ASX falls; JB Hi-Fi’s profit surges but recent lockdowns hurt sales

The Australian share market has fallen in early trade, dragged down by the big banks and energy stocks.

By 10:20am AEST, the ASX 200 had lost 0.3 per cent to 7,607.7 points.

The Australian dollar was slightly weaker against the greenback, buying around 73.6 US cents.

Most sectors of the share market were in the red, with materials and real estate the exceptions.

Bank stocks were a major drag, led by a 1.6 per cent fall in ANZ shares.

Bendigo and Adelaide Bank shares were down 7.1 per cent, after it announced its results, with profit increasing to $524 million.

Bendigo also said it would buy a Melbourne-based fintech, Ferocia, to beef up the offering of its digital bank, Up.

JB Hi-Fi shares were down 0.7 per cent after its full-year profit surged, but it noted that recent restrictions had hit sales.

The electronics retailer said its profit for the 2021 financial year climbed 67.4 per cent to $506.1 million.

Total sales rose more than 12 per cent, with a 78 per cent rise in online sales over the year.

Shareholders will receive an increased final dividend of $1.07 per share.

JB Hi-Fi has been one of the obvious winners of the COVID pandemic, as people decked out their home offices and bought devices to keep themselves entertained.

Its appliance business, The Good Guys, also benefited from the strong housing market and renovations trend, with total sales up 13.7 per cent, as people bought more fridges and laundry appliances.

However, the company has seen a hit to sales during the recent stay-at-home restrictions in Sydney and snap lockdowns in other states.

Between July 1 and August 15, comparable sales at JB Hi-Fi in Australia were 14.9 per cent lower than the same period last year, while sales at The Good Guys were down 8.6 per cent.

“While it remains an uncertain retail environment, we have continued to demonstrate our ability to adapt and respond,” incoming chief executive Terry Smart said.

However, the company declined to provide sales or earnings guidance for the 2022 financial year due to the uncertainty.

Mining giant BHP has confirmed it is mulling a merger of its petroleum business with Woodside.

Shares in BHP were 1.2 per cent higher in early trade.

In response to media reports, BHP issued a statement saying it had initiated a strategic review of its petroleum business, and that a Woodside merger was one option.

“While discussions between parties are currently progressing, no agreement has been reached on any such transaction,” BHP said.

Woodside also confirmed the discussions were underway.

BlueScope Steel triples dividend

Shares in steelmaker BlueScope were up 1.8 per cent, after it announced it would return cash to shareholders after a big increase in profit.

BlueScope will pay a final dividend of 25 cents per share — more than triple last year’s — as well as a 19 cent special dividend.

That’s after its net profit climbed to $1.19 billion, up from $96.5 million last year. 

It will also buy back up to $500 million worth of shares over the next year.

The company has set a goal of net zero greenhouse gas emissions by 2050 across its global operations, and will allocate $150 million over the next five years to “near-term” climate change action.

Sydney Airport rejects increased bid

Sydney Airport has rejected an increased takeover offer, now worth $22.8 billion, saying it’s not in the best interests of shareholders.

A bid was originally launched last month by a consortium including the investment manager for industry super funds IFM Investors, QSuper and Global Infrastructure Management.

The offer has been increased from $8.25 to $8.45 cash per share and the country’s largest super fund, AustralianSuper, also has joined the bidding consortium.

However, Sydney Airport’s board has rejected the bid after concluding it continued to undervalue the business.

“The current environment does not change the board’s view of the long-term value,” it said, noting the “rapid increase” in vaccination rates in recent weeks.

It said it was “open to engaging” with the consortium should it be prepared to lift its offer price to “recognise long-term value”.

ABC/Reuters