It's that time of the year again – when investors get flooded with updates from the nation's largest companies about how much money they're earning.
Market experts are expecting strong results from ASX-listed companies in the next few weeks as reporting season ramps up.
Citi analysts believe "earnings in the December 2021 half is likely to show that domestic-focused companies have rebounded strongly coming out of [Delta] lockdowns".
"However, the emergence of Omicron in early 2022 has disrupted the recovery and cast some uncertainty on company earnings forecasts," the investment bank wrote in a research note to its clients.
Overall, the investment bank reckons Omicron will only lead to "short-term disruptions" and that the Australian market will enjoy a decent level of earnings growth (9 per cent) in the 2021-22 financial year.
Several companies have already flagged – ahead of their official results announcements – that their profits will be hit by a combination of staff shortages (with staff needing to self-isolate), supply chain disruptions or higher inflation – including Kogan, Fortescue Metals, Ansell, Bega Cheese, Adairs and Wesfarmers, to name just a few.
Essentially, the cost of doing business rose sharply as Delta and Omicron spread rapidly across the nation and ate into corporate profit margins.
Global stock markets have recently gone into a tailspin on worries about higher inflation and expectations that the US Federal Reserve will lift interest rates several times this year.
In late January, the ASX 200 (along with Japan's TOPIX and Wall Street's Nasdaq and S&P 500 indices) slumped into correction territory, having dropped by more than 10 per cent from their record highs.
Since then, markets have rebounded from their short-lived correction, as 'bargain hunters' swoop in to "buy the dip".
'Enormous pressure' and great expectations
"I think in this reporting season, we'll see some sectors under enormous amounts of pressure," said Tribeca Investment Partners' portfolio manager Jun Bei Liu.
"Private hospitals don't have enough nursing staff to meet demand, and we've already heard from a few retailers about how tough the situation is."
Businesses that don't earn profits and pay dividends (or are considered "expensive", based on their price to earnings ratios), may also come under a lot of pressure. That includes payment apps and buy now pay later firms (BNPL) in particular.
In the past six months, shares in Afterpay, Zip Co, Openpay, Sezzle and Splitit have plunged by about 50-60 per cent.
Afterpay shares were de-listed from the Australian stock market on January 19, after Block (formerly known as Square) completed its $39 billion takeover of the local BNPL company. US-based Block now also trades on the ASX.
"The companies that are yet to make money will probably struggle for two reasons," Ms Liu said.
"One is that earnings expectations are already very high. So it's harder for them to meet those expectations.
"And with interest rate [hike] expectations increasing around the world, it's increasingly difficult for those companies to justify their valuation, hence why we're seeing a sell-off across such companies."
Travel stocks will also be in the spotlight, particularly after Qantas slashed its domestic and international flights by a third in January due to the rapid spread of Omicron.
"I think we're not going to go back to the heyday that we saw in 2019," said Atlas Fund Management's chief investment officer Hugh Dive.
Oil and banks poised for gains
Some companies may see a jump in their share price if their results manage to surpass the sky-high expectations of investors.
"The likes of JB Hi-Fi and Sonic Healthcare will still do quite well," Mr Dive said.
"The new winners are likely to be energy companies, like Woodside Petroleum, since energy prices are much higher."
Indeed, the price of Brent crude oil surged above $US91 ($128) a barrel this week, hitting a seven-year high, on supply concerns exacerbated by Russia-Ukraine tensions.
Mr Dive also noted that: "Banks tend to do quite well in an environment of higher inflation and rising interest rates."
High dividends (still) expected
Investors will no doubt be wondering about the the size of their dividends. After all, that's why many retail investors have been putting their cash in the stock market instead of in bank savings accounts, which currently earn them almost no interest.
"We're not going to see the same level of payments that we saw in August 2021," Mr Dive warned.
In the August reporting season, a record $40 billion worth of dividends were paid to shareholders, beating the previous record of $28 billion set in August 2019.
Nevertheless, it will still be higher than the value of dividends paid out in February 2021, Mr Dive added.
Ms Liu was slightly more upbeat, saying: "Dividends this year are expected to at least match that of last year's."
"The banks are expected to pick up in terms of their payout. And for this calendar year we expect a dividend return of close to 7 to 8 per cent – which is very high relative to where interest rates currently are."
Last year, the Australian share market surged 17 per cent, when dividends were factored in.
Market analysts are generally optimistic that, after this bout of volatility, markets will keep rising, but at a slower pace than last year.
They say investors will still be driven into the market… by the "TINA" mindset.
It stands for "There is No Alternative" as interest rates will still be quite low, even after a "plausible" rate hike this year from Australia's own Reserve Bank.
Reporting season calendar
These are the major Australian ASX-listed companies reporting their earnings between February 7 and 28.
The entries will be updated over the next few weeks as dates change and with links to the relevant ABC News stories as the results come out:
February 7 - 11
| Date | Company |
|---|---|
|
Monday Feb 7 |
Argo Investments |
|
Tuesday Feb 8 |
Shopping Centres Australasia Suncorp |
|
Wednesday Feb 9 |
BWP Trust Commonwealth Bank Temple & Webster Bapcor |
|
Thursday Feb 10 |
ASX Downer EDI Mirvac CIMIC AMP AGL Energy |
|
Friday Feb 11 |
Insurance Australia Group Baby Bunting |
February 14 - 18
| Date | Company |
|---|---|
|
Monday Feb 14 |
Aurizon GPT Group JB Hi-Fi Bendigo & Adelaide Bank Boral Carsales |
|
Tuesday Feb 15 |
BHP Seven West Media GWA Group Ansell Dexus Seek |
|
Wednesday Feb 16 |
Nearmap Treasury Wine Estates Vicinity Centres Fortescue Metals Emeco Holdings Evolution Mining CSL Santos Redbubble Breville |
|
Thursday Feb 17 |
South32 Wesfarmers Growthpoint Properties Data#3 Transurban Magellan Financial Newcrest Mining Tabcorp Whitehaven Coal Woodside Petroleum Crown Resorts IRESS Star Entertainment Goodman Group Origin Energy Challenger Telstra Monash IVF |
|
Friday Feb 18 |
Inghams QBE Insurance MyState |
February 21 - 25
| Date | Company |
|---|---|
|
Monday Feb 21 |
A2 Milk Adairs NIB Holdings Ampol Altium Super Retail Group LendLease BlueScope Steel OZ Minerals Sonic Healthcare |
|
Tuesday Feb 22 |
Coles Seven Group Holdings Cochlear Costa Group G8 Education Estia Health Alumina Monadelphous |
|
Wednesday Feb 23 |
Rio Tinto Woolworths St Barbara Domino's Pizza Worley Healius WiseTech Global Stockland Scentre Group APA Group |
|
Thursday Feb 24 |
Nine Entertainment Appen Brambles Perpetual Blackmores Ramsay Health Care Flight Centre Iluka Resources South Cross Media Qantas Qube Holdings Coventry Group Link Administration Cromwell Property Reece Auckland International Airport Eagers Automotive |
|
Friday Feb 25 |
Adbri Medibank Private Mayne Pharma Ardent Leisure Genworth Mortgage Insurance BWX Kogan |
February 28
| Date | Company |
|---|---|
|
Monday Feb 28 |
InvoCare Bank of Queensland |
