CBA set to go on acquisition hunt

The Australian reporting season steps into full swing this week with the likes of Woodside, Wesfarmers AMP and QBE set to report.

If the headline companies that reported last week and early this week (Commonwealth Bank, Telstra and Newcrest Mining) are anything to go by then we could see some strong results hitting the news wires.

But before we speculate on what might be, let’s have a look at reports from last week.

Commonwealth Bank, the country’s largest lender, led out last Wednesday, announcing a cash net profit after tax of $6.83 billion for the full year to June 30 which is a rise of 12 per cent on the previous corresponding period.

This was the last report that highly rated chief executive Ralph Norris will deliver before he is replaced by Ian Narev later this year.

Mr Narev is known in business circles as a proven deal-maker so this could herald the start of an aggressive acquisition era for CBA.

Chief financial officer David Craig reaffirmed that the balance-sheet in these uncertain economic times was in a strong position with record liquidity and capital.

CBA also increased its final dividend to $1.88 a share, up from $1.70 this time last year.

It was also interesting that this was the same day that CBA cut its fixed home loan interest rates by 0.6 per cent independent of the RBA, with this move being followed byWestpac and ANZ.

I think this is more than a marketing stunt by the banks as they realise the precarious position that non-mining Australia is in, and some analysts have gone as far as predicting up to a 1.5 per cent cut to official interest rates over the next 12 months.

The followers of this column will know that Telstra has been a pet topic over the past year as the NBN rollout has commenced which led to the structural separation of the telco, and the Future Fund being an active seller in reducing its stake from 17 per cent to less than 5 per cent.

On Thursday, this faith in Telstra was vindicated as chief executive David Thodey showed the market that his strategy of improving customer service and a new pricing campaign was on target.

Telstra added 1.66 million new mobile phone and mobile broadband subscribers over the year, which laid the foundation for a net profit of $3.23 billion which beat analyst’s expectations.

Telstra maintained its final dividend at 14c a share fully franked which appeased the superannuation funds out there, and equates to a full year dividend yield of 9 per cent based on Monday’s closing price.

Telstra will start trading ex-dividend on Monday, August 22.

Newcrest Mining, the world’s third-largest gold miner by market value after its takeover of Lihir in September 2010, reported on Monday with an increase in net profit of 63 per cent to $908 million as production increased and the price of gold soared.

Newcrest averaged $1409/oz over the fourth quarter, and gold has since hit record highs above $1800/oz.

About 2.5 million ounces of gold were produced over the year and the company expects that to increase to 2.775 million to 2.925 million ounces in the 2012 fiscal year. Newcrest declared a dividend of 20c/share, as well as a special dividend of 20c/share.

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