Myer profit drops sharply, but growth tipped for 2011: Economy Roundup

Department store giant Myer has recorded a 38% drop in full-year profit to $67 million although analysts largely expected the result, which is mostly due to one-off charges relating to last year’s IPO.

The company said it expects profit to rise between 5-10% for the 2011 financial year. For the 2010 year, profit before one-off items increased by 50.4% to $163.65 million, just shy of analyst expectations of $166 million. Total sales increased by 1.9% to $3.32 billion.

Chief executive Bernie Brookes said in a statement the company has managed to record a positive result during a year of discounts and weak consumer confidence.

“Against this backdrop, and despite an extensive rebuild of our flagship Melbourne store, the refurbishment of three other stores and the rollout of major technology infrastructure in our new Point-of-Sale and CCTV systems, Myer reported a positive sales result,” he said.

“Our EBIT (earnings before interest and tax) result was 14.9% above last year, and 3.9% above the prospectus forecast.”

Brookes also said the company will see new stores opening over the next year, including its flagship store in Melbourne.

“During the next financial year our performance will benefit from a significant uplift in sales at Myer Melbourne, as well as a full year of sales from our new store at Top Ryde and nine months sales contribution from our new store at Robina,” he said.

Meanwhile, consumer inflation expectations have risen, according to a private survey, with the median expected inflation rate moving up to 3.1% in September from 2.8% in August.

The Melbourne Institute Survey of Consumer Inflationary Expectations also found the number of respondents who expected inflation to rise increased to 74.5% from 73.5%, with the number of respondents expecting inflation to remain the same fell to 13.9% from 16.6%.

The result puts inflationary expectations outside of the Reserve Bank’s 2-3% target band.

Meanwhile, Sigma Pharmaceutical has seen its share price fall 4% today after the company said it expects a $270 million impairment charge regarding the sale of its pharmaceutical division could affect its loan facilities.

“It is also likely to trigger the net asset covenant under Sigma’s syndicated banking facility,” Sigma said in a statement.

“Sigma has been in ongoing discussions with its lenders about the sale and the prospect of this adjustment, and continues to work constructively with them in relation to the provision of the relevant waivers required,” it added.

Shares open flat after weak Wall Street lead

The Australian sharemarket has opened flat today following from weak leads on Wall Street, where investors were disappointed regarding disappointing industrial output data.

The benchmark S&P/ASX200 index was down 28.8 points or 0.62% to 4632.7 at 12.20 AEST, while the Australian dollar dropped slightly to US93.8c.

AMP shares lost 0.4% to $5.12, while Commonwealth Bank shares also lost 0.7% to $53.40. Westpac gained 0.1% to $23.65 as NAB gained 0.3% to $26.01.

As reported by The Australian, Virgin Blue Holdings has requested the US Department of Transportation for a three-week extension in order to put forward its case regarding a merger with Delta Airlines.

A spokesperson told the publication the company has asked for an extension in order to provide a “full and detailed” response.

FEA Plantations’ administrator has requested more time from creditors to finalise a proposed reconstruction of the timer plantation operator.

“The proposal will be a robust and realistic program for the reconstruction of the FEA businesses, including the Managed Investment Schemes (MISs) to permit the orderly and systematic merging of the FEA businesses in a way that cannot be achieved by receivership or administration alone,” Brian Silvia of BRI Ferrier reportedly said in the statement, according to AAP.

“The proposal will resolve the lingering risk for the different stakeholders of both financial and reputational loss associated with forced sale, and the real possibility of a protracted, litigious liquidation of the companies, and provide better financial returns to all parties.”

Alinta Energy receives trade bids

Electricity generator Alinta Energy has confirmed it will meet with lenders now it has received all bids for its business.

“Alinta’s lenders will be conducting detailed meetings over the remainder of this week at which time the trade bids will be considered along with lender-led solutions,” Alinta said in a statement.

“Alinta continues to work with its lending group and advisers and expects an outcome which is expected to be subject to various lender and securityholder approvals…Further announcements will be made in due course.”

Overseas, billionaire George Soros has said gold price could continue to rise, but also warned the sector is the “ultimate bubble”.

“Gold is the only actual bull market currently. It just made a new high yesterday. In the present circumstances that may continue,” he said at a Reuters Newsmaker event. “I called gold the ultimate bubble, which means it may go higher. But it’s certainly not safe and it’s not going to last forever,” he said.

Also in New York, the Dow Jones Industrial Average gained 46.24 points to 10,572.7.