# Profit Downgrades



## Fleeta (22 April 2005)

Looks like we are starting to see a lot of profit downgrades!!

I got a trifecta this week - MPI, RCL and MGW - all bad news

I'm starting to think that maybe we are in a bubble caused by high expectations of future profits. Especially considering many of these profit downgrades are still forecasting profits higher than last year.

And remember that 1 profit downgrade is normally not the end of it, because Company's generally don't want to deliver bad news, it gets spread over time...so i'm sticking with my policy of taking the hit of a profit downgrade announcement.

Anybody got any other thoughts on prfit downgrades?


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## GreatPig (23 April 2005)

Well... look what happened to GUD when they announced one. 

Cheers,
GP


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## Smurf1976 (23 April 2005)

"Higher materials and energy costs have adversely impacted upon earnings" or words very similar are becoming rather common in the announcements of US companies. Profit downgrades here, downgrades there...

Personally my best guess, and it is only a guess (albeit one into which a lot of thought has gone), is that we are going to see a generally slowing economy and all that goes with it as the next major theme in the markets. I'm not naturally a negative person, but that's just how I see it at the moment. 

*Even the Reserve Bank talks about growth in the order of 2 - 3%.

*It was on the radio yesterday morning that (Hobart) house prices are down 11% in the past 12 months. Newspaper reports suggest that similar things are occurring in other parts of Australia, notably Sydney, as well.

*Wall Street managed one decent up day and then back down we go (Friday night our time). The US market has basically gone nowhere since the late 1990's. (Up, down, up again but sideways for anyone who bought and held.) 

*If you look internationally (mainly UK and US in my case) then there seem to be lots of reports coming through about falling sales of practically every non-essential product. Electronic gadgets of all kinds in the US and the overall sales of upmarket retailers in the UK seem to stand out. The UK in particular seems to be accumulating a growing list of big job losses due to factory closures etc.  

*The Bureau of Meteorology suggests a substantially above average chance of an El Niño weather pattern (usually means drought in Australia) developing later this year.

*There is no real sign that the US Fed is about to stop raising rates. 

*There is talk of war with Iran - the world simply does NOT have sufficient spare oil production capacity to offset the loss of production, even temporarily, from Iran. 

And so on.

Sure, it could all work out fine but I think the risks are somewhat high at the moment. I still own stocks, I'm not totally a bear by any means. But I just think there are a lot of negatives starting to emerge.


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## Investor (2 May 2005)

Fleeta said:
			
		

> Looks like we are starting to see a lot of profit downgrades!!
> 
> Anybody got any other thoughts on prfit downgrades?




There certainly were many downgrades. Kresta announced a huge 40% downgrade last Friday. I did not hold. 

Well and truly into "confession" season as the end of financial year draws closer. I read today in the Financial Review, that if such downgrades move up the "food chain" into ASX 100 territory in any significant way, market sentiment would fall further (stating the bleeding obvious, this)  .

The consensus forward P/E's are gradually coming down. What a difference two months make in terms of outlook for the ASX. Then again, stocks fell 25% in one day in Oct. 87.

My reading of the tea leaves is such that sector performance has been diverging and will continue to diverge, in that some sectors (health, utilities and consumer non discretionary) will continue rising or at worst stabilise while other sectors will continue falling. Overall, the ASX index will move sideways. The wild card that is still hard to read is the mining sector. If it continues to rise, after the current pause, the ASX index might go up. 

The other wild card is the banking sector. This sector is so big, I wonder whether anyone actually knows what is happening within the loan books?????? From memory, bank shares fell 50% in one month during the last recession. The banking industry wrote off $30 billion in loan losses in one recession.


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## Investor (3 May 2005)

I had a look at the price charts of Orica and Wattyl paints, in the newspaper this morning. 

Talk about nosedives!

I do not hold.


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## Investor (3 May 2005)

Another day, another profit downgrade. 

Latest is Mirvac. Price dropped 10.7% today.

I do not hold.


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## Smurf1976 (3 May 2005)

Wattyl not doing too well? 

They make paint, don't they?

If that's so then I think it says quite a bit about the economy in general and real estate in particular. Whilst there are exceptions like industrial protective coatings and lines on the road (though they're thermoplastic mostly these days) a large portion of paint demand is for either new construction (residential) or renovation. If they're not doing well then that speaks volumes about the economy...


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## Investor (4 May 2005)

JB Hi Fi and Salmat have just announced profit downgrades and their share prices have fallen sharply.

