Consumer Staple Stocks News and Tips on the ASX.
Metcash (MTS) $325m Capital Raising
[caption id="attachment_22391" align="alignleft" width="120" caption="$325m Capital Raising"][/caption] Metcash Limited (MTS) is a leading marketing and distribution company operating in the food and other fast moving consumer goods categories. MTS operates via three business units: IGA Distribution (retail), Campbells Cash & Carry (wholesale) and Australian Liquor Marketers (ALM; liquor wholesale). Metcash announced a $325 million capital raising, the new shares will be issued at $3.46, which is a 7.5% discount to its previous closing price. The funds will be used to pursue growth opportunities through acquisitions, as well as provide financial flexibility to take advantage of any future opportunities that may appear. The group also released its FY earnings, showing a net profit of 90 million Australian dollars, a 63% fall on the prior year’s results. The company said in a statement that results had been hit by one-off restructuring and impairment costs. Click Here for FREE Daily FX Trading Recommendations
Wesfarmers (WES) Bunnings Up 4.7% For Third Quarter
Wesfarmers Ltd. owns retail chains, operates mines, writes insurance, manufactures and distributes industrial products, manufactures fertilizers and chemicals, and distributes liquefied petroleum gas and medical and industrial gases. Blue chip stock Wesfarmers said today at a strategy briefing that third-quarter sales at its Bunnings home improvement stores were up 4.7% on year. The company also said that comparable store growth for Bunnings climbed 2.6% over the same period. Wesfarmers’ Officeworks chain sales in the third quarter were up 2.5%. Management said market conditions remained challenging, with competitive pressure on sales and margins and concerns about consumer sentiment continuing.
GrainCorp 1H FY12 Net Profit $133.7 million
[caption id="attachment_22206" align="alignleft" width="99" caption="GrainCorp 1H FY12 Net Profit $133.7 million"][/caption] GrainCorp Limited provides grain industry related services in Australia. The Group provides grain and bulk commodities handling and storage for growers, end users and marketing organizations. The Group also operates grain pools, provides transportation services for bulk commodities along with farming products and flour milling and mixing services. Consumer staple stock GrainCorp reported a 1H FY12 net profit $133.7 million, a 52.5% surge on the previous corresponding period. The group said that the result was largely driven by higher earnings from storage, handling and ports activities. GrainCorp lifted its net profit guidance to a range $185 million to $205 million from 165 million to $185 million previously. CEO Alison Watkins said “the strong forward program of export bookings at GrainCorp's ports, coupled with improving malt sales and expected earnings, gives the company sufficient confidence to upgrade the earnings guidance provided to the market in February.” To Access FREE Daily Trading Recommendations, Click Here!
Metcash: Stocks To Watch
Metcash Limited (MTS) is a marketing and distribution company operating in the food and other consumer goods sectors. MTS is divided into four business units: IGA Distribution, Campbell’s Wholesale, Australian Liquor Marketers and Mitre 10. All of the business units are full owned by MTS with the exception of Mitre 10, which is 50.1% owned. Last year, MTS completed a takeover of New South Wales supermarket chain, Franklins. The deal was finalised after the Full Court dismissed the ACCC’s appeal to block the merger on the 30th of November. Margin squeeze The domestic supermarket industry is dominated by Woolworths and Wesfarmers-owned Coles, with MTS coming in at a distant third. Significant price deflation has crimped profit margins across the industry, but MTS has been hit harder than its bigger rivals. Based on semi-annual figures, MTS’ EBITDA margin has contracted over 20% between November 2009 and November 2011. In that same time, Wesfarmers and Woolworths have seen their EBITDA margins rise 5.4% and 1.7%, respectively. There may be many other reasons behind the discrepancy, but it is apparent that MTS is struggling to keep up with the aggressive discounting being implemented by Wesfarmers and Woolworths. Business restructuring In early April, MTS shocked investors by announcing a $34 - $43 million restructuring charge related to the consolidation of its businesses and the closure of 15 regional Campbells Cash & Carry (Campbells) branches. Additionally, MTS will book a $75 - $90 million non-cash restructuring charge related to the underperformance of two JVs in Queensland. The write-downs followed a disappointing 1H12 for MTS, in which its underlying