Qantas names former Telstra chair as Richard Goyder's replacement, Woolworths half-year results drag ASX lower — as it happened
Qantas has named John Mullen as its next chairman, with the former Telstra chair taking over from Richard Goyder later this year, while data from the ABS shows annual wages growth has risen to 4.2 per cent — the highest it's been since 2009.
It comes as the Australian share market closed lower, dragged down by losses in Woolworths after its half-year profit results and resignation of its CEO, Brad Banducci.
Look back at how the trading day unfolded with our blog.
Disclaimer: This blog is not intended as investment advice.
By Gareth Hutchens
(Prices correct as of 4:15pm AEDT)
By Kate Ainsworth
The ASX has closed 0.7% lower for the day to finish at 7,608 points.
Eight out of the 11 sectors finished lower, with consumer staples dropping the most — it fell 4.4% thanks to Woolworths.
Other sectors in the red were materials (-1.6%), telecommunications (-1.2%), financial (-0.8%), energy (-0.5%) and industrials (-0.4%).
As for the three sectors that finished in the green, information technology gained 2% off the back of WiseTech Global's boost, followed by utilities (+1.1%) and health care (+0.5%).
CSR surged late in the trading day to be the top performer before being paused, after Bloomberg reported that the local building materials producer could be taken over by its French rival, Saint Gobain.
As for the top performers this Wednesday:
And the bottom five stocks:
That's where we'll leave the blog for today, but we'll be back to do it all again tomorrow for more half-yearly company reports.
On the agenda? Qantas, Medibank and Fortescue, to name a few.
Until then you can catch up on today's developments below, or download the ABC News app and subscribe to our range of news alerts for the latest news.
By Kate Ainsworth
There's been no shortage of comments coming through from analysts about Woolworths' half-year profit results.
Here's a few different highlights from around the grounds.
(I'd bring you all of them, but you would be reading until very late in the evening.)
E&P Capital retail analyst Philip Kimber said that despite the strong performance of the Australian food retail industry, sales momentum is beginning to slow — and Woolworths stock would drop on the results.
"The retirement of a well-respected CEO, during a period of heightened press and government scrutiny, and very weak sales in January (is) expected to see share price weakness following the result," he wrote in a briefing note.
(Even with a dividend of 47 cents a share for shareholders, Mr Kimber is not wrong about its stock dropping — Woolworths stock had dropped by almost 7 per cent to $33.42 a share by 3pm AEDT.)
A first read of its results by UBS noted that the outlook for Woolworths was "weak", and expects trading in the second-half of the 2024 financial year will also be weak, and below its expectations in its core Australian food business.
Comparatively, Moody's analyst Sean Williams said that Woolworths Group's overall earnings were "solid" and in line with its expectations, noting the "continued strength of its Australian Food business outweighing a contraction in earnings for Big W and New Zealand Food" isn't without future hurdles.
"Woolworths faces challenges in both Big W and its New Zealand food divisions, recognising a $1.5 billion impairment for the latter," he wrote.
"Nevertheless, Woolworths' leading market presence in the Australian domestic supermarket sector and strong balance sheet continue to underpin the company's credit profile.
"We expect the continued prevalence of at-home consumption will further drive supermarket sales as the impact of high interest rates and cost-of-living pressures weigh on Australian households."
By Kate Ainsworth
Professor Allan Fels — the former head of the Australian Competition and Consumer Commission (ACCC) — has just spoken to my colleague David Chau on his reaction to Woolworths' half-year profit results and Brad Banducci's retirement.
Professor Fels says while the outgoing CEO has been good for the supermarket giant's business, he shouldn't be fronting up to inquiries into supermarket prices and price gouging allegations before he leaves later in this year.
"He's a total failure in public relations 101, walking out of a TV interview, plus the Australia Day fiasco," he said.
"In addition, he was very successful in business terms, in getting their profits up at consumers' expense.
"That makes him unpresentable at all the forthcoming public inquiries."
Professor Fels has been particularly critical of the supermarket giants for several months — he chaired a union-backed inquiry into price gouging, and published a report earlier this month that was scathing of Coles and Woolworths, finding that they were using inflation to disguise their rising profits.
With Woolworths' half-yearly results out today, he says its accounts indicate there's been "a bit of a cover up".
"There's further evidence of getting their profits and their profit margins up, on top of the rises they had during COVID, so they can't justify their profits in terms of cost increases," Professor Fels said.
"There's a bit of a cover up in the data because they've done some write-offs for New Zealand and for Endeavor.
