Treasurer Jim Chalmers has flagged a potential superannuation overhaul, with those holding multi-million-dollar balances potentially in the spotlight. Meanwhile, profit results have driven mixed fortunes on the ASX.
Look back on the day's financial news and insights from our specialist business reporters.
Disclaimer: This blog is not intended as investment advice.
Key events
Live updates
Market snapshot at 4:45pm AEDT
By Michael Janda
ASX 200: +0.1% at 7,352 points
All Ords: Flat at 7,553 points
Australian dollar: +0.3% at 68.98 US cents
Nikkei: Flat at 27,512 points
Hang Seng: +0.7% to 20,856 points
Dow Jones (Friday close): +0.4% to 33,827 points
S&P 500 (Friday close): -0.3% to 4,079 points
Nasdaq (Friday close): -0.6% to 11,787 points
FTSE (Friday close): -0.1% to 8,004 points
EuroStoxx 600 (Friday close): -0.2% to 464 points
Brent crude: +0.7% to $US83.61/barrel
Spot gold: +0.1% to $US1,843/ounce
Iron ore: Flat at $US124/tonne
Bitcoin: Flat at $US24,486
Investors' chicken play as Inghams surges, while NIB and BlueScope plunge on outlook
By Michael Janda
The overall market didn't move far — in fact the All Ords ended dead flat — but the surface calm masked some strong currents tugging on individual firms.
Despite the ASX 200 finishing up 0.1 per cent at 7,352, 123 of the 200 companies on the index lost ground, compared to only 71 that gained.
The biggest losers were companies whose profit reports, or the future earnings outlooks disclosed (or not disclosed) therein, disappointed.
Chief among those were health insurer NIB Holdings (-11.6 per cent) and BlueScope Steel (-10 per cent), while A2 Milk (-8.6 per cent) and Charter Hall group (-6.1 per cent) also failed to meet analyst hopes.
On the flip side, poultry producer Inghams Group (+11.7 per cent) rebounded from recent weakness on the back of some broker upgrades after its results were released at the end of last week.
QBE Insurance (+3.7 per cent) likewise benefited from positive analyst sentiment.
Transport operator Kelsian Group (+3.4 per cent) gained on a major new bus contract with the NSW government.
Super Retail Group (+2.6 per cent) was also a top performer.
Financial stocks had the biggest gain across the market overall, up 0.8 per cent, led by a 1.9 per cent gain for Bendigo and Adelaide Bank, with three of the four majors up more than 1 per cent and ANZ lagging with a 0.3 per cent increase.
Superannuation tax concessions could be overhauled
By Nassim Khadem
Treasurer Jim Chalmers has singled out super tax concessions as an issue that needs to be tackled as part of on overhaul of Australia's $3.3 trillion system.
Research by The Australia Institute shows the annual cost of super tax concessions ($52.6 billion) is almost on par with the value of the entire age pension program ($55.3 billion).
"Right now, we're on track to spend more on super tax concessions than the age pension by around 2050," Mr Chalmers said in a speech in Sydney on Monday.
"I'm not convinced that's a sustainable way to get to our destination – good retirement incomes for more Australians, now and into the future."
Currently, people can make before-tax contributions to their super, which are taxed at a flat rate of 15 per cent in the fund.
Once people retire, their investment earnings are generally tax-free, and payments to individuals once they are aged 60 or over are also generally tax-free.
The government has suggested that the objective of superannuation "is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way".
It suggested superannuation contributions should not be accessed unless as retirement income.
Treasurer Jim Chalmers flags superannuation overhaul
By Nassim Khadem
Treasurer Jim Chalmers has announced a major overhaul of Australia's $3.3 trillion superannuation sector.
The Albanese government has today released a consultation paper on legislating a purpose for people's retirement savings.
And once they legislate that purpose they have said they will make policy changes thereafter.
The government has indicated that it wants to cap super tax concessions for people with high retirement balances and to crack down on employers that are not paying their workers compulsory superannuation in full.
One of the major ideological differences between Labor and the Coalition is about whether people should be able to use their superannuation to do things like buy a house.
During the pandemic Australians were allowed to withdraw up to $20,000 of their super to help with their living costs.
It proved to be very popular policy, with about $36 billion drawn.
But it has also depleted people's retirement savings.
"This messy ideologically motivated approach culminated in the early release debacle during the pandemic," Mr Chalmers said on Monday in a speech to the financial services industry.