I do not hold. (Expected this sector to fall some time ago).


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## markrmau (4 May 2005)

Add CCL to your list, and SSS just called in the receivers.

Last one out, please turn off the lights.


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## Investor (4 May 2005)

SSS has gone SOS.  

The writing was on the wall for what - a year???


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## Investor (4 May 2005)

Auspine (ANE) has just announced a 20% profit downgrade after the close of trading today.

Watch the price nosedive tomorrow. 

I do not hold.


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## markrmau (5 May 2005)

Funny, commsec listed it originally as after market close. 4.34pm?

Then revised to about 3.43pm (droped in late trading).

I nearly pooped myself after reading your message as I have 10k of GNS. But it is powering up this morning.


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## Investor (5 May 2005)

GNS is a better quality stock.


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## Investor (7 May 2005)

In The Australian newspaper today, is an article that could be of interest:

"THE bears - for the past two years comprehensively outmuscled by the bulls - are getting organised. Marshalling their forces, they are starting to attack the market sector by sector.

On Tuesday it was residential property developers, with $2 billion carved off just five stocks in an afternoon mauling. On Wednesday it was retailers -- a favourite stock market whipping boy of late. 

On Thursday, the agribusiness sector was firmly in their sights. 

Last week any company exposed to the automotive sector was punished. And at various times in the past few months, the airlines, the paper and box merchants, the media proprietors and the consumer goods providers have been subjected to waves of selling that has pushed individual stocks down 20 or 30 per cent. 

These systematic and co-ordinated attacks on the market are becoming a pattern, as any hint of bad news -- poor figures from the Australian Bureau of Statistics, a murmur that profits may miss targets, executive unrest -- is amplified into corporate calamity. 

It is a sign of how twitchy investors have become after two years in which the stock market, driven by record-breaking profits, soared 45 per cent to its peak in March. 

Nobody thought Australian corporate earnings would rise forever. But, after 15 years of often spectacular economic growth, mostly booming house prices and steadily increasing employment, Australian investors had begun to feel all but bulletproof. 

The last few weeks have shown that they were wrong. 

"We are about to bring down the curtain on 20 years of spectacular Anglo (economic) performance," predicts ABN Amro equity strategist Gerard Minack. 

He sees rising interest rates, slumping consumer demand and falling asset prices cascading through the US and Australian economies in particular, with some ugly results. "If we see asset prices tip, what has been virtuous can become vicious," Minack says, pointing out that falling interest rates, buoyant consumer demand and rising asset prices have boosted the Anglo economies for the last two decades. 

The first shoe dropped in Australia in early March when a 0.25percent interest rate increase by the Reserve Bank coincided with a halving of Australia's economic growth rate to an annualised 1.5 per cent. 

But the market rallied to a record high that day. Investors did not seem to care about the rate hike, coming so soon after a stellar earnings season in which companies such as AMP, BHP Billiton, the Commonwealth Bank and Qantas contributed to what the Reserve Bank says was a 38 per cent increase in underlying earnings. 

Maybe, just maybe, the market seemed to think, Australia had dodged the bullet. Many economists thought that the gross domestic product figure was unduly weak -- it did not reflect the underlying strength of the Australian economy. 

Then the bad earnings news started to come in waves. 

"Initially the warnings were contained within the small caps," observes AMP Capital Investors head of investment strategy and chief economist Shane Oliver. "But it has been a bit more general than was earlier thought." 

In early April, McGuigan Simeon told the market that a glut of Australian grapes and the high dollar would lead it to miss its target. Other winemakers held up well, partly because Foster's was battling to buy Southcorp and partly because McGuigan Simeon has a an unusual business model. 

Then, two weeks later, automotive parts maker Pacifica and parts retailer Repco also warned of poor earnings. Pacifica was hit by falling demand from ailing US car giant General Motors as well as the strong dollar, while Repco reported weaker than expected domestic demand. 

Next it was the turn of the pulp and paper companies to disappoint. Printer PMP warned on the same day as Repco and Pacifica and was followed a few days later by packaging company Amcor and paper maker and distributor Paperlinx. Rising raw material prices and a strong dollar dragged down the paper companies. 

Investors were especially unnerved by Paperlinx, which a month earlier had predicted a stronger second half. Not surprisingly, they savaged the company's share price. It is off by a third since the market peaked on March 21. 

A few days later chemicals company Orica and paint maker Wattyl added their voices to the depressing litany, and pinned the blame on rising raw material costs and moderating domestic demand. 

