Myer profit jumps 38% in first half: Economy Roundup

Department store giant Myer has said it expects to meet its full-year earnings guidance after recording a 38% increase in first-half net profit.

The company said its net profit after tax reached $115 million before one-off costs, ahead of its guidance and an increase from $83 million from the previous corresponding period.

Revenue increased by 2% to $1.8 billion, with earnings before interest and tax rising 11.9% to $181 million from $151 million.

But the company remains cautious about the rest of the year.

“We are entering a period during which we cycle the second and more significant Federal Government stimulus package, further interest rate rises are widely anticipated, and the consumer remains wary,” the company said in a statement to the Australian Securities Exchange (ASX).

“Against this backdrop, and despite the sales trend for the first six weeks of the second half of 2010 being ahead of the 2% growth reported in the first half 2010, we anticipate total sales growth in the second half of the year to be in the range of 0-2% and the full year to be up 1-2%.”

The company, which completed its float on the ASX last November, also said it remained confident that its EBIT would come in at $261 million for the full year, as said in its prospectus.

Meanwhile, ISP iiNet, which recently successfully defended a legal challenge from the Australian Federation Against Copyright Theft, has requested a trading halt while it responds to reports of a possible acquisition.

“The company is seeking a trading halt pending the company’s response to an article published in today’s Australian Financial Review,” iiNet said in a statement.

The article said the company is considering acquiring Netspace, with a possible price of between $60-75 million. It is understood the halt will cease within two days or when an announcement is made by the company.

Meanwhile, Westpac has said consumers’ unemployment expectations fell slightly during March by 0.2% to 103.74, following a 3.4% rise in February. Additionally, inflationary expectations remained steady at 3.2%.

Shares flat after Wall Street results lower than expected

The Australian sharemarket has opened flat today, with US stocks only slightly higher, after disappointing results in metals markets brought the market down.

The benchmark S&P/ASX200 index was down 4 points or 0.09% to 4815.7 at 11.40 AEST, while the Australian dollar remained flat at US91c.

ANZ shares increased by 0.6% to $24.09, while Commonwealth Bank shares rose 0.3% to $55.85. NAB shares gained 0.5% to $26.94 as Westpac lost 0.4% to $27.21.

As reported by the Australian Financial Review, AGL Energy is open to deals with Royal Dutch Shell if the company succeeds in acquiring Arrow.

It comes after Shell and PetroChina have made a joint bid of over $3.3 billion for Arrow. AGL, the country’s top energy retailer, has said it will consider selling its stake in the Moranbah gas field.

Also in the energy sector, The Australian has reported Harbringer Capital and Leucadia Capital are behind the trades worth $283 million in Fortescue Metals last week.

Sources have said Fortescue did not receive any explanation for the sell-down.

Meanwhile, communications minister Stephen Conroy has told ABC Television that the Senate should delay the legislation requiring Telstra separate its wholesale and retail networks.

“(The public) don’t want constant argument about a double dissolution; they want the government to get on with the job of governing,” Conroy said. However, opposition communications spokesman Tony Smith has said the legislation is not in the public’s best interests.

“Labor’s legislation is a deliberate assault on Telstra and its 1.4 million shareholders and 30,000 employees,” he said. “As we’ve said from day one, Telstra shareholders have every reason to be outraged by Labor’s plans to force the break-up of the company.”

Leighton Holdings wins Hong Kong rail contract

Elsewhere, construction and engineering group Leighton Holdings has said its Asia unit has secured a $463 million contract to build tunnels and ventilation buildings for the Hong Kong Express rail link.

It is understood the contract will include the construction of a 7.6-kilometre twin-track tunnel along with ventilation and access paths and two ventilation buildings.

“Leighton Asia is delighted to be selected to construct another part of Hong Kong’s rail network,” Leighton Asia managing director Hamish Tyrwhitt said.

“The XRL will provide the strategic link for Hong Kong to the comprehensive high-speed rail network in Mainland China. Leighton is excited to play a key role in this effort to provide a fast and convenient railway service to the communities in Hong Kong that will connect to other mainland cities.”

The Organisation for Economic Cooperation and Development has said the upcoming Henry Tax review, which is yet to be revealed by the Government, will include incentives for lifting workforce participation.

The OECD’s Going for Growth report has said the report will include such incentives, and noted it has recommended before that Australia should reduce effective marginal tax rates.

“Income tax cuts have lowered EMTR’s, especially for second wage earners and low income families,” the report said. “The conclusion of a review of the tax and welfare system focusing on incentives for workforce participation will be released in early 2010.”

However, the Rudd Government has said it has not yet set on a timetable for releasing the report.

In New York, financial markets have failed to have been spurred on by data showing wholesales inventories fell in January, with sales at their highest in a year. The Dow Jones Industrial Average gained 2.95 points or 0.03% to 10,567.33.