"Without consultation, and little consideration, Australians were forced to choose between better incomes for retirement or paying their bills.
"Funds were forced to liquidate assets and $36 billion of Australians retirement savings were lost.
"Our government will take a different approach."
HESTA chief executive Debbie Blakey has also argued that superannuation savings should be for retirement and not used for things like buying a home.
"I think there are other ways to deal with the housing crisis," she said.
"And although it might seem like an easy fix, there's an ample amount of evidence that actually access to super to deal with the housing crisis could actually make the housing crisis worse.
"So I think this objective is a really important part of being caring of what super is there for."
BlueScope warns safeguard mechanism could threaten local steelmaking
By Michael Janda
BlueScope's Steel's boss Mark Vasella has used his company's latest profit announcement to warn about possible fallout from the Albanese government's proposed changes to the safeguard mechanism.
"We are working encouragingly with the government around what we think is needed to maintain sovereign capability," Mr Vasella said.
"There is no value here in seeing carbon exported.
"If steel was to be produced offshore and shipped back to Australia because that capability was not here, that is actually a worse outcome for the planet."
You can read more about his comments from my ABC Illawarra colleagues Tim Fernandez and Nick Rheinberger.
Earnings hits outnumber misses, but uncertain outlooks sink shares: UBS, Barrenjoey
By Michael Janda
We're around halfway through reporting season, and two major investment banks in the local market have given their verdicts on the results so far.
First to Richard Schellbach and Sparsh Polepalle at UBS:
"With 40% of companies having now reported, a more fully formed picture has emerged.
"Earnings beats are still outnumbering misses (just), while analysts have consistently been cutting their forward earnings estimates.
"Domain, JB Hi-Fi, Southern Cross Media and Temple & Webster all cited depressed activity levels since the start of the year. But the story remains mixed given that the trading updates from Bapcor, Endeavour Group, GUD Holdings and Super Retail have shown a consumer still willing to spend.
"Discretionary retailers have acknowledged an increasing reluctance from customers towards making big-ticket purchases, whilst the Wesfarmers result saw clear signs of consumers 'trading down'."
Investors have reacted by selling out of the market.
Rival Barrenjoey has also crunched the numbers, and come up with similar findings:
"At this stage EPS [earnings per share] has produced 40% beats (31% misses) but DPS [dividends per share] has produced 26% beats (35% misses).
"The Outlook changes have been broadly negative, with PBT [profit before tax] 14% upgrades (25% downgrades), EPS 16% upgrades (21% downgrades) and DPS 15% upgrades (24% downgrades). Sales was slightly positive with 19% upgrades (11% downgrades)."
As for sectors facing a reckoning in 2023, UBS has fingered the banks.
"The rolling over of bank share prices fits with the strategy we laid out back in early January that: 1) this stage of the cycle does not reward holding banks, and 2) NIM [net interest margin] expansion already seemed fully baked into share prices, 3) any pick-up in bad debts did not seem to be priced into shares.
"Put simply, everything that could have gone banks' way through 2022 did and, following a period of solid share price outperformance, we were happy to take profit."
UBS is looking at the general insurance sector, currently benefiting from big premium increases, as an alternative.
NIB shares hammered despite 13 per cent rise in profit
By Michael Janda
As always, earnings season is more about expectations and outlook than it generally is about the numbers being reported themselves.
Health insurer NIB is a case in point today.
Its net profit after tax was up 12.8 per cent to $91.6 million, with earnings per share up a similar amount and an increase in its interim dividend from 11 to 13 cents per share, fully franked.
"We're very pleased with the result on a number of fronts," NIB's chief executive Mark Fitzgibbon told the market.
"The half-year has set us up for a good full-year result and longer term outlook."
The share market begged to differ. NIB shares had slumped 10.2 per cent to $7.13 in early afternoon trade.
It appears a key concern among investors is that the insurer's margins remained propped up by the lingering effects of the pandemic, with a lower level of claims than previously seen.
NIB declined to offer earnings forecasts because of the uncertainty about when and how much claims would begin to ramp up as policyholders undertook procedures that had been put off due to the pandemic.
"Our current provisioning is prudent, but it's going to take a bit more time for this to settle," added Mr Fitzgibbon.
