Corporates whinge but profits rise

Company profits Source: AMP CapitalEarnings season: Enjoy special dividends while they last
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Contrary to much of the commentary about corporate results, most local companies have reported fatter profits than they managed a year ago and increased their dividends while only a relatively small minority – 12 per cent – have had to cut their dividends. And if you could ignore the resources sector for a moment, the story is considerably brighter.

A reporting season that has so few corporates needing to trim dividend payouts is hardly a sign of miserable times. It’s partly the nature of news then that those feeling pain, those with CEOs having a big whinge, receive disproportionate coverage while those getting on with improving their businesses’ bottom line are less noticed.

As the accompanying graph from the scorecard kept by AMP’s Shane Oliver shows, with the reporting season 70 per cent over, two-thirds of companies have reported higher profits and one-third lower – not far off the average over the past six years.

Furthermore, the average for this reporting season is dragged down by the resources sector feeling lower commodity prices. According to Oliver, earnings expectations for resources stocks are down about 20 per cent while the rest of the market is up 7 per cent.

And talking of expectations, 40 per cent of those reporting so far have beaten market expectations while 30 per cent have disappointed – percentages that aren’t as good as they were six months ago, but still around average and never mind what the whole business of corporates massaging analysts’ expectations means anyway.

That said, business conditions are undeniably harder than management and shareholders would like and tougher than they have been, especially compared with those rosy-in-retrospect pre-GFC days of unsustainable economic bubbling. The reality beyond the current political nonsense is that all Australian industries are in the midst of a major restructuring, adjusting to a more sustainable level of consumer spending, a necessity nicely explained by the RBA’s Glenn Stevens in his Glass Half Full speech a year ago and updated last month.

Which is why it’s wrong to dismiss profits gained from cost-cutting, as seems to be the fashion. Oh it’s not as happy a story as winning the lottery or selling more goods and services on bigger margins, but cutting the cloth to fit is an important a guide to management’s ability during this great restructuring. Those that do it intelligently also are setting their company up for further profit increases when stronger growth rolls round.

The pain of reducing costs is real enough and usually not felt at the top of the organisation – just ask the CEO of BlueScope rolling in an 82 per cent pay rise after receiving $5.1 million last year. And much of that pain is being inflicted by management that proved second rate at handling the good times.

You hear plenty about the Big Two miners, BHP and Rio, slashing costs under their new CEOs. Not so much was discussed about the bloated bureaucracies that sprouted during the bubble prices era, the days of easy excess when problems in the resources sector were greeted with the solution of throwing another dump truck of money at them. While it’s outside our local listed company view, the MUA certainly carries some responsibility for the Gorgon project’s cost blowout, but Chevron carries much more for embracing levels of excessive spending back when money seemed to be no object.

Meanwhile, back at the main game indicated by dividend payments, it remains instructive that companies paying strong dividends outperform over the longer term despite the apparent loss of capital when they turn it over to shareholders.

Portfolio manager for Fidelity’s Australian equities fund, Paul Taylor, likes to cite various studies demonstrating the superiority of the big dividend payers, the most interesting of which being how they overcome that loss of capital compared with other profitable companies that are miserly at dividend time. (Disclosure: I heard Taylor tell this story while hired by Fidelity to MC the function.)

Turns out that a high dividend ratio forces boards and management to be more careful with their capital management – they’re much less likely to waste it on dumb takeovers and wild adventures than those who are always looking for a way to spend big retained profits.

It’s an interesting lesson and one that has worked for Taylor, his fund beating the benchmark over all time frames for the past decade, right through the first and second stages of the resources boom.

There’s also a message in there somewhere about the local corporate landscape when 66 per cent of companies can increase dividends during harder times and only 12 per cent have to cut them. While some sectors are certainly hurting, maybe the overall story isn’t as bad as we like to scare ourselves.

Michael Pascoe is a BusinessDay contributing editor.

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Crane death plunge: friend’s grief after stunt turned tragic

Fenwick Joyce plunged 27 metres. Photo: SuppliedOne after another, the well-dressed northern beaches lads took the stand at the NSW Coroner’s Court and tried to explain why they had decided to break into a construction site and climb a 27-metre high crane.
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One after another, they failed to come up with an explanation.

”The approach would have just been ‘let’s go, let’s do it’,” Steve Carroll told the court on Monday.

