ASX Company Reporting Season
Companies listed on the Australian Stock Exchange report their earnings in February and August each year.
The Australian market has continued its strong price performance through the August reporting period, with the ASX200 index up +3%. This takes the 12-month total return performance to circa +15%. A positive lead from global markets and another RBA rate cut earlier in August has added support to the local equity market rally.
Less than a 25% of companies on the ASX 200 reported worse-than-expected earnings last month, according to JP Morgan. According to analysis from the investment bank, 55% of companies delivered results in line with market expectations — that is above the average of 39% in-line results over the previous five years.
However, there is not a whole lot of optimism about the outlook for corporate Australia, with only 18% of companies having their forecast earnings upgraded by analysts, compared to 36% experiencing downgrades, by JP Morgan's estimates.
Analysts at UBS agreed that revisions to forward earnings estimates were skewed to the downside, with their number-crunching showing five upgrades for every six downgrades.
Analysts say Australian shares are 'overvalued' and trading at their most expensive levels in four years. When shares climb to record highs without a meaningful improvement in company profits, the market will eventually enter a 'correction', defined by a -10% fall.
Sector Highlights: Winners, Underperformers, and Key Themes
Financials & Banks
Outperformed on both earnings and dividends, aided by investor rotation and stable domestic operating environments.
Resources & Materials
Heavily impacted by lower commodity prices and margin squeeze: BHP’s profit slump and cautious outlook.
Technology & Growth
Tech again offered rare bright spots, with Pro Medicus and WiseTech under focus. Elevated valuations, however, increase sensitivity to any soft guidance.
Consumer & Retail
Mixed bag: JB Hi‑Fi and Super Retail delivered special dividends, while Reece cut both earnings and dividends amid structural headwinds.
Utilities & Energy
Origin stood out with strong earnings and increased dividend, benefitting from battery investments, LNG returns, and tax advantages.
Market Outlook & Investment Strategy
Macro Drivers
- RBA policy easing: Three rate cuts in 2025 help drive liquidity and support equities.
- Valuations elevated: Forward PE well above long-term average—34% to 32% higher across sources—means expectations are high.
- US Trade Tariffs: What will be the effect on the US consumer and businesses as they navigate fluctuating tariffs and an increase in goods. How will this impact global trade?
- Unemployment: All eyes are on unemployment figures as a key metric on the strength of the economy.
Make sure you understand your allocation to growth vs defensives assets and hold some additional cash reserves.
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