Australian reporting season wrap: Rewriting the script for growth

After many years of the same old story – cost cutting and slow revenue growth story, February 2018’s reporting season has offered up some positive news for the Australian market and economy.

15 March 2018

Our team of Australian investment specialists led by Reece Birtles, Martin Currie Australia's Chief Investment Officer, look back at the February 2018 reporting season. They share their unique view into Australian companies and industry sectors, providing insight on how individual company profit results translate into portfolio activity.

Australia Reporting Season 2018 PDF report

Over the four-week reporting period our team conducted around 100 meetings with company management teams following the release of results. These meetings enabled us to gain a better understanding of the issues and strategies of each business that we use to refine our views on each investment case.

Download full PDF report

There were high expectations for good results before companies reported, reflecting growing confidence in the economy’s growth. Actual results went on to significantly beat consensus forecasts on sales growth, signifying one of the best reporting season in many years.  

What was particularly pleasing was the improved sales numbers for the industrials sector (that is, the market ex resources), finally reversing the persistently weak revenue trend of the past five years. Companies also appear to be spending more to achieve those higher sales, resulting in lower profit margins, in contrast to the past few years where cost-outs were the main driver of profit growth. 

In this reporting season, we are starting to see tangible signs that Australia’s nominal GDP growth is recovering, and that this growth is spreading from resources and property into the broader domestic economy. Albeit behind the head start made by the US, growth and inflation looks to be finally making its way back into corporate Australia.