”I never really thought too much about what [the reward was] … I guess just the adrenaline that goes with it.”

Nineteen months after budding construction manager Fenwick Joyce, 29, fell to his death from a crane on a building site at Montpelier Place, Manly, during drunken Australia Day celebrations, a coronial inquest has brought to light the full circumstances of the incident for the first time.

However, the question of why Joyce and four other young men decided to make the climb is still unclear.

”I’m struggling to understand. Why did you do this,” Deputy State Coroner Sharon Freund asked Mr Carroll.

”It’s a question I ask myself every day,” Mr Carroll replied.

”I’m sure it’s a question Fenwick’s mum asks every day too,” Ms Freund said.

The inquest heard that it was as the young men were climbing down from the very top of the crane, having walked along the crane’s crossbeam, chatting and laughing, that Mr Joyce fell.

”Nils [one of the other climbers] felt something brush against his right arm,” counsel assisting the inquest, Deb Williamson, said.

”He tried to reach out with his right arm and grab him, but it was too late. He saw Fenwick bounce off the railings of the driver’s cabin.

”It appears he tried to jump a short distance onto a pillar but lost his footing.”

A toxicology analysis showed Joyce had a blood alcohol level of 0.228, equivalent to 22 standard drinks. Traces of ecstasy, cocaine and amphetamines were found.

The inquest heard that Joyce was far from alone in being intoxicated. Each partygoer who gave evidence indicated he had been drinking heavily.

Nevertheless, from mid-afternoon onwards, groups of young men began using a ladder to climb into the Lend Lease construction site, before scaling another fence, and climbing the crane.

”There seems to have been a pack mentality,” Ms Freund said.

”They seemed to think, ‘there are some people up the crane so I may as well do it too’.”

The inquest was held at the request of Joyce’s mother, who thinks fencing around cranes needs to be improved to discourage climbing.

”Words can’t explain the effect of losing my son to such a violent death,” Mrs Fenwick said, before breaking down. ”I wish that Fenwick’s life will not be lost in waste and that through this tragedy we can bring protection to others in the community.”

A construction union representative told the inquest that some construction companies were placing wooden hoardings at the base of cranes to make climbing more difficult, and that this should be required by law.

However, WorkCover inspector Kevin Murphy said this would not discourage people from climbing a crane if they were determined to do so.

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‘I thought my days are gone’: Elderly man describes ‘cowardly attack’

Battered and bruised: Francois Beugels. Photo: The South Coast RegisterFrancois Beugels’ battered and bloodied face says it all.
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The 76-year-old North Nowra resident was the victim of a cowardly and vicious attack in on the state’s south coast on Sunday night.

He was punched to the ground, had his head pushed into a concrete gutter, his wallet stolen and his head stomped on.

Mr Beugels said he thought his time was up.

“They never talked to me, I just got hit from behind – bang, bang, bang,” he said.

“I was bashed repeatedly, stomped on repeatedly and my head was smashed into the asphalt – I thought my days are gone, that’s it.

“I heard one of the fellows say, ‘That’s enough’, and then immediately said, ‘Get his wallet’. Then I got the foot into my face.”

Mr Beugels was on his daily walk around 6.30pm on Sunday on Pitt Street, North Nowra when he noticed two teenagers following him.

He continued walking onto Page Avenue, where one of the teenagers assaulted him near the intersection of Goolagong Street.

His head made contact with a concrete gutter after he was punched to the ground.

The offenders then stole his wallet before inflicting another beating on him, stomping on his head, before running away.

It is believed Mr Beugels’ cries for help prompted one of the teenagers to return and kick him several times.

Mr Beugels was taken to Shoalhaven District Memorial Hospital where he was treated for head injuries, including bruising and lacerations.

He was released on Sunday night and bravely fronted a press conference on Monday morning in order to help police find his attackers.

Shoalhaven police Inspector John Behrendt said the attack was “un-Australian”.

“It was just disgusting. I’ve been here for seven years and it’s one of the most cowardly attacks I’ve ever seen,” Inspector Behrendt said.

“[They are] cowards and thugs.”

“The target they picked … it’s un-Australian. It’s not good picking any target but even worse when it’s an older gentlemen on his daily walk. Seems callous,” Inspector Behrendt said.

Police went to the scene and searched without success for the offenders.

They are now appealing for public information about the attack.

Acting Shoalhaven Local Area Commander, Acting Superintendent Paul Condon said the attack was unprovoked.

