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ASX 200 (XJO) up 0.3%, Westpac (WBC) drops

The ASX 200 (ASX: XJO) is currently down 0.3% as reporting season continues.

Westpac Banking Corp (ASX: WBC)

The major ASX bank announced that it produced a cash profit for the FY20 third quarter of $1.32 billion, which was higher than the FY20 first half average quarterly average of $497 million – this was up 19% excluding notable items (like customer remediation and AUSTRAC costs).

Westpac announced that statutory profit for the quarter was $1.12 billion, up from the quarterly average of $595 million in the previous half.

The big bank revealed an impairment charge of $826 million further increasing provisions and provisioning cover. However, profit was higher in this quarter because the impairment charge was lower.

The Westpac board has decided not to pay its deferred interim dividend so that it can retain a strong balance sheet and the ongoing uncertainty. The board will consider the dividend decision at the final result.

Westpac CEO Peter King said: “We have maintained our strong balance sheet and increased provisions for bad debts to support our prudent approach to managing impairments.

While there have been some signs that the economy is performing better than early expectations, significant uncertainty remains, particularly given the unpredictability of COVID-19 outbreaks and their local impacts.”

The Westpac share price is down more than 3%.

Cochlear Limited (ASX: COH)

Cochlear announced its FY20 result today.

Cochlear reported that its sales revenue declined by 6% to $1.35 billion, or 11% in constant currency. Like many other companies, Cochlear’s financial year was a tale of two halves – first-half revenue climbed 9%, partially offsetting a 22% fall in the second half of FY20.

Services revenue fell 7% (or 12% on a constant currency basis) to $395.5 million and now represents 29% of the company’s sales mix. Cochlear implants accounted for 61% of sales, achieving revenue of $817.9 million, down 3% or 8% in constant currency. The remaining 10% of sales came from the acoustics line (e.g. bone conduction and acoustic implants), which saw a 20% fall in revenue to $138.9 million.

As announced in a trading update in May, cochlear implant unit sales across developed markets declined by around 80% as most elective surgeries were postponed. Surgeries recommenced across many markets across mid-May and by the end of June, the company said more than 80% of cochlear implant surgical centres in developed markets had recommenced surgeries.

Cochlear reported a 42% decline in underlying earnings before interest and tax (EBIT), which came in at $206.9 million. Underlying net profit suffered a similar fate, also falling 42% to $153.8 million.

However, including $11 million of innovation fund gains and $416 million of patent litigation expenses, Cochlear reported a statutory loss of $238.3 million. The patent litigation expense relates to an adverse judgement in the long-running AMF patent infringement case, which Cochlear provided an update on yesterday.

The Cochlear share price is up almost 10%.

Coles Group Limited (ASX: COL)

Coles announced its FY20 result that its sales revenue increased by 6.9% to $37.4 billion with growth across all of its segments. The supermarket business said it achieved its 51st consecutive quarter of Coles supermarket comparable sales growth, with a rise of 7.1% in the fourth quarter.

Pleasingly, Coles said it achieved more than $10 billion in own brands sales, which grew by 10% for the year and contributed almost a third of supermarket sales in fourth quarter with more than 1,850 products launched during the year.

EBIT (click here to learn what EBIT means) rose by 4.7% to $1.39 billion on a pre lease accounting (AASB 16) basis. Statutory EBIT was $1.76 billion.

Net profit after tax (NPAT) increased by 7.1% to $951 million on a pre lease accounting (AASB 16) basis. Statutory NPAT was $935 million.

The Coles board decided to increase the ordinary final dividend by 14.6% to 27.5 cents.

The Coles share price is down 1.5%

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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