Like other insurers, NIB has announced premium increase deferrals and the second lowest increase in 20 years, with premiums going up by 2.72 per cent at a time when the general level of inflation is running at 7.8 per cent.
BlueScope shares smashed amid profit plunge
By Michael Janda
BlueScope shares have posted one of the biggest falls on the ASX 200, after the company reported a 64 per cent slump in net profit after tax.
The company's first-half profit of $599 million was down from $1,644 million the same period a year earlier.
The drop wasn't down to one-offs either, with underlying profit also dropping 61 per cent to $614 million.
Despite the slump in earnings, BlueScope is maintaining its interim dividend at 25 cents per share, fully franked.
Perhaps more worrying for investors was a warning that earnings for the second half of the financial year would be even weaker than the first.
BlueScope shares were down 9.8 per cent to $17.88 shortly after 2:00pm AEDT.
Market snapshot at 1:10pm AEDT
By Michael Janda
ASX 200: +0.1% at 7,350 points
All Ords: Flat at 7,551 points
Australian dollar: Flat at 68.8 US cents
Nikkei: Flat at 27,510 points
Hang Seng: -0.2% to 20,686 points
Dow Jones (Friday close): +0.4% to 33,827 points
S&P 500 (Friday close): -0.3% to 4,079 points
Nasdaq (Friday close): -0.6% to 11,787 points
FTSE (Friday close): -0.1% to 8,004 points
EuroStoxx 600 (Friday close): -0.2% to 464 points
Brent crude: +0.2% to $US83.14/barrel
Spot gold: -0.1% to $US1,840/ounce
Iron ore: Flat at $US124/tonne
Bitcoin: -0.6% to $US24,339
ASX still flat despite some big winners and losers
By Michael Janda
The Australian share market is still trading broadly flat, as investors remain cautious with the prospect of no Wall Street action tonight due to the Presidents' Day holiday.
The ASX 200 was up only a point at 7,348 just before 1:00pm AEDT, with the All Ords down 5 points at 7,547.
Financial stocks were leading the gains along with educational services.
Industrial and real estate stocks were leading the losses halfway through the trading day.
There were 117 stocks in the red and 78 trading higher.
Despite a flat market overall, there were some big movers.
Biggest gains:
- Inghams Group: +9.5% to $3.00
- Kelsian Group: +5.2% to $6.50
- QBE Insurance: +3.1 to $14.835
- Reliance Worldwide: +2.6% to $3.57
- Super Retail: +2.5% to $13.22
Biggest losses:
- BlueScope Steel: -11.7% to $17.51
- NIB Holdings: -9.9% to $7.155
- A2 Milk: -8.3% to $6.51
- Charter Hall: -7.7% to $13.40
- Imugene: -5.4% to $0.1325
Bendigo and Adelaide Bank profits jump on interest margin growth
By Michael Janda
Bendigo and Adelaide Bank has reported a 49 per cent jump in half-year profit to $249 million, amid a rise in its net interest margin (NIM).
The bank's NIM went up 19 basis points to 1.88 per cent. The growth in NIM was similar to that reported by the Commonwealth Bank last week, but Bendigo's NIM was more than 0.2 of a percentage point lower than its big four rival.
The net interest margin is the main source of bank profits, measuring the difference between the rates a bank has to pay to borrow money (for example, from depositors) and the rates it lends it out at (to borrowers).
Bendigo's preferred cash earnings measure, which strips out one-offs was up 23 per cent to $295 million.
Frank Mirenzi, a vice-president at Moody's Investors Service, said the result is credit positive for the bank.
"Strong margin expansion has driven a large increase in net interest income, while credit expenses have remained relatively modest," he noted.
"Gross impaired loans and residential mortgage loans in arrears continue to fall, but rising interest rates and cost of living pressures may reverse this trend in the second half, raising risks and credit costs for the bank."
The bank's interim dividend was up 9.4 per cent to 29 cents per share.
Bendigo and Adelaide Bank shares were up 1.1 per cent at $9.72 by 12:50pm AEDT.
Gas prices plunge on Europe's mild winter, but relief may be short-lived
By Michael Janda
Commonwealth Bank commodities analyst Vivek Dhar with an interesting update on LNG prices, which go some way to determining local gas prices.
