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Economies, Governments and Businesses across the globe are reeling under the coronavirus impact, with equity markets experiencing wider sell-off. This, coupled with domestic bushfire impact, is posing mixed threat/opportunities for ASX listing players amidst the current reporting season.
With investors closely monitoring company’s financial performance and business outlook for the stocks in their portfolio and asset allocation, here we shall discuss the earnings update from three stocks, namely, BlueScope Steel Limited (ASX:BSL), nib Holdings Limited (ASX:NHF) and oOh!media Limited (ASX:OML) and how they are positioned for the coming year.
Let us discuss the operational as well as financial performance of these stocks in detail now.
BlueScope Steel Limited (ASX:BSL)
Global leader in premium branded coated and painted steel products, BlueScope Steel Limited declared underlying NPAT of $199.6 million, representing a plunge of 67.5 per cent in 1H FY2019. The Company reported a 64% fall in the EBIT that stood at $302.4 million, which was primarily driven by the expected decrease in the commodity steel spreads which BSL had already indicated in August last year.
However, the business has performed fairly throughout the half, especially with improving conditions at the tail-end of the half and has finished 1H FY2020 marginally stronger than its guidance.
The business achievement of $302 million underlying EBIT validates the reality of BlueScope’s turnaround and transformation while also re-instils that BlueScope is a resilient, international company with a strong balance sheet and high-quality assets.
With the announcement of the dividend, the Company believes that the existing times, where there is prevailing uncertainty in key markets due to impacts of coronavirus and current macroeconomic conditions, present the suitable balance to invest for the future in key projects such as the North Star expansion and also deliver returns to shareholders of the Company.
The Company’s expansion plans for the North Star mini mill in Delta, Ohio, by around 850,000 tonnes per annum, is running well as per the schedule and the site works are currently on track with major OEM equipment orders been placed.
How Is BSL Positioned Amidst Coronavirus Outbreak?
Moreover, BSL has been prioritising the employee’s safety and security and has implemented return to work safety guidelines across its China operations to make its China businesses operational. With most employees having returned to work safely and no cases of COVID-19 reported within BlueScope China, all sites except Hubei sales office remains opened.
The Company anticipates considerable impact over its business in February and March amidst the outbreak of coronavirus and the rate of recovery in demand and operations of the second half of the year remains unclear in the current situation. It also acknowledges the economic impact of coronavirus on its Asian businesses and Asian steel spreads in the near term, while the impact to US Midwest spreads remains under the misty impressions.
In the second half of the FY20, BSL expects underlying EBIT somewhere near to 1H FY2020, while expectations are subject to various factors like spread, foreign exchange and market conditions, especially coronavirus.
nib Holdings Limited (ASX:NHF)
Popular health and travel insurer, nib Holdings reported a lift in the Group underlying revenue by 6.4% to $1.3 billion compared to the pcp, majorly driven by the growth in membership and premium revenue across all business segments during 1H FY2020.
However, there was a 27.2% decline in Group Underlying Operating Profit (UOP) that stood at $83.2 million as compared to 1H FY19 and was largely impacted by the higher claims inflation across the Company’s insurance businesses as well as timing in the receipt and payment of claims.
The Company believes that its results remained disappointing even after allowing for the claims provisioning effect and avoid incurring decline in its earnings, especially when there is growth in revenue across the Group.
NHF’s New Zealand business delivered an outstanding operating performance with growth in revenue and earnings, where UOP increased 16.8% to $11.1 million with net policyholder growth of 5.7% and now has around 225,536 people covered compared to just under 170,000 when it all began in 2012.
The Company also reported weaker growth its nib Travel, although with continued growth in sales and operating income and has now become Australia’s third-largest travel insurer. For the future, the NHF has transparent targets for nib Travel based upon its investment criteria and is highly confident of achieving them.
For the bushfire sufferers, the company offers three-month health insurance premium waiver, with an alternate option to suspend the policy for six months.
NHF’s Outlook
Moreover, the Company confirmed FY20 Group UOP guidance of at least $170 million with the belief that the current business have a fundamentally solid performance and progress.
In addition to this, the Company has already started to invest substantially in programs and systems designed to decelerate growth in hospital utilisation and relieve the risk of fraud and overpayments, along with the recent restructuring of the Group to combine major functions such as contact centres and claims processing to with a view to kick-in efficiency.
oOh!media Limited (ASX:OML)
Amidst a challenging media market during 2019, oOh!media Limited recorded growth in revenue in consistency with the wider Out Of Home (OOH) market, sustaining market share in Australia as well as New Zealand and continued successful integration of the Commute business, where integrated sales and operational team structure have been implemented.
OML’s Commute has now become its largest division by revenue with its strong performance in FY19 that reflects upon its noteworthy contribution towards improvising its diversified asset portfolio.
The Company believes that its business out-performed the broader market and grew by 1% in Australia in times when the overall media market declined by approximately 5%.
Notwithstanding the difficult second and third quarters, OML gained revenue growth in line with the OOH market and earnings within its guidance range through tougher performance and recovery of share in the fourth quarter.
Moreover, there was a reduction in the net debt from $372.5 million in the prior year to $354.5 million, and the gearing ratio was steady at 2.6 times at 31 December 2019 as compared to the pro forma prior year, even though there was a decrease in EBITDA.
OML’s Outlook
Going forward into the year 2020, OML expects progressive gain in the market share by its Out Of Home sector across media formats in FY20 and looks forward to scoring an Underlying EBITDA pre AASB16 in the range of $140 million - $155 million for the year ending 31 December 2020.
OML looks forward to maintaining its disciplined method towards capital expenditure with an estimated capital expenditure to be between $60 million - $70 million for FY20 and expects its overall strategy to deliver long term sustainable revenue and earnings growth to maximise shareholder value.
