PRESS DIGEST-Australian Business News - Feb 11
Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.
THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)
A review by James Packer's Crown Ltd (CWN.AX) of the carrying value of its overseas assets may result in a more write-downs after the gaming company on Monday announced a A$450 million write-down on the value of its stakes in three United States-based casinos. Assets being reviewed by Crown include its half-stakes in Canadian casino operator Gateway and British-based Aspinalls, and its 38 percent holding in the Melco joint venture in Macau. Crown investor relations spokesman Geoff Kleemann said the review was still in progress. Page 17.
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Consumer electronics retailer JB Hi-Fi (JBH.AX) yesterday announced a 41 percent jump in net profit after tax to A$59 million, beating market forecasts of about A$52 million. The company, which plans to increase the number of its stores across Australasia to 150 from 101 at present, increased its dividend payout by 50 percent to A15c per share, fully franked. Despite a warning by chief executive Richard Uechtritz that conditions would be "tough right through 2009," JB Hi-Fi shares finished the day up 17.4 percent at A$10.80. Page 17.
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The proposed deal between troubled miner Rio Tinto (RIO.AX) and Chinese state-owned group Chinalco would offer a strategic advantage to Rio, observers have said. If the potentially A$29.7 billion deal goes ahead, Rio, the world's second largest iron ore producer, could gain access to resource projects in China. But the impending transaction has caused turmoil in the miner's board, with chairman-elect Jim Leng resigning on Monday over his objections to the deal, which could give Chinalco representation on Rio's board. Page 18.
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Rio Tinto will deliver its full-year result tomorrow, and analysts have forecast the diversified miner will announce a 50 percent surge in profit to about US$9.7 billion (A$14.4 billion). However, the result would be weighed down by US$38 billion in debt on the company's balance sheet linked to its 2007 acquisition of aluminium producer Alcan. Rio, which is considering a major deal with Chinese group Chinalco to prop up its finances, is also expected to write-down about US$10 billion on the book value of its Alcan assets. Page 18.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
The Australian Taxation Office (ATO) has been unsuccessful in two separate court cases, which found against the ATO's interpretation of double tax treaties. The ATO had argued that the treaties, which prevent income from being taxed in two countries, did not apply to taxation on capital gains made on share sales. The tax office will have to pay significant costs, and will forego collecting more than A$250 million in tax due to the decisions, although it has already lodged an appeal in one of the cases. Page 31.
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Australian wheat exporter AWB (AWB.AX) yesterday said its first-half profit would fall by between 45 percent and 55 percent below the previous year's result of A$22.3 million, leading to shares in the company falling 25 percent to close at A$1.53. AWB was one of three agribusiness companies to report poor results yesterday, a reflection of the effect of the drought in rural Australia Page 31.
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Major energy companies are competing to position themselves in Queensland's growing liquefied natural gas industry. Energy company BG Group (BG.L) has made a A$796 million cash bid for Pure Energy Resources PES.AX, beating a cash and scrip offer from Arrow Energy (AOE.AX), and pushing Pure Energy's shares 28 percent higher to A$6.73 a share. BG's bid has raised speculation that Shell may bid for Arrow, which would increase the value of Arrow's scrip and cash bid above BG's offer. Page 32.
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Telecommunications company Optus yesterday reported third-quarter profit had remained at A$143 million, with revenue increasing by 10 percent for the quarter. Mobile and wireless broadband subscribers rose by 213,000 in the quarter, to a total of 7.6 million customers. Optus chief executive Paul O'Sullivan said "this is an incredible result for our mobile numbers and it will genuinely surprise our competitors." Analysts say that despite the rise in revenue, there are concerns over a fall in earnings margins. Page 33.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
Australian hearing implant group Cochlear (COH.AX) has reported strong results, including a prediction of nearly 20 percent growth for the full-year. Cochlear increased the amount it spent on research and development in the six months to the end of December by 14 percent to A$45.5 million, nearly 13 percent of revenue. Chief executive Chris Roberts says he believes the company can maintain its growth rate of 16 percent, and that a focus on costs and processes means the company is not solely reliant on increasing sales. Page 25.
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APN News & Media's (APN.AX) chief executive, Brendan Hopkins, who chairs the industry group Newspaper Works, has criticised analysts who say that Australian newspapers will soon experience the same difficulties as overseas publications. Mr Hopkins said Australian newspapers have stable circulations, stronger online positions, reach a higher proportion of the population, and are less dependent on classifieds. Mr Hopkins would not say what effect an advertising recession was likely to have on the sector. Page 26.
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Australian miner Lynas Corp (LYC.AX) has suspended construction of its flagship rare earths project in Western Australia after a dispute with a group of hedge funds on access to funds. Lynas raised A$94.5 million in an institutional placement last year as well as issuing a US$95 million convertible note to five overseas hedge funds. The note funds can only be accessed with the consent of Lynas and 82 percent of the noteholders; however, the hedge funds say the miner is in breach of some of the conditions. Page 27.
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Former James Hardie (JHX.AX) director Peter Willcox has told the New South Wales Supreme Court he would have resigned his position as director in January 2001 if the board had accepted an asbestos compensation trust proposal which had insufficient funds to meet all anticipated claims. Mr Willcox said there had been a "very strong push to set up an underfunded trust," in that month's board meeting. Mr Willcox supported a later proposal with further funding, which was later found to be underfunded by A$1.5 billion. Page 27.
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THE AGE (www.theage.com.au)
The Australian Securities Exchange is to investigate a possible case of insider trading after movements in the share price of Hutchison Telecommunications (HTA.AX) shortly before the company announced that it would merge with Vodafone Australia. On Friday, shares in Hutchison rose by 37.9 percent at one point, with over 2 million shares traded -- around 20 times the usual volume. If any breaches of insider trading regulations become apparent, the matter will be referred to the Australian Securities and Investments Commission. Page B1.
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Plantation company HVP Plantations has up to 20,000 hectares of plantations under threat from bushfires in Victoria, representing around 10 percent of the its tree stock. Chief executive Linda Sewell said it was currently difficult to assess how many hectares have been burnt, but added, "this is a substantial loss for our company -- but nobody who works for us has been hurt." Timber Communities Australia says the bushfires mean many timber workers now face an uncertain future. Page B1.
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Wealth management firms IOOF Holdings (IFL.AX) and Australian Wealth Management (AWM) AUW.AX say they will continue with a A$500 million merger despite both companies suffering in the current economic crisis. AWM's profits for the six months to the end of December fell 30 percent to A$23.4 million, while IOOF's operating profit fell 22 percent to A$7.9 million. The all-scrip deal, which still requires shareholder approval, will see IOOF give one share for every 3.73 AWM shares. Page B3.
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Bunnings Warehouse Property Trust (BWP.AX), which is the landlord to around 60 of the 171 handyman stores run by Wesfarmers, has reported a net loss of $23.4 million in the half-year to the end of December. Although the trust saw rents increase by A$20 million, it was forced to cut the value of its assets by A$43.9 million. Managing director Grant Gernhoefer raised the possibility of seeking funds from the equity market, saying "capital-raising is something we've got constantly under review." Page B3. --