profit rose just 1.4% on-year to $116.6 million. Campbells was the most disappointing business unit, with EBITA decreasing 35% to $16 million and EBITA margin dropping 73 basis points (bps) to 1.2%. IGA Distribution - the largest of all the business units – saw its EBITA rise only 0.8% and EBITA margin slipping 5bps to 4.73%. Outlook Conditions for supermarket retailers like MTS have been terrible over the past two years and things are unlikely to turn around in a hurry. MTS is in the unfortunate position of having to contend with two industry behemoths in Coles and Woolworths. [caption id="attachment_22126" align="alignleft" width="150" caption="Metcash: Stocks To Watch"][/caption] These companies have been forced into aggressive price discounting in order to attract customer sales, and this has come at a huge cost to MTS’ margins. In response, MTS has looked to streamline its business through consolidation and the closure of its Campbells branches. However it will be a stock to watch as there are questions as to whether more write-downs may be needed down the track if trading conditions deteriorate further and/or price deflation continues to cut into MTS’ margins. Click Now for FREE Trading Recommendations
Transfield Net Profit Down
[caption id="attachment_21776" align="alignleft" width="118" caption="Transfield Net Profit Down"][/caption] TRANSFIELD SERVICES LIMITED (TSE) listed since 2001 and included in S&P/ASX 200, is an international provider of operations, maintenance, asset management and project management services. Clients of Transfield Services include major national and international companies, as well as all levels of government. Transfield announced that it expects net profit for FY12 to be $105 million, down from previous guidance of between $130 million to $135 million. The company said its resource sector services company Easternwell had been hit by $7.4 million of unforeseen costs relating to a recent cyclone in Western Australia and wet weather in Queensland. Bad weather in South Australia also was linked to another $1.6 million in unforseen costs. Receive Daily FREE Trading Recommendations, click now.
Metcash To Restructure Business
[caption id="attachment_21756" align="alignleft" width="210" caption="Metcash To Restructure Business"][/caption] Metcash Limited (MTS) is a leading marketing and distribution company operating in the food and other fast moving consumer goods categories. MTS operates via three business units: IGA Distribution (retail), Campbells Cash & Carry (wholesale) and Australian Liquor Marketers (ALM; liquor wholesale). Metcash announced that it will restructure its business, cut 478 jobs and incur one-off charges to position the company for ongoing trading difficulties. CEO Andrew Reitzer said that difficult conditions are a result of continued deflation which is pushing prices and margins down. The company revealed its would incur a one-off restructuring charge of 34 million Australian dollars and also book a "largely" non-cash impairment charge of about $75 million-$90 million. To Access FREE Daily Trading Recommendations, Click Here!
Australian Stocks Dividend News: Metcash Ltd (MTS)
Metcash Limited (ASX:MTS) is a leading marketing and distribution company operating in the food and other fast moving consumer goods categories. MTS operates via three business units: IGA Distribution (retail), Campbells Cash & Carry (wholesale) and Australian Liquor Marketers (ALM; liquor wholesale). Metcash today released its first half results, which showed a 14% decrease in 1H profit to $94.4 million. The company said the decrease was due to grocery price deflation, economic uncertainty and a cut in margins due to increased competition. Metcash said it expects low-to-mid single digit earnings growth for the full year. MTS will pay an interim dividend of $0.115. Click to Receive FREE Trading Recommendations!
ASX Blue Chip Stocks News: Wesfarmers (WES)
Wesfarmers (ASX:WES) is Australia’s leading conglomerate, headquartered in Perth, Western Australia. It is also widely considered among the market’s blue chip stocks. The company owns several iconic Australian businesses, including supermarket chain Coles, hardware retailer Bunning’s Warehouse, discount department stores Target and K-Mart, and office supplies provider Officeworks. WES also involves in industrials supplies distribution, coal mining, fertilisers, chemicals and general insurance. Today, WES announced that it has sold its Premier coal mine to Chinese-based Yancoal, for $296.8 million. The deal needs approval from Australian and Chinese regulators, and WES said that the sale would generate an additional $90 million in pre-tax profit. Receive FREE Trading Recommendations for the next 7 Days, Click Here!
