Posted August 14, 2018 15:32:40

Among the major companies which reported their results on Tuesday, Whitehaven Coal was the only one which saw its stocks surge.

Cochlear and Challenger would normally have very little in common on any other day.

However, what unites the hearing implant maker and investment management firm is that they are two of the worst-performing stocks on the Australian share market today.

Whitehaven Coal surges

Whitehaven Coal’s annual net profit rose 29.7 per cent to $525.6 million — which sent its share price up 2.2 per cent to $5.38 at 2:30pm AEST.

The coal producer’s revenue lifted 27 per cent to $2.26 billion in the 2017-18 financial year, driven by increased coal sales at higher prices.

The company reported a 7 per cent rise in thermal coal production to 22.9 million tonnes.

At the same time, it was selling coal at an average price of $US130 a tonne, which was $US18 higher than the previous year.

Its shareholders will be paid an unfranked dividend of 27 cents per share —which comprises the final dividend (14c) and special dividend (13c).

“This brings the total cash returned to loyal shareholders to $595 million in the space of 12 months,” said Whitehaven’s chief executive Paul Flynn.

Mr Flynn is also expecting Whitehaven to perform strongly in the current financial year, particularly due to solid demand for coal from Asia.

“For example, Japan, Whitehaven’s largest thermal coal customer, has plans to build up to 30 new ultra-supercritical power stations as sub-critical generation capacity is retired.”

Cochlear’s profit expectations too low

Despite its profit surge and decision to pay shareholders a higher dividend, Cochlear shares fell 4 per cent to $190.87.

Cochlear’s net profit lifted 10 per cent to $245.8 million in the previous financial year (2017-18).

It was driven by a sales revenue increase of 9 per cent to $1.35 billion.

The number of hearing implants it sold also increased by 8 per cent to 35,260 units.

The company declared a final dividend of $1.60 per share, which is 14 per cent higher than last year.

This takes its full-year payout to $3 per share, an 11 per cent gain compared to last year.

But its profit guidance for the current financial year (2018-19), a range between $265 million and $275 million, fell below what the market was expecting.

Cochlear’s chief executive Dig Howitt said the company has a large number of long-term investment projects.

These include, “the development of our China manufacturing facility, with the construction phase expected to be complete by the end of the 2020 financial year, and investments in IT platforms to strengthen our connected health, digital and cyber security capabilities”.

Challenger profit tumbles

Challenger’s annual net profit fell 19 per cent to $323 million, impacted by higher finance costs and expenses.

The result fell below market expectations, with Bloomberg analysts predicting a much higher profit of $402.4 million.

Its share price fell 4 per cent to $11.94 at 2:30pm AEST.

However, the company’s normalised net profit after tax — a measure which excludes investment returns and other volatile items — rose 6 per cent to $406 million.

Challenger said, in a statement to the ASX, this was driven by a 16 per cent surge in assets under management (AUM) to $81 billion.

The investment firm touted its normalised profit as a “record”, but it still fell below analysts’ expectations of $432 million.

Its shareholders will receive a final dividend of 18 cents per share, which is an increase of 0.5 cents.

This takes its full-year dividend to 35.5 cents per share, up 3 per cent.

It did, however, provide a positive outlook on account of ageing populations.

“Demand for retirement income solutions is underpinned by accelerating growth in the number of retirees, the higher balances they are retiring with and the increasing length of their retirements.”

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