"But basically, their food and grocery profits are well up at a time when most Australians are suffering from cost of living crisis."
By Kate Ainsworth
Now the dust has settled from the latest wages data, the ASX is still trading lower — down 1% to 7,586 points as of 1:35pm AEDT.
(For live figures at any time, head to the post at the very top of the blog.)
It's a mixed trading session for the sectors, but consumers staples is deep in the red — down 5%, largely thanks to Woolworths and its half-yearly results (and its CEO stepping down).
Other sectors in the red are materials (-2.2%), energy (-0.9%), telecommunications (-0.5%) and industrials (-0.3%).
But information technology is leading the charge of positivity on the local front — it's up 2.8%, thanks to positive earnings from software provider WiseTech.
More modest gains have flowed through to utilities (+0.8%), health care (+0.7%), consumer discretionary (+0.5%) and real estate (+0.4%).
As for the top five performers:
And the bottom five performers:
By Gareth Hutchens
Give it to me straight Gareth, does this mean the RBA is going to keep rates higher for longer because they'll see these wage increases as giving us more money to spend? If wages are rising faster than inflation, I can't see how they won't punish those people doing it tough? But that's just my take as a disillusioned truckie. Cheers
– Darren
Hi Darren,
The annual wage growth recorded in this data wasn't unexpected. The consensus view among economists surveyed by Reuters was for annual wage growth to be 4.1%, which was just below the actual outcome of 4.2%.
And here's a summary of what economists are saying about the data (according to the economists' notes that have come into my inbox).
They say on its face, this pace of wage growth is too high, given the current level of productivity growth we have right now, for inflation to return to the 2% to 3% range that the Reserve Bank wants.
They say they'd really like to see productivity growth pick up so it can take some of the inflationary pressure away from these wage increases, and they note that the RBA is assuming that productivity growth will be returning to its pre-pandemic trends over time.
However, they also expect economic activity to slow down this year, and for unemployment to rise a bit further, which should put downward pressure on wages.
These lines from ex-RBA economist Callam Pickering is pretty typical of the reaction to today's data:
“Our view is that economic conditions will remain subdued this year, particularly within the household sector, and that should prove sufficient to bring inflation back to target. And that’s likely to happen ahead of the RBA’s current forecasts. Rate cuts in the second half of the year are increasingly plausible and there will be lots of discussion to that effect. Labour market conditions will likely play a pivotal role in the intensity of those discussions and whether rates move this year or next.”
I hope that was straight enough.
By Kate Ainsworth
NAB released its earnings reports for the December quarter earlier today (it took a bit of a backseat thanks to Woolies and their flurry of announcements).
The bank reported statutory net profit of $1.7 billion in the December quarter, but a 3% drop in its first-quarter cash earnings compared to the quarterly average in the second half of 2023, saying higher cost pressures were to blame.
NAB posted cash earnings of $1.8 billion for the three months to December, while its revenue (excluding its NAB Markets and Treasury income) was up slightly by 1%, which saw its net interest margin decrease slightly — which is a key profitability measure for banks.
But the bank — which is also the second-biggest lender by market valuation in Australia — has seen a 16.9% drop in its quarterly cash earnings, triggered by a $193 million impairment charge reflecting higher mortgage arrears.
NAB noted that "the ratio of 90+ days past due and gross impaired assets to gross loans and acceptances was stable at 0.75%.
"This mainly reflects an increase in arrears in the Australian home loan portfolio, offset by improved performance in the New Zealand business lending portfolio," its trading update said.
By Gareth Hutchens
Dr Andrew Leigh, the assistant minister for Treasury and Employment, has taken a special interest in the topic of non-compete clauses in employment contracts.
He says their prevalence in Australia's labour markets is worrying because employment terms that make it harder for workers to move to a better job may be acting as a drag on wages and economic dynamism.
He says today's ABS data confirms similar findings from the e61 Institute which found that 1 in 5 Australian workers had a non-compete clause, including many low wage workers.
Non-compete clauses have been found to apply to hairdressers, early childhood workers, security guards and yoga instructors.
He says these are some key findings from the new ABS survey:
Dr Leigh has also flagged future policy movement in this area from the government.
"Today's results confirm that non-compete clauses are prevalent across the Australian economy, and looking into the use of these clauses is a top priority of the Albanese government's Competition Taskforce," he said.
"To continue to build the evidence base, Treasury will release an issues paper for public consultation in April.
"In addition, the ABS will be linking today's data with broader ABS business-side microdata, enabling a deeper understanding of how non-compete clauses are affecting job mobility, wages and business dynamism," he said.