Developer Mirvac's warning coincided with a free-fall in new housing approvals. Troubled Multiplex followed Mirvac shares down. 

Then JB Hi-Fi announced that profits would come in at the bottom of its forecast range as demand for CDs and other products moderated. Other retailers of luxury goods, such as Harvey Norman, tumbled in its wake.

And those warnings seem to have been the tip of the iceberg. Macquarie Bank's tally of earnings downgrades since last November had reached 90 by the middle of last week, though analyst Paul Stanies says that includes a few repeat offenders. Virgin Blue, for example, has warned three times in the last nine months. 

"I think there will be more to come," cautions Stanies. "Some of the downgrades are coming from companies issuing too high guidance and there are signs out there that things are not as easy as they were 12 months ago." 

Through the bull market investors and analysts consistently argued that the run-up in stock prices was justified by ballooning earnings. Underlying earnings rose by just under 40 per cent, according to Reserve Bank figures, from just over $15 billion in the six months to June 30, 2003, to $25 billion by the end of last December. 

In the same period, according to UBS, the stock market rallied roughly 55 per cent. 

Forward price/earnings multiples averaged 15 times, but never got to gravity-defying levels. Except, of course, for the fact that forward earnings multiples factored in some aggressive estimates of what companies were going to earn over the next six months or year. 

UBS argued in January that if earnings reverted to mean historical growth levels that would increase the price/earnings ratio from 14.6 per cent to 16.6 per cent. But the bank now estimates that after the market's eight per cent sell off and the surge of downgrades the forward p/e ratio is 13.5 per cent. UBS still appears to think that inflated earnings estimates are distorting the ratio -- noting in January that they were 13 per cent above long-term estimates. 

But it considers equity valuations reasonable. 

For a long time the stock market seemed prepared to shrug off companies' small problems -- assuming that the glass was still half full. 

Not so anymore. 

A combination of weak Australian economic data, the rash of earnings warnings and a deteriorating US economy -- still the main engine of global economic growth -- have combined to cast a pall over the market. "It is a very jittery market out there," says Stanies. 

Coca Cola Amatil, for example, might feel a little aggrieved at its treatment by the market. The company pointed to inventory hangover, cooler weather and a weak retail environment as negatives for the company's growth, but still predicted a fifth year of double-digit earnings growth. 

"I don't think we need to get too bearish," says David Cassidy, equity strategist at UBS, who is starting to see some signs of value in the market. "I don't think the situation is calamitous." 

Cassidy has been bearish on earnings for some time and he agrees with GSJBW's list of vulnerable sectors. Furthermore, he expects more downgrades. But he recommends a shift into defensive stocks rather than outright flight into cash. Cassidy and many of his peers see general insurers, yield stocks (such as pure property trusts or Telstra), infrastructure and utilities, staple retailers (such as Woolworths), and healthcare stocks as companies most likely to weather the storm. They are looking for companies which provide staple goods and services and which consequently should be immune from a strong dollar, weak consumer demand or rising raw material prices -- all the things which have dogged the underperformers. 

There is some debate among strategists over resource, gambling and banking stocks, however. "We're overweight boredom," says Minack, explaining that ABN is backing "dull companies with resilient earnings." 

But he also recommends a few sin stocks. In the coming downturn he expects people to continue gambling and drinking -- though he recommends the big brewers rather than the vintners. Where he parts companies with many of his peers is in pessimism about the resource stocks. 

"One of the safest calls is that global growth will be weaker than last year," he says, noting that global growth was exceptionally strong last year. For that reason he sees resource prices taking a break, even if they resume their climb before long. 

"I think it is unlikely (the sell-off) is going to spread to resource stocks," says Oliver, who makes a case for a soft landing for the global economy. 

"The growth of China is going to slow but probably to levels experienced last year." 

"Already we are seeing the Reserve Bank going on hold indefinitely and in the US I think it will only be a few months until the (Federal Reserve) calls a halt." 

The two strategists also disagree about the banks. ANZ and St George have recently increased their forecasts for the full year -- though Westpac's half year announcement was more downbeat. 

Dr Oliver thinks that the soft economic landing will allow banks to emerge relatively unscathed. 

But Minack expects the whole sector to start suffering before long. 

"I have always thought that the banks would be virtually the last carriage to come off the rails," says Minack, but he thinks it "inconceivable" that the banks could emerge unscathed from an environment of falling house prices, declining consumer confidence and tumbling retail sales. 

