Australian Earnings Season One of the Strongest in Years, Credit Suisse Says

It’s clear there is profit strength Down Under: CS’s Tevfik
More than 50% of companies had earnings, sales surprises

Australia’s current earnings season is one of the strongest in the last 15 years, based on the proportion of companies with profit expectation upgrades from analysts compared to downgrades, according to Credit Suisse Group AG.

While analysts have have downgraded EPS forecasts for the year ending June by 0.3 percent for the S&P/ASX 200 Index, 28 percent of companies in the benchmark have had upgrades of more than 1 percent versus 23 percent with downgrades, Credit Suisse analysts Hasan Tevfik and Peter Liu wrote in a note dated Feb 16. Excluding poor results at Commonwealth Bank of Australia, Fletcher Building Ltd. and Wesfarmers Ltd., analysts’ profit outlook for the S&P/ASX 200 would be 0.6 percent higher, they wrote.

The reporting season is “not as shabby as it first seems,” the analysts wrote. “It is clear there is underlying strength in Aussie profits.”

More than half of the companies that have reported half-year, or full-year results since Jan. 30 had positive earnings and sales surprises, according to data compiled by Bloomberg.

That’s good news for shareholders. An additional A$500 million ($397 million) in dividends are expected to be paid out in the 12 months to June 30, while there’s about A$820 million of more share buybacks, led by Dexus, Mirvac Group and South32 Ltd., according to Tevfik and Liu.

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