ASX Small Caps Shares News: Goodman Fielder (GFF)
Goodman Fielder (ASX:GFF) is Australasia's leading listed food company, delivering products to over 30,000 supermarkets, convenience stores and food service customers throughout Australia, New Zealand and the Pacific Islands. The company owns a host of iconic bakery and dairy brands, including Meadow Lea, Praise, White Wings, Pampas, Mighty Soft, Helga's, Wonder White and Irvines. GFF has announced a $259 million capital raising to improve its balance sheet flexibility. The group warned that trading conditions were difficult in its baking and dairy divisions, as it contended with higher commodity prices and reduced demand for its brand name products. It has been one of the shares to sell in recent times due to these problems. The new equity will be priced at 45 cents a share, representing a 24% discount to its last closing price. Receive FREE Trading Recommendations for the next 7 Days, Click Here!
ASX Shares to Buy: Coca-Cola Amatil (CCL)
Coca-Cola Amatil (ASX:CCL) is an Australasian bottler for US-based The Coca Cola Company. CCL manufactures, sells and distributes Coca-Cola products, including carbonated soft drinks, mineral waters and other non-alcoholic beverages, plus packaged fruit. It is also considered among the market’s blue chip stocks. Over the years, the company has successfully reduced its percentage of sugary carbonated beverages and increased its percentage of non-carbonated beverages, alcoholic beverages and food, in order to diversify its earnings stream. It has also ventured into the manufacture and distribution of premium beer brands and the premium spirit portfolio of global distributor Maxxium through Pacific Beverages (a JV entity between CCA and SABMiller). The company delivered a solid first half result last month helped by its strategic product positioning in key markets. Market ace CCL stands to benefit from SABMiller’s takeover of Foster’s Group. The move is likely to result in the Pacific Beverages joint venture being dissolved. CCL management estimates it could book a profit of $200-$300 million on the $305-$380 million sale of Pacific Beverages to SABMiller. From an EPS perspective, this would be equivalent to a 2%-3% accretion. CCL will also have the opportunity to acquire some of Foster’s assets at multiples that would be EPS accretive to CCL. As an overall entity, CCL has grown from strength to strength in recent years. The company’s diversification strategy has been key to this growth, which has included the addition of alcoholic beverages. Drink up to earnings CCL last month reported a 27.8% decline in 1H11 net profit to $153.6 million. An interim dividend of 22 cents was declared. The result was impacted by an $80.5 million charge related to the restructuring of its SPCA Ardmona division. Underlying profit rose 5.5% to $234.1 million, with revenue growing 3.3% on-year despite the impact of the recent flooding and consumer caution. At an AGM in June, CCL had said it was looking to target around 5% growth in underlying profit for the 1H11. The group has been hurt by the strong Aussie dollar, natural disasters and higher resin prices. Before currency translation effects, first half profit was expected to be around 6% - 7% higher than the prior year. CCL was expecting to generate stronger earnings in the second half, but said trading conditions remained uncertain as consumers contended with higher living costs. Taking into consideration the adverse factors CCL faced during the period, we feel the company delivered a solid result. Looking ahead CCL will continue to focus on capitalising on its growing alcoholic beverage and non-carbonated soft drinks market, which are growing owing to modern lifestyle trends. The company has strong brand awareness, and very stable and highly predictable cashflow compared to its peers. Coca-Cola Amatil is a defensive company which is protected against inflation as it can pass costs on to customers, who are always willing to spend money on CCL’s famous brands. With the potential for significant earnings upside from the Foster’s takeover, we feel CCL is in a lucrative position. Receive FREE Trading Recommendations for the next 7 Days, Click Here!
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Nov 2014 - Nov 2016
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DISCLAIMER: *Performance is derived from recommendations provided by Australian Stock Report’s Trading Report, opened on or after date of acquisition in Nov 2014 *Return figures are gross returns and do not take into account fees or brokerage costs. *Returns are calculated based on a $50,000 hypothetical portfolio, risking 2% of the overall portfolio balance ($1,000) as a starting point for each trade. *Due to slippage and gapping, losses can sometimes exceed $1,000 on an individual trade. *Opening and closing prices for trades (and therefore the prices used for determining aggregate profit/loss) will be those published on the Australian Stock Report website and will be determined by the price at which they could realistically be executed in the market at the time the recommendation is published. *ASX 200 Accumulation Index Return is calculated based upon the price of the index at the start of the session on the day the first ASX 200 trade was placed, i.e. 24.11.2015
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