If the banks do get hit, Minack has said in the past, the whole market is likely to suffer because they make up so much of the stock market. 

Minack is, of course, the most bearish of Australia's market watchers. At the end of last year he predicted that the ASX 200 would end 2005 at 3,000. It closed at 3,983 at the end of last week. 

The consensus view is that earnings growth will moderate, but not cease entirely, while the Australian economy enjoys a soft landing and the stock market ends the year moderately up. 

But recently his warnings of declining Anglo economies have started to look more prescient. The British and New Zealand economies have also shown signs of slowing at the same time as Australia and the US have stuttered. Rising interest rates and moderating house prices have bedevilled their economies too. In its latest fund inflows Challenger Financial Services reported a 20 per cent increase in cash funds. 

Certainly, with earnings downgrades continuing and some of Minack's bleak prognostications coming to pass a few more dollars in nice, safe cash seems like a good idea."

The Australian.


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## Investor (7 May 2005)

In The Age today, comes the following article by Marcus Padley (some readers might know his name):

Having been married "before", I know: relationships are a lot easier to end than sustain. In fact, leaving the old gal took about half an hour from decision to execution. She came home to find the wardrobe empty. She rang me early (ish) the next day with the immortal words "Does this mean you're not coming to the polo on Saturday". Two years of faith (and half a house) gone in half an hour.

It's the same in the sharemarket. Share prices grow over years and collapse in days. Have you noticed? The sharemarket only ever crashes. I don't ever remember it going up 25 per cent in a day, let alone 5 per cent.

It probably stems from the notion that losses have three times the emotional impact of a gain. We fear a loss three times more than we lust for a gain. It makes us slow to buy and quick to sell. In fact, if the numbers are right, share prices will take three times as long to rise as they do to fall.

Look at the chart of your favourite share at the moment. Two years' worth of investing, nurturing, hoping, praying and even, sometimes, researching, all destroyed in a month. It hardly seems fair and probably isn't, but this is a fact of life in the sharemarket. Shares go up like a balloon but fall like a rock.

For those of us who haven't got the patience, for those of us sticking our necks out for the betterment of our children's schooling, the last month has been doubly painful because of another fact of life: shares that offer high rewards usually have the least in the way of fundamentals. The shares we hold have "ideas" for assets, "placements" for cash flow, "hope" instead of sustainable earnings and chief executives with marketing, not management, qualifications. These are shares that rely on the very essence of what the market is now losing: confidence.

The most obvious sectors to rely on confidence are biotech and small resources/exploration. Where would the world be without long-term, patient, equity investment in biotechs and resource shares? Yet, with just a small correction in the market, they are decimated.

The worst performing shares in the All Ords since March 21 are Prana Biotechnology, Polartechnics, Giant Reefs Mining, Benitec, Pacifica, pSivida, Agenix and Fortescue Metals. All are down over 40 per cent in just a few weeks. Punished for not having the fundamentals this month. Punished for taking risks.

For those of us stuck in these confidence shares, there is good news and bad news. The good news? Confidence will return. The bad news? It'll take three times as long as it took to lose it. For those of us trying to gauge market confidence in the future, it's simple. Forget the brokers, the charts and the herd. When the market's up 55 per cent in 24 months, or your shares are down 40 per cent in a month, how confident are you? Trust that reaction. That's all you need.

Marcus Padley is a stockbroker and author of the daily sharemarket newsletter marcustoday.com.au


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## DTM (8 May 2005)

Marcus Padley sounds like a pump and dump stock broker.


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## Investor (9 May 2005)

A stockbroker who has asked readers to "forget the brokers".

Wonder what his clients think??? Then again, they might have decided to take his advice and forgotten him!


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## TjamesX (12 May 2005)

Not really a profit downgrade, as it is a full year result...

AVJ (AV Jennings) reported a 60% drop in full year profit today, the SP has not been hit as market was expecting it.

If anyone had doubts to the property market slowdown - well :goodnight

Have a look at the 5 year chart for AVJ share price.....

TJ


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## Investor (12 May 2005)

Rebel Sport Ltd (REB) today warned its net profit for the year ending July 2 would be in a range of $13.5 million to $15.5 million.

The company anticipates its group result will be at least 15 per cent below that achieved in the previous corresponding period.

I do not hold.