Here's some highlights from today's note:
"LNG futures have plunged 46% to ~$US16/mmbtu (delivered to Japan/Korea) since the beginning of the year. Prices are down 77% from peaks reached on 25 August 2022. The fall in LNG prices largely reflects the steep decline in European gas futures. European gas futures have now declined below €50/MWh for the first time in 17 months on milder weather reducing seasonal demand, efforts to curb gas consumption and new LNG supply," he wrote.
"Europe's gas storage levels are currently at 64% of capacity, well above the 5 year average (2018 2022) of 43% for this time of year. The high storage capacity relative to the past indicates that Europe likely has enough gas for this winter. Storage levels are so high that there is growing hope that Europe may even make it through to next winter without a shortage.
"While it's true that the winter gas shortage that many feared late last year did not come to pass, the risk of gas shortages are still on the table. Europe will likely need to import more LNG than it did last year in the upcoming northern summer months to compensate for lower Russian gas pipeline imports. In the same time period, China will likely see LNG imports pick up by 15 20%/yr as China's economy re-opens. How well Europe manages to replenish its gas storages in the summer months will set up the narrative for market conditions in the next winter. We see limited downside risks to LNG spot prices at present given the heavy decline over the last six months. We expect LNG spot prices to remain well above pre-Ukraine war levels given the limited spare LNG export capacity."
Ampol posts 42 per cent profit jump on 'high refining margins'
By Michael Janda
The petroleum refiner and service station operator posted a full-year net profit after tax of $796 million for 2022, up 42 per cent on the previous year.
In its profit release Ampol said:
"Historically high refining margins converted to earnings through reliable operating performance."
Ampol also said its convenience stores experienced their best earnings in five years, up 37 per cent on the previous year.
The company has declared a final ordinary dividend of 105 cents per share, fully franked, plus an additional special dividend of 50 cents per share.
RBC Capital Markets analyst Gordon Ramsay said the dividend news has driven the share price higher.
"Ampol's capital management (special dividend) was a positive surprise in our view, and Ampol has stated its board will consider further capital management initiatives in 2023, taking into account the balance sheet strength, market conditions, franking credit balances and investment in growth opportunities."
The company's shares were up 1.5 per cent to $32.24 at 11:50am AEDT.
Kelsian gains on new Sydney bus contract
By Michael Janda
One of the top movers this morning has been Kelsian, which owns Transit Systems, which in turn operates a number of Sydney's 'public' bus routes, that have recently been contracted out to private operators.
With the state election looming next month, and the Labor opposition promising to review the privatisation of Sydney's formerly state-government run bus networks, the Perrottet government has awarded Kelsian a new eight-year contract for two regions through a competitive tender process.
Region 2 is made up of the old regions 2 and 15 and involves around 230 buses and nearly 400 employees based at three depots.
The contact, worth around $500 million in contracted revenues, will make Kelsian Sydney's largest public bus operator, running about 30 per cent of the network.
RBC analyst Owen Birrell says it was a positive surprise for Kelsian (KLS).
"The market wasn't expecting KLS to be successful in any further Sydney Network tenders, following the award of the region 3+13 bundle in December, so this announcement should come as a positive surprise," he notes.
"That said, we highlight that the earnings contribution remains highly uncertain. No comment was made regarding the expected operating margins and we would expect low-EBITDA [profit] margins in the near term … with incremental margin expansion to emerge over time from scale and operating synergies.
"From a more strategic perspective, we highlight that KLS now controls five regions (6 + 13 + 3 + 2 + 15, bundled as three regions) in a geographic corridor that extends from the Sydney CBD down through the fast growing south-west. The strong population growth through this corridor, combined with the long concession term, should allow KLS to add additional services over time where practical and commercial."
Kelsian shares jumped 4.7 per cent to $6.47 on the news.
Top and bottom movers
By Michael Janda
With profit reporting season continuing, we have some big individual stock moves again on the ASX 200 today.
