unchanged dividend (steady now for the last three half years) tells the real story of this year’s result and the cautious immediate outlook from the NAB’s board. This was unlike Westpac, which lifted its final dividend. Perhaps the NAB board is forcing shareholders to share in the “pain” of the higher capital demanded by regulators? — Glenn Dyer
Not a knockout. Apple and Twitter released quarterly earnings reports this morning, but they failed to set markets on fire like those updates from Amazon, Microsoft and Alphabet (Google) did last Thursday. Twitter received the thumbs-down on all counts and the shares fell 10% in after-hours trading. Apple shares were up around 1.4% — a long way from the 6% to 10% surges seen for last Thursday’s trio. It’s not that Apple didn’t do well. Its fourth-quarter profit was up 31%, thanks to strong demand for iPhones in China, while revenue surged 22%. In fact fourth-quarter net profit jumped to US$11.12 billion, up from US$8.47 billion in the year-ago period and revenue jumped 22% to US$51.50 billion from US$42.12 billion in the same quarter of 2014. Apple also said its gross margin, the percentage of revenue that remains after manufacturing costs, was a fat 39.9% in the quarter.
Apple sold 48.04 million iPhones in the quarter, topping sales of 39.27 million units in the same quarter of 2014. Apple didn’t disclose sales for Apple Watch. Watch sales were included with the iPod, Apple TV and Beats (headphones) accessories in the “other products” category. Sales of that segment rose 61% to US$3.04 billion. Sales of iPads continued to fall, down 20% in unit terms. That shows Apple’s biggest problem — its over-dependence on the iPhone is growing. This problem will take a big bite out of Apple sooner rather than later. — Glenn Dyer
The incredible shrinking mining industry: Honey, I shrunk the mining industry (again) might not be the most arresting name for a movie or book, but as a catchy headline summarising the latest survey of the mining sector by SNL Metals & Mining, it’s not a bad attempt. The survey shows that the market value of the global mining industry’s listed companies fell under $US1 trillion in September for the first time since the GFC in April 2009. In Industry Monitor, SNL Metals & Mining said that the aggregate market capitalisation of 2684 listed companies tracked in its database at the end of September was only US$934 billion, compared with US$1.03 trillion at the end of August. That’s a fall of 9.3% in the month (the number of companies in the survey was the same).
SNL says the value of mining companies listed on the world’s stock exchanges had slumped 43% since the middle of 2014 and is now just 39% of the US$2.415 trillion value reached in April 2011. Looking at it another way, the mining industry now has a market value worth less than the valuations of Apple (around US$650 billion) and Alphabet (Google), around US$440 billion. The low point in valuation for global mining remains November 2008 (in the eye of the GFC), when the market value of the then-2390 listed companies was US$656 billion. The fall in value in September was the fifth monthly decline in a row. SNL says the value of the 100 largest listed mining companies was less than US$800 billion, having fallen below the US$1 trillion mark at the end of July for the first time since June 2009. — Glenn Dyer
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.