'Grim' reporting season ahead: UBS

'Grim' reporting season ahead: UBS

The collapse in resources sector earnings due to falling commodity prices will be the driving factor behind a "decidedly grim" reporting season, warns UBS.


The UBS 2016 Reporting Season Preview, released yesterday, said ex-resources earnings trends are "far from buoyant" but nevertheless continue to grow at a subdued pace (approximately five per cent).

The Australian equity market is confronting a number of earnings headwinds beyond weak commodity prices, particularly at the "very large-cap end of the market", said UBS.

"Outside the 'top 20', the earnings picture is somewhat better, albeit the backdrop is one of moderate overall growth with a fairly [diverse] range of growth outcomes by stock," said the report.

The tailwind from a lower Australian dollar is still helping 2015-16 earnings per share growth for the US dollar earners segment of the market, said UBS.

"Domestically, consumer discretionary should be a relative bright spot with housing still buoying consumer spending and the NSW economy particularly strong," said the report.

"Resource-related industrials should report weak results although the market will be looking for any signs of a bottom in profitability given the extended poor performance (and level of short interest) in the sector," said UBS.

Within the financial services sector, UBS tipped IOOF Limited as a "potential large-cap negative surprise".

For IOOF, "weak flows present downside risk" and there is "potential for cost disappointment", said UBS.

Read more:

Global banks a ‘significant opportunity’

BlackRock CEO warns against short-termism

Macquarie upbeat about full-year result

Carbon risk disclosure inquiry launched

OneVue hires former JP Morgan exec

 

 

Related Articles

 

'Grim' reporting season ahead: UBS
investordaily image
ID logo
promoted stories

Appointments

Stephen Glenfield

FASEA appoints new chief executive

Reporter

David Murray

David Murray commences new role as AMP chairman

Reporter

Adrian Went

ANZ names new group treasurer

Reporter

Analysis

investordaily image

Super shouldn’t be a lottery

Tim Stewart

investordaily image

Can infrastructure equities cope with rising rates?

James Lydotes

James Swanson

Is this as good as it gets?

James Swanson