Australian Market Report - Market declines - driven by TLS and BHP

Thursday, 9 February - The local market closed slightly lower, recovering from a low in the wake of a jump in China's inflation.

The All Ordinaries fell 6.6 points (-0.15%) to 4,357.1 while the S&P/ASX 200 weakened 7.8 points (-0.18%) to 4,282.9.

Telstra Corporation (TLS)

Telstra reported that first-half profit rose 23% as it continued to attract more customers and make cost savings. "Last year we recorded one of our best years for customer growth," Chief Executive David Thodey said in a statement. "This momentum has continued into the first half of fiscal 2012." Telstra's net profit for the six months to December 31 was $1.47bn (US$1.59bn), up from the previous year's $1.19bn. Analysts were expecting net profit of $1.48bn, according to the average forecast of six brokers surveyed. Telstra confirmed its guidance for fiscal 2012 of low single-digit growth in revenue and earnings before interest, tax, depreciation and amortisation. Australian telecommunications companies are in the middle of the biggest shake-up of their sector as the federal government-owned NBN Co rolls out a nation-wide $36bn high-speed internet network. Telstra has an $11bn deal with NBN Co to transfer its customers to the company and allow it to use Telstra's infrastructure, which is aimed as speeding up and reducing the cost of the new network. TLS lost 7 cents (2.03%) to $3.37.

Stockland Group (SGP)

Stockland Group reported a 28% drop in fiscal first-half net profit, which it blamed on difficult property-market and economic conditions and a hedge write-down. But the company confirmed it is on track to match last fiscal year's earnings. Net profit fell to $307.6m in the first half ended December 31 from $425.1m in the year-earlier period, the property developer and manager said. The figure included an unrealised $85m mark-to-market hedging loss, which Managing Director Matthew Quinn downplayed saying it won't be realised as the instruments will be held to maturity, as planned. Underlying profit before one-time items came to $350.8m, a year-on-year drop of 7.8%. Economic conditions were tough in mid-2011 with poor consumer sentiment, lower discretionary spending and weaker demand for Sydney office space, which affected the result, Quinn said in a statement. Despite this, Stockland's retail business proved resilient, with earnings growth of 6% on year, while residential sales picked up in the last four months, particularly from first-home buyers, he said. SGP fell 6 cents (1.83%) to $3.21.

Tabcorp Holdings (TAH)

Tabcorp Holdings, said first-half net profit from continuing operations climbed 14% on year to $189.3m. Net profit overall for the six months to December 31 slumped 29%, as this category no longer includes earnings from its former casino business, spun off in a demerger last year to create Echo Entertainment Group. The result from continuing operations reflected "strong underlying earnings growth and lower interest expense following the demerger," Tabcorp said in a statement. Its shares rose 3.2% in early Sydney trading. Tabcorp owns the TAB and tabsportsbet wagering brands, Tabaret in the gaming area, the Sky Racing broadcaster and Keno. The company reported revenue of $1.57bn, compared with the previous year's $2.26bn. It said it would pay an interim dividend of 13 cents a share, down from last year's 24 cents. TAH rose 5 cents (1.75%) to $2.91.

Ramelius Resources (RMS)

Ramelius Resources plans to buy a gold deposit in Western Australia state from South Africa's Gold Fields for $10m (US$10.8m) in cash and a production royalty. Ramelius will also enter into a toll milling agreement with Gold Fields for ore produced from the project, which would allow milling at a lower cost than if a small standalone mill were built, it said in a statement. The Vivien deposit Ramelius has proposed buying from Gold Field's subsidiary Agnew Gold Mining is located west of the town of Leinster. It has an estimated indicated resource of 154,000 ounces of gold, Ramelius said. RMS strengthened 2 cents (1.33%) to $1.14.

Economic News

Fourth Quarter Business Confidence Index Up 4 Points

Australian business confidence and conditions picked up in the fourth quarter, helped in large part by two rate cuts from the central bank, according to a closely watched quarterly survey. Even so, the broader mood among executives remains subdued, with a large disparity across sector performance. Mining, transport and utilities all posted strong business conditions and confidence, while retail, manufacturing and construction were weak -- further solidifying a growing gap between those areas benefiting from an ongoing mining boom against those hit by a corresponding rally in the country's currency. Overall, confidence rose four points to one index point from the third quarter, while business conditions gained five points to two index points, according to the quarterly National Australia Bank business survey.

The NZSX50 rose 2.07 points (0.06%) to 3,326.74 while the Nikkei dropped 13.35 points (-0.15%) to 9,002.24 and the Hang Seng firmed 14.84 points (0.07%) to be last quoted at 21,033.30.

The Australian dollar was last quoted at 108.09 US cents.

Companies commencing Ex-Dividend Trading Today (ASX 300):

Navitas Limited

Westfield Group

Westfield Retail Trust

Overseas Market Report -