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## Investor (12 May 2005)

TjamesX said:
			
		

> ....AVJ (AV Jennings) reported a 60% drop in full year profit today, the SP has not been hit as market was expecting it.
> 
> TJ




This company almost collapsed during the last economic recession. From memory, it was bailed out by investors from Singapore.

I do not hold.


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## Investor (12 May 2005)

ALLIED BRANDS (ABQ) down 7c to 24c. The operator of the Baskin-Robbins and Saint Cinnamon franchise brands warned last night that earnings for the eight months to June would be 25 to 30 per cent lower than prospectus forecast.

I do not hold.


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## Investor (12 May 2005)

HUDSON TIMBER PRODUCTS (HTL) warned it is likely to report a loss of $5.4 million for the year.

I do not hold.


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## Investor (12 May 2005)

SDI has issued a big profit downgrade. 

ABN Amro has reduced target SP to $0.61 from $1.25.

In Dec. 2004, the target SP was $2.10 by ABN Amro.

I do not hold.


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## Smurf1976 (12 May 2005)

Investor said:
			
		

> AVJ AVJenning...This company almost collapsed during the last economic recession. From memory, it was bailed out by investors from Singapore.
> 
> I do not hold.



Does anyone have a long term chart of this stock covering the last recession? My broker only supplies past 10 years worth of data.


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## Investor (13 May 2005)

Emperor Mines' (EMP), which lost $5.8 million in the first half to December 31, today warned it expected to lose more than $18 million in the second half and incur a deficit for the full June 30 year of about $24 million.

I do not hold. If anyone here holds, this is now in the "flying with one wing and a prayer" classification.


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## Investor (13 May 2005)

RHD issued a profit downgrade today. 

I do not hold.


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## Investor (16 May 2005)

Cheviot Bridge Ltd (CVB) today announced a reduced profit forecast for 
the seven months to June 2005.

The year-end EBITDA is expected to be in the range of $1,050,000 
to $1,100,000 while net profit before litigation costs is expected to be 
within the range of $400,000 to $450,000 against a prospectus forecast 
of $984,000.

I do not hold.


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## Investor (16 May 2005)

May 16 (Bloomberg) -- Carter Holt Harvey Ltd., the biggest lumber maker in Australia and New Zealand, may miss its earnings forecast as a record-high New Zealand dollar and a drop in Australian construction erode earnings. 

Carter Holt, whose stock slid 24 percent the past year, posted a 19 percent decline in first-quarter profit.

I do not hold.


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## Investor (17 May 2005)

Just Group Ltd today warned earnings before interest, tax and amortisation (EBITA) for the year to July 31 would be in a range of $67 million to $73 million.

This compares with previous guidance of EBITA exceeding $80 million and the prospectus forecast of $73 million.

I do not hold.


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## Investor (17 May 2005)

Argus Solutions (ASV) is embarking on a restructuring program.

"The likelihood is that this year's revenues will be lower than previously advised."

I do not hold.


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## Investor (20 May 2005)

Cellnet Group Ltd. fell 19 cents, or 15 percent, to A$1.12. The mobile telephone wholesaler said yesterday full-year net income will fall to between A$7.3 million ($5.53 million) and A$7.5 million because of a ``general downturn'' in the retail sector. Last year Cellnet had net income of A$9.1 million.

I do not hold.


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## markrmau (23 May 2005)

VLL - the ink had hardly dried from the last profit downgrade


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## Investor (23 May 2005)

markrmau said:
			
		

> VLL - the ink had hardly dried from the last profit downgrade




Yes, the last episode was merely 9/5/05. Now 2 weeks later, here is what it has to say:

The Directors of Village Life Ltd (VLL) request a voluntary suspension of trading of VLL shares with immediate effect.

The Directors have become aware of information that leads them to believe that the financial forecasts announced to the market on 9 May 2005 for the year ending 30 June 2005 will not be achieved. The Directors believe that the voluntary suspension is necessary until they can provide clarity to the market
about the financial performance of the company for this period.

Background – arrangements with ING
On 9 May 2005, the Directors announced a revised forecast net profit after tax for the financial year ending 30 June 2005 of between $4.5 million and $4.7 million.

This was announced in conjunction with a significant transaction with ING Real Estate Investment Management Australia Pty Ltd (“ING”) and was based on a proposal to sell 10 new villages to the Village Life Trust (“VTR”), partly financed by a placement to ING of approximately 15% of the issued units in VTR. That placement was made last week. As foreshadowed in the 9 May 2005 announcement ING has requested VLL to convene a meeting to consider ING’s appointment as responsible entity of VTR.

