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ASX 200 (ASX:XJO) goes negative, Suncorp (SUN) jumps

The ASX 200 (ASX: XJO) is down 0.1% after initially being up in morning trading.

Today was a good day for Australian COVID-19 news. It was lowest number of new COVID-19 cases in Victoria for more than five weeks with 179 new cases. Meanwhile, NSW reported just one new coronavirus infection overnight.

It was another busy day of reporting on the ASX:

Suncorp Group Ltd (ASX: SUN)

The Suncorp share price is up more than 9% after reporting its FY20 result.

The Australian insurance division reported a net profit after tax of $384 million, which was down 33.9%. The natural hazard cost was in line with the allowance of $820 million.

The COVID-19 impact on its general insurance businesses was broadly neutral – excluding the impacts on investment markets. This division recognised $85 million of additional claims provisions and risk margins to cover COVID-19 uncertainty, including landlord loss of rent and potential business interruption claims.

The banking and wealth division saw a net profit after tax of $242 million for FY20, which was down 33.5% to $242 million. The bank division has been impacted by higher higher provisions, amounting to $255 million in total with conservative economic assumptions. At 31 July 2020, 5% of the home lending portfolio was under temporary loan deferral arrangements.

Suncorp’s New Zealand division generated a net profit after tax of $245 million, the same as last year.

That meant the profit after tax from ongoing businesses dropped 26.8% to $871 million.

Suncorp’s total cash earnings fell 32.8% to $749 million (which includes ‘other’ profit/losses).

However, reported net profit after tax (NPAT) of $913 million was up 421.7% after a $285 million after-tax profit from the sale of the Capital SMART and ACM Parts businesses, and the $89 million impairment charge relating to the core banking platform.

Suncorp has decided to pay a final dividend per share of $0.10, bringing the total FY20 dividend to $0.36 per share. That’s a reduction of 48.6%.

BWX Ltd (ASX: BWX)

The BWX share price is up 2.8%.

BWX reported that its revenue increased by 26% to $187.7 million.

The company said that it made continued market share gains with increased revenue across all four core brands.

Sukin sales increased by 55% to $81.7 million as it becomes more available in Europe, USA and APAC. Sukin is now being sold in over 1,000 doors in the US. Andalou Naturals sales increased by 10% to $53.3 million. It was affected by COVID-19 restrictions. Mineral Fusion sales grew by 16%, helped by online accessibility. Nourished life reported an increase in sales of 15%. The second half saw sales growth of 26% with an accelerated shift to online shopping due to lockdowns.

The gross margin rose 210 basis points (2.1%) to 58%. BWX’s comparable EBITDA (click here to learn what EBITDA) increased by 30% to $27.5 million. The EBITDA margin improved thanks to EBITDA growing faster than revenue. It generated statutory EBITDA of $30.9 million when including the AASB 16 leases accounting changes.

Statutory net profit rose by 59% to $15.2 million.

BWX’s net debt was $32 million at the end of FY20. At the end of FY19 it had net debt of $42.8 million. The board of BWX declared a final dividend of 2.6 cents per share. In FY21 the company is expecting revenue and EBITDA growth of at least 10%.

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price is up 2.4% on acquisition news.

A2 Milk has said it’s in discussions with Mataura Valley Milk (MVM), a New Zealand dairy nutrition business, to explore options for A2 Milk to participate in manufacturing at MNM’s facility in Southland, New Zealand.

After these discussions, A2 Milk has made a non-binding indicative offer to acquire a 75.1% interest in MVM for a total consideration of approximately NZ$270 million, based on an enterprise value of around NZ$385 million.

MVM has agreed to give A2 Milk a period of exclusivity to conduct confirmatory due diligence and negotiate definitive transaction documentation.

The discussions are still ongoing. If a deal can be agreed then it’s expected to settle towards the end of FY21 and it would be funded from existing A2 Milk cash reserves.

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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