Top five gains:
- Inghams Group: +9.5% to $3.00
- Kelsian Group: +3.4% to $6.39
- Link Administration: +2.9% to $2.15
- De Grey Mining: +3% to $1.375
- Ampol: +2.5% to $32.56
Five biggest falls:
- NIB: -11.7% to $7.015
- BlueScope Steel: -11.2% to $17.60
- A2 Milk: -7% to $6.60
- Charter Hall Group: -6.8% to $13.52
- Pilbara Minerals: -4.7% to $4.23
Market snapshot at 10:30am AEDT
By Michael Janda
ASX 200: Flat at 7,344 points
All Ords: -0.1% to 7,547 points
Australian dollar: -0.1% to 68.70 US cents
Dow Jones (Friday close): +0.4% to 33,827 points
S&P 500 (Friday close): -0.3% to 4,079 points
Nasdaq (Friday close): -0.6% to 11,787 points
FTSE (Friday close): -0.1% to 8,004 points
EuroStoxx 600 (Friday close): -0.2% to 464 points
Brent crude: +0.1% to $US83.08/barrel
Spot gold: -0.1% to $US1,840/ounce
Iron ore: Flat at $US124/tonne
Bitcoin: -0.4% to $US24,380
Flat start on the ASX
By Michael Janda
Given my tech troubles this morning, it's fortunate there's not a lot happening on the ASX.
The benchmark ASX 200 index is dead flat at 7,347 points, while the All Ords is 2 points lower at 7,551.
The banks and big iron ore miners have started modestly higher, but 120 companies out of the top 200 were losing ground early on, compared to just 68 gaining.
The biggest drop by sector is industrials, while financials were enjoying the best gains.
ATO comes to $157 million settlement with petrol giant Ampol over its Singapore tax hub
By Nassim Khadem
The Australian Taxation Office (ATO) says it has come to a confidential settlement worth $157 million with petrol giant Ampol over its Singapore tax hub.
Ampol said in a statement that it will pay a further $5.6 million in Australian tax on earnings between 2014 and 2021, and $0.1m in interest.
This is in addition to the $104.1 million of tax already paid on Ampol Singapore earnings.
In June 2023 Ampol will pay $48.2 million in Australian tax on Ampol Singapore earnings in the 2022 financial year.
Ampol has written back excess current tax liabilities and deferred tax assets recognised between 2014 and 2022 in accounting for the full amount in dispute, with this write-back resulting in a one-off benefit to corporate tax expense in 2022 of $110.2 million, recognised as a 'significant item'.
No penalties have been imposed on Ampol, and the ATO has not applied any anti-avoidance provisions.
ATO deputy commissioner Rebecca Saint said the settlement also "locks in" the company's tax arrangements out to 2033.
"Locking in tax outcomes for the future has become an important feature of our settlements with multinationals as it provides us, taxpayers and the community with certainty that the multinational is meeting their tax obligations into the future, avoiding future disputes," Ms Saint said.
The ATO's Tax Avoidance Taskforce has had a focus on offshore procurement hubs for a number of years.
The hub is used to procure goods from third party suppliers and in turn on-sell those goods to the Australian arm of the group and is typically located in a low or no tax jurisdiction.
"We are keen to ensure that procurement hubs are not used as a mechanism to shift profit from Australia by charging excessive prices for imported goods and services in an effort to reduce tax paid in Australia," Ms Saint said.
The ATO says since the Taskforce's inception to date it has raised tax liabilities of $18.7 billion, although it has previously said some of the tax bills issued are being disputed.
She noted details of the settlement are confidential and comes after the ATO has reached settlements in previous years with other companies including Rio Tinto, Google, BHP, Apple, ResMed, and Microsoft.
Ampol group chief financial officer Greg Barnes said Ampol approached the ATO in 2014 in relation to its operations in Singapore.
"We are pleased to have reached an agreement with the ATO and to have certainty over the future tax treatment of Ampol Singapore earnings. The changes minimise operational disruption, while ensuring we fairly meet our tax obligations in Australia."
Sorry for the silence
By Michael Janda
A "bulging battery" on my (very old, like 5-years+) ABC laptop meant I needed to source a replacement from IT.
Back in business now (excuse the pun) and will have the market open news to you shortly, along with a heap of profit results.
Market snapshot at 8:40am AEDT
By Michael Janda
ASX 200 futures: Flat at 7,273 points
Australian dollar: -0.3% to 68.56 US cents
Dow Jones (Friday close): +0.4% to 33,827 points
S&P 500 (Friday close): -0.3% to 4,079 points
Nasdaq (Friday close): -0.6% to 11,787 points
FTSE (Friday close): -0.1% to 8,004 points
EuroStoxx 600 (Friday close): -0.2% to 464 points
Brent crude: -2.5% to $US83.00/barrel
Spot gold: Flat at $US1,841/ounce
Iron ore: +1.2% at $US126/tonne
Bitcoin: +0.2% to $US24,523