Pending the unitholder meeting, VLL in its capacity as responsible entity of the Village Life Trust today appointed ING to provide management services to VTR, subject to approval from the Trust’s financiers.

The forecasts released by the Directors on 9 May 2005 included a contribution from the anticipated sale of 10 new villages to VTR. The Directors, in preparing the forecasts, assumed certain development and construction costs, and those assumptions were reviewed by a Quantity Surveyor.

The Directors subsequently received construction tenders for the development of a village at Sunshine Ave, Victoria, one of the properties that were to be sold to VTR. The construction costs included within that tender were substantially higher than those assumed by the Directors. As a result of these cost increases, the Directors have concluded this property is uneconomic to develop in accordance with the current development plan.

The Sunshine Ave property was designed to be a larger, two-storey village with the capacity for 182 units. A multi-storey development at Bribie Island, Queensland had previously been developed by a Village Life licensee developer at a much lower cost.

Multi-storey villages were also planned for two other properties proposed to be sold to VTR (Sydenham, Victoria, and Welcome Inn 2, Tasmania). 

Although construction tenders are yet to be received for those properties, it now appears likely that similar higher costs may eventuate. Therefore,
three of the proposed properties may not be able to be delivered to VTR under the current development plan.

The development plans for the villages at Sydenham, Sunshine Ave, and Welcome Inn 2 are currently being reviewed to ensure that they become viable projects for the company in FY06.

As a result, the revised net profit forecast of $4.5 million to $4.7 million for the financial year ending 30 June 2005 will not be achieved.


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## Investor (27 May 2005)

National footwear and apparel retailer and wholesaler COLORADO (CDO) group today announced that while it was not adjusting its year-end earnings guidance, a subdued start to the year meant it was unlikely to produce results in excess of forecasts.

Managing Director Mr Webb confirmed Q1 earnings were marginally below internal forecasts and sales were flat, reflecting difficult market conditions and a late start to winter.

"With Q1 representing less than 10% of the year's profit however, the earnings shortfall is not material and in itself does not justify any change to our full year earnings guidance," he told the company's annual meeting today.

"We still believe we are a good chance of achieving a 10% increase on last year's adjusted NPAT of $42.6 million.

"We accept however that the market conditions have changed which has made the task more difficult.

"We have already taken action against the changed conditions so we are prepared for the second half, particularly the all important Christmas quarter when the majority of our profit is made."

Mr Webb said the company remained focused in 2005 on implementing strategies to improve top line sales through organic growth and increased scale while maximising system benefits from its new retail merchandising system, RETEK, to lower operating costs.

"A significant increase in capital expenditure for stores of $8 million will see us open around 30 stores and refurbish up to 100 stores which should stimulate customer traffic particularly in the second half,” he said.

Mr Webb said that in line with expectations, the first half results would be affected by IFRS accounting policy changes, the change from retail to cost accounting for inventory, a prior year one off currency benefit, and some unusual one off costs including legal, due diligence and RETEK.

"We budgeted first half earnings to be down by around $4.5 million on the record $19 million prior half year result," he said.

"Given the difficult trading conditions we may fall a little short of that target although a lot still depends on the next two months' trading."


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## Investor (27 May 2005)

Hmmm ... no fast and furious selling of CDO following the expertly worded profit downgrade warning? 

Either the selling has already been done or most of the investors are retail investors.

I do not hold. 

Here is another downgrade today:

Following a review of unaudited management accounts to 30 April the Board has revised down the Supply Network Ltd (SNL) full-year profit forecast to between 5.0c and 5.5c a share.

This is below indications given at the  November AGM of a similar result to that of 2004 (6.2c).

I do not hold. 

And another one: 

Gregory Australia Ltd (GIL) today warned its anticipated loss for the year ending June 30 would be in the range of $1.5 to $1.75 million.

This follows one-off charges of about $2.8 million ($750,000 cash impact and $2.05m non-cash impact) due to a reorganisation of certain aspects of the company, in particular the Pluto business bought in April 2002, and a review of assets.

Chairman Mr Richard Sealy said all the key stakeholders of the company remained supportive and agreed with the decisions taken by directors.

Excluding the one-off costs, the company would have been trading in profit for this year.

"The reorganisation has removed significant recurring operating expenditure and highlights that the underlying profitability of Gregory Australia is intact," Mr Sealy said.