“His face says it all, this was a very low act by these people.”

“We believe someone within the Nowra community has done this. We are appealing for anyone who may have any information, hears or knows anything about this attack to come forward,” he said.

The two suspects are described as Caucasian in appearance, between 160 to 170cm tall, aged in their late teens, and both were wearing hooded jumpers, one of which was red.

Police said there was no connection between Sunday night’s attack and the discovery of a 52-year-old man found lying unconscious on a cement slab in front of the change rooms at the Sharman Park soccer fields in North Nowra recently.

That man had apparently suffered a medical incident, a fit, and had collapsed, and sustained a large wound to the back of his head.

Police are urging anyone with information about this incident to call Shoalhaven Local Area Command on 4421 9699 or Crime Stoppers on 1800 333 000.

with South Coast Register

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Sydney Uni newspaper back on the shelves with vagina cover

The now infamous University of Sydney student newspaper which featured the genitalia of 18 women has been re-released in sealed plastic packaging.
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Last week’s 4000 copies of Honi Soit had been removed from the stands after it was discovered that the cover’s black bars, which were supposed to censor the 18 vulvas, were transparent and potentially constituted a criminal offence.

The controversy of the cover and its removal from the stands drew significant public attention, including a statement in support of the editors from Greens MPs Lee Rhiannon and Mehreen Faruqi.

Initially, Honi Soit’s editors were instructed to cut off the offending covers in order to be allowed to redistribute the newspaper. While a small portion of guillotined editions were released on Friday, the majority of copies have today been made available intact, in sealed plastic packaging.

Lawyers from Sydney Uni’s Student Representative Council, which publishes Honi Soit, advised Honi Soit’s editors that they could keep the controversial cover if it was sealed and rated R 18+.

The edition is now behind the counter of the SRC office to students over 18 years, and picking up a copy requires proof of age identification.

Editor Hannah Ryan said that although the sealed edition was the preferred option over guillotining the newspapers, it was still an inconvenience for the student population. “It’s pretty annoying to have to specifically go to an office to pick it up”.

Ms Ryan said there had been no legal fallout from the incident, and considers the controversy for the most part a positive experience. “I’ve heard that people have been having conversations with their friends about how we see vaginas, and we’ve received loads of messages from people thanking us,” she said.

Ms Ryan said that they have been contacted by people overseas, interested in having the “Vagina Soit” edition mailed to them.

“In the end, having thousands of people hear about ‘Vagina Soit’ combats the silence around vaginas, which is only a good thing”.

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Labor threatens action over Adam Bandt’s ‘false’ claims

Federal Election 2013 coverageHave your say on YourViewElection Live with Stephanie PeatlingFact Check the politicians
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Mud continues to be thrown in the battle for the seat of Melbourne, with the ALP threatening to take Greens MP Adam Bandt to the electoral commission for “false and misleading information”.

Labor vice-president and state MP, Jane Garrett, says the party is considering taking Mr Bandt to the AEC over a letter he wrote to the electorate accusing the ALP of doing a preference swap with the Liberal Party.

The Greens say the threat is an example of how desperate the ALP is becoming in the election.

Mr Bandt recently wrote: “It’s no wonder that here in Melbourne, according to The Age, Labor and Tony Abbott have worked on a preference deal in an attempt to lock the Greens out of the Parliament.”

Ms Garrett said it was an appalling display from the Greens, saying the party was making things up in an attempt to save his political skin.

“The ALP is investigating options including referring the matter to the Australian Electoral Commission on the grounds of false and misleading material,” Ms Garrett said.

“It comes in a long line of dodgy claims from Adam Bandt, including claiming credit for the NDIS and education reforms, making these false claims from a party that has done a preference deal with Clive Palmer’s coal party demonstrates an air of desperation.”

Mr Bandt said the statement was a desperate last-minute attempt to distract from their preference deal with the Liberals.

“Senior Labor MP Michael Danby’s statements as far back as 2011 have been crystal clear, offering to preference the Liberals above the Greens in Melbourne Ports if the Liberals preferenced Labor in Melbourne, and that is exactly what has happened. It’s hard to imagine a clearer example of an agreement,” Mr Bandt said.

“Labor is also preferencing the Liberals in Mallee as was predicted by The Age when it reported on the Labor-Liberal preference deal earlier in the year.”

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