Weekly Stockwatch: Australian Earnings, UK Banking Sector & More

Qantas Earnings

Australian airliner Qantas announced its financial results for the half-year ended in December 2021 (H1 FY2022) on Thursday. It moved to Underlying EBITDA Loss of A$245 million in H1 FY22, from Earnings (EBITDA) of A$86 million a year ago, but the figure marginally lower than its A$250-A$300 million projection. ^[1]

The Group's flying operations were impacted by Covid-19 lockdowns, since the reported period included both the Delta and the Omicron variants. Revenue losses amounted to more than A$22 billion since the start of the pandemic.

The firm's three-year post-Covid recovery plan has delivered A$840 million in savings since its beginning and is on track to deliver more than A$900 million by the end of financial year 2021/22 and $1 billion by the end of financial year 2022/23.

The Qantas International segment, registered Underlying Earnings (EBITDA) of A$89 million. This segment includes the Freight business which was the main reason for those earnings. The Loyalty business was another highlight, producing A$157 million in Underlying Earnings (EBITDA).

QAN.au shed almost 5% on Thursday after the report and extended and concluded its second straight negative week.

Coles vs Woolworths

The two Australian supermarket chains released their half-year financial results (H1FY2022) this week. Coles was the first one, reporting on Tuesday Revenue $A20.593 billion, up 1% year-over-year. However, Net Profit after tax (NPAT) dropped 2%, to A$549 million. ^[2]

The firm declared a A$33 cents/share interim dividend and commented that "COVID-19 costs remained elevated with approximately $150 million costs incurred in the first half compared to approximately $105 million in the prior corresponding period".

Woolworths reported on Wednesday Group Revenues of A$31.89 billion during H2 FY22, up 8% year-over-year. Net Profits after tax (NPAT) dropped 6.5% year-over-year, to A$795 million.

Ecommerce Sales surged 48% year-over-year, to A$3.487 billion, with total Group eCommerce penetration now 11.6%, up 353 bps on the prior year.

CEO Brad Banducci, said that "While the far-reaching impacts of COVID resulted in one of the most challenging halves we have experienced, we ended H1 strongly with positive trading momentum".

COL.au rallied after the results and closed the week with profits of more than 5%. WOW.au also strengthened after the report, registering gains of nearly 5% on the week.

UK Banks

HSBC kicked off this week's earnings releases for the UK banking sector, having reported on Tuesday. Profit before tax came in at $18.9 billion in 2021, more than double compared to the prior year's profit. ^[4]

Revenues however dropped 2% year-over-year, to $49.6 billion, "primarily reflecting the impact of lower global interest rates and a decrease in revenue in Markets and Securities Services ('MSS') compared with a strong comparative period."

The Board has approved a second interim dividend of $0.18 per share, making a total for 2021 of $0.25 per share and announced the intention to launch another share buyback program of up to $1 billion.

HSBA.uk started the week in a positive mood, but was moving towards a negative week at the time of writing.

Barclays followed on Wednesday, reporting Record 2021 Group Profit Before Tax of £8.4 billion, from around £3 billion in the previous year, while Net Income rose to £21.9 billion. ^[5]

The Corporate and Investment Bank (CIB) stood out, generating Profit before tax of £5.8bn.

BARC.uk rose after the report, but was registering losses on the week, at the time of writing.

Lloyds rounded off the week, announcing on Thursday Profit Before Tax of £6.9 billion in 2021, from £1.226 in the previous year. ^[6]

The board recommended final ordinary dividend of 1.33 pence/share and a share buyback of up to £2 billion, "marking 2021 as a very strong year of capital return to shareholders".

CEO Charlie Nunn, commented that "2021 has been a year of solid financial performance with successful strategic execution, ongoing investment and continued franchise growth."

LLOY.uk dropped on Thursday, as stock markets were hit by Russia's attack on Ukraine, heading towards a losing week.

Alibaba Results

Alibaba reported its financial results for the last quarter of the year, on Thursday before the US stock markets opened.

Revenue was RMB242.58 billion (US$38.066 billion), an increase of 10% year-over-year, that was primarily driven by the revenue growth of China commerce ^[7]. The 10% growth however, was the slowest since it got listed in the US.

Total Revenue form the Cloud business increased 19% year-over-year to RMB26.431 billion (US$4.148 billion).

The reported period included the 2021 11.11 Global Shoping Festival, which had generated RMB540.3 billion in gross merchandise volume (GMV) during the 11-day campaign, with the participation of a record 290,000 brands. ^[8]

BABA.us set all-time lows after the results on Thursday, but defended $100 and covered most of the initial losses.

Next Week (February 28 - March 04)

The earnings season begins to wind down, but we still get results from some high-profile companies during the upcoming week.

Zoom and retail giant Target, stand out from the US, reporting on Monday and Tuesday respectively. Other than that, German airline Lufthansa, releases its financial results on Thursday.