"This gives the directors confidence that the company will return to profitability in 2005/06 financial year with considerably improved performance as a result of the benefits gained, particularly from the reorganisation of Pluto."

Shares in Gregory fell 0.5c to 22.5c today. I do not hold.


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## Investor (30 May 2005)

Newcrest Mining Ltd (NCM) today warned profit for the 2005 and 2006 financial years would be affected by the late start and slower-than-anticipated ramp-up at its Telfer mine, which was reported in the company's March quarter report (released April 20).

In addition, volatility in the level of inventory of copper concentrate expected to be held at June 30, may also have an impact on the result.

The company says it will continue to take steps to minimise inventory levels at all sites but it currently estimates full-year net profit for 2005 will be in the range of $130 to $145 million.

This compares with the net profit of $122.9 million in 2004.

In the 2006 year Newcrest expects to produce between 1.7 and 1.8 million ounces of gold and between 110,000 and 120,000 tonnes of copper metal, compared with the forecast 2005 figures of almost 1.2 million ounces of gold and more than 90,000 tonnes of copper metal.

The new Telfer mine is expected to contribute more than 800,000 ounces of gold and 55,000 tonnes of copper in 2006.

The concentrator at Telfer continues to outperform in terms of tonnage treated and additional open-pit mining equipment will be mobilised to the Telfer mine to maintain the high tonnage rates.

In 2006, the Toguraci production is expected to be similar to 2005 but at Ridgeway the mine grade will fall, as previously flagged, to an average of 2.35g/t, resulting in lower production from that mine in 2006. Cracow production is expected to be as anticipated.

Higher cash costs, higher interest charges and expected lower copper prices will further offset the increased revenue from Telfer and hit the 2006 profit.

The company says its commitment to the conversion of resources to reserves is being maintained.

When appropriate work is completed, significant reserve increases are expected in 2005 and 2006 in both the Cadia East and Kencana projects.

Shares in Newcrest fell $1.39 to $13.46 this morning.

I do not hold.


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## GreatPig (30 May 2005)

NCM also released an update today on the fire and explosion in the Telfer mine. Price closed at $13.24.

GP


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## Aden_1 (30 May 2005)

Im scared of what will happen to my 2000 multiplex shares tomorrow. After their announcement today


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## Investor (30 May 2005)

The price will plunge.

What you need to decide is whether you exit and take the loss now or risk further losses down the track. 

As it is your money, you will need to make that decision yourself.


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## Investor (30 May 2005)

Sydney - Monday - May 30: (RWE Australian Business News) - 

Multiplex Group has revised its forecast aggregated group profit after 
tax and before stapling eliminations for FY2005 to $170 million.

This compares to previous guidance of $235 million, which 
specifically excluded the accounting impact of Multiplex's investment in 
Duelguide.

The forecast result has been affected substantially by the 
Wembley National Stadium project and the accounting impact of 
Multiplex's investment in Duelguide.

This can be reconciled with the earlier guidance as follows:
* Previous guidance $235m
* Accounting impact of Duelguide investment (after tax) ($18m)
* Additional Wembley writedown (after tax and indemnity) ($41m)
* Other ($6m)
* Leaving $170m.

Multiplex has made a pre-tax provision on its Wembley National 
Stadium project in the United Kingdom of 24 million pounds ($59
million pre-tax or $41 million after tax), from a previous break-even 
position.

As previously advised, Multiplex completed a detailed review of 
program and costs relating to Wembley National Stadium in February.

Following that review, Multiplex recognised a material increase 
in the expected cost to complete the project and subsequently wrote the 
project back to a break-even position.

At that time, the scheduled completion date was December 2005.

Multiplex has introduced various enhanced risk procedures since 
February, including a process whereby all of its major construction 
contracts (exceeding $100m contract value) are to be subjected to an 
additional internal review on a regular basis.

Most particularly, an internal peer review has been undertaken 
on the Wembley project.

This review has highlighted that the productivity levels that 
had been assumed previously are not currently being achieved.

The peer review has concluded that while Wembley is now expected 
to be completed by the end of March 2006, in time for the FA Cup Final 
to be played in May 2006, the costs associated with completion of this 
program are anticipated to have further increased which is expected to
result in a loss on the project.

Multiplex anticipates being able to commence a staged handover 
of the project to its client in January 2006.

Multiplex estimates the loss in relation to Wembley to be 45 
million pounds ($109 million) excluding the $50 million Roberts Family
indemnity, announced in February 2005.

