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ASX 200 (XJO) falls 1%, Afterpay (ASX:APT) jumps 8%

The ASX 200 (ASX: XJO) is currently down around 1% as reporting season continued.

Afterpay Ltd (ASX: APT)

The Afterpay share price is up around 8% after the buy now, pay later business said it was going to report higher profitability.

The FY20 net transaction loss (NTL) as a percentage of underlying sales is now expected to be approximately 0.38% compared to expectations at the time of the original update in July of up to 0.55% of underlying sales. Essentially, Afterpay is expecting to report lower losses compared to sales than before.

The improvement in the NTL is primarily due to higher than anticipated collections of instalment payments relating to the 30 June 2020 receivables balance that have occurred after 30 June 2020. This in turn translated into a materially lower provision and lower losses than expected in FY20.

Due to the positive change in the NTL, the FY20 net transaction margin (NTM) as a percentage of underlying sales and EBITDA (click here to learn what EBITDA means) (excluding significant items) is expected to be higher than the July update, with the NTM percentage being approximately 2.25%.

FY20 EBITDA excluding items is now expected to be $44 million, instead of the expected EBITDA range of $20 million to $25 million. That’s 96% higher than the midpoint of the guidance range.

Qantas Airways Limited (ASX: QAN)

Qantas announced that its revenue dropped by 20.6% to $14.26 billion.

The airline said there was a $4 billion drop in revenue in the second half with a near total collapse of travel demand due to the COVID-19 crisis and associated border restrictions.

Qantas said that fast action to radically cut costs and place much of the flying business in a form of ‘hibernation’ helped minimise the financial impact. From April to the end of June, revenue fell 82% while cash costs were reduced by 75% helping limit the drop in underlying profit during the second half to a decline of $1.2 billion.

Overall, Qantas generated $124 million of underlying profit before tax in FY20, which was down 91%. It made $771 million of underlying profit before tax in the first half of FY20.

Government support played its part to support the business. Qantas has collected $267 million in jobkeeper payments.

Qantas announced a statutory loss after tax of $2 billion, with a statutory loss before tax of $2.7 billion – the majority of which related to reducing the value of its aircraft and assets of $1.4 billion and $642 million in redundancy and other costs relating to restructuring for the recovery.

Wesfarmers Ltd (ASX: WES)

Wesfarmers announced its FY20 report today which showed that revenue increased by 10.5% to $30.85 billion.

The company’s continuing operations EBIT (click here to learn what EBIT means) was almost flat when excluding significant items – it fell slightly to $2.96 billion when excluding lease accounting changes.

Continuing net profit after tax, excluding significant items, rose by 8.2% to $2.1 billion. Operating cashflow went up by 32.3% to $3.6 billion.

The statutory profit came in at $1.71 billion. There were $386 million of significant items relating to restructuring the Kmart Group, impairments for Target, and the industrial and safety division, partially offset by gains on the sale and revaluation of the company’s investment in Coles Group Limited (ASX: COL).

Bunnings EBIT went up 13.9% to $1.85 billion. Revenue rose 13.9% to $15 billion. The business benefited from households looking to do DIY projects during the lockdown period. It invested in its digital offering to serve customers.

Kmart Group EBIT fell 23.5% to $413 million. Revenue rose 7.2% to $9.22 billion. Including impairments and payroll remediation costs, Kmart Group recorded a loss of $222 million. There was lower sales and higher clearance activity. Wesfarmers is taking action to help Kmart Group.

Officeworks EBIT rose 13.8% to $190 million. Revenue rose 20.4% to $2.8 billion. There was significant demand for home office, technology and learning & education products.

The board declared a final dividend of 77 cents per share. Wesfarmers also decided to pay a special dividend of 18 cents per share to reflect the sale of Coles shares. That brings the total dividend to $1.70 per share.

Other reports

There have been plenty of other reports released today which the team at Rask Media have covered.

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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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