By Gareth Hutchens
We flagged this one earlier this morning.
Today, the Bureau of Statistics has released some really interesting experimental data on the use of restraint clauses in employment contracts.
It collected information from employers on their use of restraint clauses relating to Non-disclosure, Non-compete, Non-solicitation of clients, and Non-solicitation of co-workers.
It was collected through a short follow-up survey of employers responding to the 2023 Survey of Employee Earnings and Hours.
It found in 2023, 46.9% of Australian businesses reported that they had used at least one type of restraint clause.
Non-disclosure clauses were the most common type of restraint clause, used by 45.3% of employers, followed by:
It's added that information to this release:
By Gareth Hutchens
Looks more like lavender to me 🤔
– Justin
I cede the ground to Justin on this one.
By Gareth Hutchens
This graphic is great, once your eyes acclimatise to it.
On the right-hand side of the graphic, notice how the purple and violet (?) colours got bigger over the last year.
The purple area represents annual wage increases of between 4% and 6%, and the violet area represents wage increases over 6%.
The ABS says for jobs with a wage movement over the previous 12 months, the share of jobs that recorded an annualised increase above 3% has continued to grow since June quarter 2022.
And almost two thirds (64%) of all jobs that recorded a wage change over the previous 12 months received an annualised increase above 3%, compared to 45% in December quarter 2022.
By Kate Ainsworth
Just zooming out of the nitty-gritty of the ABS's latest wage data for a minute — this annual increase of 4.2% for wages makes it higher than the annual level of inflation.
With annual wages up by 0.9% in the December quarter, that's contributed to wages growing by 4.2% in 2023.
Compare that to inflation — it came in at the annual rate of 4.1% in the year to December.
(And in a funny coincidence, the January unemployment rate is also sitting at 4.1%.)
While we're still taking a broad look at things: this annual wage increase of 4.2% is the largest annual increase for wages since the March quarter of 2009 — as Gareth pointed out below.
By Gareth Hutchens
Wages increased by 4.2% over 2023.
The last time we recorded annual wages growth at these levels was in the March quarter of 2009.
By Gareth Hutchens
The ABS has released its latest quarterly wages data.
The Wage Price Index for the December quarter shows Australian workers enjoyed an average base pay rise of 0.9 per cent in the December quarter, leading to an annual increase of 4.2 per cent over 2023.
Economists surveyed by Reuters typically expected base pay packets to increase by 0.9 per cent in the December quarter and 4.1 per cent over the past year.
By Gareth Hutchens
Gee, were they thinking about 15 Minute Cities in 1944? (Tongue firmly in cheek.)
– Scruffy
Interesting hey. And it wasn't a conspiracy theory..
By Gareth Hutchens
Woolworths share value is down more than 5.5%, to $33.85 a share, this morning after the company released its profit results and announced the departure of CEO Brad Banducci.
By Kate Ainsworth
In more company news this morning, Qantas has announced two new board members — including a new chair to replace the outgoing Richard Goyder.
Former Telstra chairman John Mullen will join Qantas on July 1 to take over as chairman.
Mr Mullen left Telstra last August, and also chairs Brambles and Treasury Wines.
Dr Nora Scheinkestel will also join Qantas' board on March 1, and will chair its remuneration committee.
Both of their positions on the board will be put to Qantas shareholders at its AGM later this year.
By Gareth Hutchens
Tesco's, Sainsbury's, Asda, Morrisons, Waitrose, Co-Op, Aldi. Just to name a few. I was spoiled for choice with supermarkets in the UK. I don't ever see a future where we have this kind of choice in Australia.
– Peter
You would assume things could be shaken up in Australia if we saw more names like these entering the market (we already have Aldi). Does the size of our population prevent that from happening? The UK has 67 million people, compared to our 26 million.
By Gareth Hutchens
After 20 minutes of trading, the ASX is down 29.5 points, or 0.39%, to 7,629.5 points.
By Gareth Hutchens
I want butchers, delis, bakeries, fruit shops back in every suburb…
– Natty
It's interesting you should say that, Natty.
In the 1944 Commonwealth Housing Commission report, when authorities turned their mind to what Australia's housing situation "could" look like after WWII if we prioritised housing for everyone, one of their recommendations was that local markets or shops should be located within half a mile of every dwelling unit (see No. 176).
I know that was written in a time when cars were far less prevalent in Australia, and the social set-up was very different (forgive the old language in the report about "housewives"), but that was the ideal as they saw it.
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