As a result of the review, Multiplex is now recognising a 
pre-tax provision on the project of 24 million pounds ($59 million 
pre-tax or $41 million after tax) including allowance for receipt of the 
Roberts Family indemnity.

This position assumes no change in the level of claims 
recoveries previously advised.

Multiplex Chief Executive Officer and Managing Director, Mr 
Andrew Roberts, said: "The Wembley result is unacceptable and completely 
overshadows the strong results from all other parts of the business.

"Since February, we have implemented a range of measures to 
isolate and address problems at Wembley including a peer review that has 
just completed, the appointment of new senior management and new risk 
management procedures.

"However, this latest result is extremely disappointing and we 
acknowledge it will take some time to earn back investors' confidence.

"Despite the disappointing revision to our earnings forecasts, 
all other operating divisions within the company and Multiplex Property 
Trust continue to perform at or above expectations.

"We have completed a review of a significant number of major
projects and no material issues have been identified other than 
Wembley," he said.


I do not hold.


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## Investor (31 May 2005)

Sydney - Monday - May 31: (RWE Australian Business News) 

As previously advised to the market, Hamilton James & Bruce (HJB) has been 
going through a business rebuilding phase that is well under way.

Improving the quality and underlying business has coincided with a downturn in sales over the past 3 months. As a result of this downturn, it has been necessary to readjust the company's profit expectations for the half-year to 30 June.

While still expected to produce a profit, the result for the six months to 30 June will not match the result for the first half of the year as previously anticipated.

As a result, the full year profit is likely to be some 20% less 
than the 2003/4 full year profit.


I do not hold.


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## TjamesX (6 June 2005)

More property pain....



> One of the country's biggest property developers, Mirvac, is expecting the pain in Australia's housing market to extend well into next financial year and is tipped to this week unveil a hefty profit downgrade for 2005-06.
> 
> A Mirvac board meeting today is expected to discuss the tough times ahead, and later managing director Greg Paramor is expected to announce a 13 per cent profit downgrade to about $240 million for 2005-06, rising to about $280 million the following year.
> 
> ...




http://www.smh.com.au/news/Business/Mirvac-braces-for-more-pain/2005/06/05/1117910186724.html


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## TjamesX (7 June 2005)

More pain for retail....



> Clothing wholesaler and retailer OrotonGroup Limited (ORL) saw its share price drop approaching 25% in the first hour of trading today after the group dropped its full year earnings guidance and announced that it would not continue with its discussions on a potential privatisation of the group.
> 
> The group lowered its earnings before interest, tax and amortisation (EBITA) guidance, to between $8.5 and $9.5 million for the twelve months ending 31 July 2005, compared to a result of $14.5 million in the corresponding period last year.
> 
> The group said that the downgrade reflected the impact of what the group described as “relatively“difficult” trading conditions during the period, together with increased overhead costs and expenses associated with OrotonGroup’s restructuring program.




TJ


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## markrmau (7 June 2005)

MRL has just made an appalling announcement. (As I said previously, DJS is far better managed - they saw weaker conditions coming and rationalised their holdings while the going was good).


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## ghotib (7 June 2005)

markrmau said:
			
		

> MRL has just made an appalling announcement. (As I said previously, DJS is far better managed - they saw weaker conditions coming and rationalised their holdings while the going was good).



Hmmm... but is this appalling announcement a smart move to get all the losses into this year so the new management can have good results for its first full year in control?

I wish I knew the answer to that 

Ghoti


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## markrmau (7 June 2005)

...and djs is down almost as much as mrl. You could be right ghotib. The market is always right.


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## TjamesX (23 June 2005)

More retail pain....



> Brazin Limited (BRZ) shares dropped 13% this morning as the group advised that Earning Before Interest and Tax (EBIT) would be around $20.5 Million. This result follows some disappointing trading results for May and June 2005 (particularly post Mothers Day), mainly from the Footwear and Entertainment Divisions.


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## TjamesX (24 June 2005)

A summary of a sector feeling the pinch.... the big wheel turns and consumers are starting to tighten.



> June 24, 2005
> FRESH signs of the consumer-spending drought emerged yesterday as Brazin joined the long list of retailers struggling in an environment marked by sales offering shoppers 70 per cent discounts to get them through the door.
> 
> Brazin chief executive Greg Milne yesterday described trading conditions as "tough" as he conceded that the entertainment and underwear retailer had fallen victim to the slump in discretionary spending.
> ...


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