With the ASX earnings season now drawing to a close, it’s the perfect moment to reflect on the key takeaways from this reporting period. This season has presented a mixed bag of results: some companies have exceeded expectations and emerged as clear winners, while others have underperformed.
In this overview, we’ll examine some of the standout winners and losers of the reporting season. But remember, the real value lies in understanding the underlying factors driving these results and identifying potential investment opportunities.
Exclusive Access for Members:
To gain deeper insights and unlock the full potential of these reports, become a Member today. Enjoy exclusive access to our comprehensive analysis, expert commentary, and actionable recommendations. Our Membership offers a wealth of resources to help you navigate the market and make informed investment decisions.
Winners
1.Orora
Orora emerged in good shape from the August reporting season, in a welcome return to form after a slide earlier in 2024. Underlying earnings were about 10%better than feared. Underlying EBIT surged by 26% to $404 million, buoyed by the Saverglass acquisition. Excluding this acquisition, EBIT growth was much more subdued, up just 0.9%, but this was a decent result given cost pressures and thetepid demand environment. Further adding to the momentum, Orora acknowledged the rejection of a $3.3 billion takeover offer from private equity giant Lone Star. Ororais mulling the divestment of a North American unit, which could unlock value. The shares are up roughly 25% over the past month.
2. Downer EDI
Downer EDI shares climbed 17% on the day it announced a swing to an annual profit of $82 million. That was a welcome turnaround following the $386 million net loss a year earlier, driven by write-downs. The contracting titan is mulling an exit of the JV with France’s Keolis. Underlying earnings matched expectations, and gross profit margins improved in the second half. The business still has much more work ahead to improve overall earnings quality. The spike following the announcement saw the stock recoup lost ground earlier in August, with the shares up 16% over the past month.
3. Ansell
Ansell surged following the FY24 results. Management reported that destocking issues had faded somewhat, and the medical equipment firm provided a decent earnings forecast for the current year, with material growth, should the upper end of guidance be achieved. The cost reset undertaken in the business bodes well for when underlying top-line momentum returns, and the recent acquisition slots in nicely. The shares have climbed 12% over the past month.
4. Droneshield
Those following Droneshield’s trajectory will know the firm is no stranger to volatility. Although the stock initially sold off following a record-breaking 110% revenue surge to $24.1 million in 1H24, investors changed their minds after more time to digest the state of play. The stock has flown 26% higher over the past month.
Losers
1.Red 5
After disappointing guidance, gold miner Red 5 has seen its share price dull, tumbling -12% the day results dropped. FY24 gold sales surged 35% to 223,498ounces, underpinned by a surge from the King of the Hills mine in its second year of operations. The merger with Silver Lake was completed on 19 June 2024, so Red 5’s FY24 results only include 12 days of contribution from Silver Lake. Revenue jumped47% to $620 million thanks to more ounces and higher prices, but Red 5 posted a statutory loss of $5.4 million due to one-off merger costs. Underlying profit rebounded to $48.5 million from a $1.5 million loss last year. However, the market reacted negatively to the company’s weaker-than-expected FY25 guidance, forecasting lower-than-anticipated gold sales and higher all-in-sustaining costs.
2. QBE Insurance
QBE Insurance fell despite announcing soaring profits for 1H24 thanks to a drop in its combined operating ratio (COR) to 93.85 from 98.8% a year earlier. Remember, lower CORs are better for insurers, with anything below 100% indicating profitable underwriting. Net profit doubled to US$802 million. The pressure on the stock has stemmed from expectations that premium rate increases will slow as households face tighter budgets. The stock has declined almost 9% over the past month.