Finance Finance News Stephen Mayne: JobKeeper plea sets up big payday

Stephen Mayne: JobKeeper plea sets up big payday

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We’re now almost halfway through the most unpredictable corporate reporting season since the GFC and Thursday was a day that had it all.

Continuous disclosure laws are supposed to mean no surprises, but the deluge of big-name results caused wild swings in share prices because COVID-19 has made the business world so hard to predict.

On the upside, Treasury Wine Estates shares rocketed more than 10 per cent on signs of a China recovery, but Telstra shares were pole-axed by more than 7 per cent courtesy of weaker profit forecasts even though the 16c annual dividend was maintained.

The impacts of COVID-19 – and the support measures introduced to soften the impact – are many and varied with Telstra estimating a $200 million earnings hit last year, rising to $400 million this year.

Insurance giant QBE Insurance detailed $600 million of global COVID-19 losses for 2019-20 and AGL explained that bad debts on power bills would be up another $20 million – and that was after a $33 million customer support package.

Woodside Energy plunged to a $US4 billion first-half loss yesterday – mainly because of write-downs on its oil and gas assets, a feature we’ve seen right across the industry given weak demand has delivered lower oil prices.

Contrast that with gold, which has hit a record high due to the flight to quality in scary times, something which played out in Thursday’s profit report from Evolution Mining – up 38 per cent to $301 million.

Two sides to the retail coin

Within the property sector, two very different stories are emerging.

Retail is proving the hardest hit, but the global industrial property giant Goodman Group reported a $1.5 billion annual profit as demand booms for the likes of warehouses supporting e-commerce and data centres.

Goodman is now valued by investors at $32.6 billion, making it three times as valuable as Westfield’s debt-laden parent company Scentre Group. Talk about a changing of the guard.

The retail landlords are clearly hurting, but it is a very different story for the retailers themselves, partly because of the generosity of the JobKeeper wage subsidy program.

Solomon Lew’s Premier Investments revealed it was headed for a 10 per cent jump in half-year profits.

The triple play of rent reductions, JobKeeper and soaring digital sales has been a boon for many retailers, even while their landlords bleed.

Solomon Lew. Photo: AAP

The retail billionaire was gloating a little too much in Premier’s update on Thursday.

After reportedly lobbying Treasurer Josh Frydenberg for a wage subsidy scheme, it is a bit rich to then refuse to pay the rent, pocket more than $50 million in JobKeeper payments, and declare a profit upgrade that saw Premier shares jump $1.12 to hit a six-month high of $18.04.

In the frequent battles between landlords and tenants, it’s not often that you feel sorry for the landlords but that’s the way this pandemic is shaping up.

As Westfield’s parent company Scentre Group noted tersely last week, “the group has not received any funds from the Australian government under its JobKeeper scheme”.

Just like fellow property companies Vicinity and GPT, Westfield is set to announce big property write-downs with its full-year results.

Whilst not much help for landlords, the JobKeeper program has been a lifesaver for many other companies, with Flight Centre revealing it is receiving $10 million a month.

It is also dramatically curtailing its retail network, another move that will hurt big landlords like Scentre Group.

The JobKeeper bottom line

JobKeeper is currently running at $11 billion a month and we’re yet to hear from some of the biggest recipients including Qantas, Crown Resorts, Myer and cinema giant Village Roadshow.

Full disclosure of the amounts received will be very important for transparency.

The New Zealand government has produced a searchable website that precisely discloses which companies have received what public monies in wage subsidies and for how many of their employees.

It is a shame we don’t have an equivalent in Australia.

Qantas would be in a world of pain but for JobKeeper as it is expecting to receive around $400 million by the end of September.

With that sort of largesse, when the Qantas results are announced on August 20 it should be no bonuses, no dividends and no buybacks.

Qantas has been rescued by the JobKeeper stimulus, Stephen Mayne says.

And speaking of buybacks, AMP became the first major company to launch one this earnings season, revealing that it would spend $200 million buying its shares.

It can only do this having just sold off its crown jewels, the old AMP Life insurance business, for $3 billion. AMP shares jumped 15c to $1.53, but don’t forget this used to be a $20 stock.

It remains a financial and reputational basket case that really should be taken over – with the most obvious predator being Macquarie Group.

In other profit season themes, the predicted raft of new equity raisings accompanying results announcements hasn’t yet emerged, with Sydney Airport’s $2 billion raising the major exception.

That said, there is a more conservative approach to paying dividends with CBA cutting its interim payout of $2 a share in March down to 98c, the first time it has paid a dividend below $1 since 2006.

Other companies like Seek and Sydney Airport abandoned final dividends altogether.

Based on what we’ve seen so far, 2019-20 is likely to produce the largest list of big-name bottom-line losses since the GFC with property companies, travel outfits and the oil sector set to dominate when it comes to red ink.

But for every troubled company there have been others that are booming in these strange times.

The likes of Afterpay, data centre company NextDC, online retailer and iron ore giant Fortescue Metals have never had it so good.

Stephen Mayne is an independent journalist, founder of, shareholder activist, Qantas shareholder and former local government councillor who can be reached at or via Twitter @maynereport