We still hold a view that Australian shares are still a critical part of any investment portfolio and consider an overweight position as sound investment strategy at this time. This is supported by research from CommSec that at each profit reporting season tracks all the earnings results of ASX 200 companies to obtain a comprehensive picture of the aggregate health of Corporate Australia.
The past year has certainly had its challenges for companies including the Federal Election, the response to a supposedly ‘tough’ Budget, slowdown of the mining sector and geopolitical issues. But Aussie companies have maintained their focus on controlling costs, boosting productivity and working hard to lift revenues. And the results have paid off – Corporate Australia is in good shape.
CommSec has assessed the results of the 141 companies that have reported full-year earnings (the 12 months to June 2014) and the 29 companies that reported half-year results for the six months to June 2014. Almost 69 per cent of those reporting full-year earnings (FY companies) improved their profit results – the best result since the 2009/10 financial year. Further, almost 90 per cent of FY companies reported a profit. A stunning 76 per cent of FY companies lifted or maintained dividends. And cash holdings by all ASX 200 companies that reported earnings lifted by 24 per cent over the year to $112.6 billion.
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The summary has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on the information in this report, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.