《AFN Daily Business Update》NAB：Rate cut won’t stimulate economy

1

NAB cuts dividend after $2.95b H1 profit

National Australia Bank has slashed its dividend to its lowest in almost nine years after posting a first-half cash profit of $2.95 billion.

Profit for the six months to March 31 was up 7.1 per cent on a year earlier, but the increase was largely because the $325 million hit to cash earnings from customer remediation was smaller than the $530 million from restructuring costs in the prior corresponding period.

The lender cut its interim dividend 16 per cent to 83 cents after deciding the 99 cents paid in each of the previous 10 reporting periods had become unsustainable.

NAB had paid shareholders a 99 cent dividend every half year since May 2014, and hadn’t paid as little since the 78 cents that came with the 2010 full-year results.

2

Woolworths lifts Q3 food sales by 4.2%

Supermarket giant Woolworths has lifted third-quarter grocery sales by 4.2 per cent, reaping the benefits of lower deflation and more favourable weather conditions.

Comparable grocery sales for the 13 weeks to March 31 rose 4.2 per cent to $10.0 billion after adjusting for the timing of Easter, and total group sales from continuing operations lifted 5.1 per cent to $14.90 billion.

The grocery sales growth was an improvement on the first half’s 2.3 per cent, while major rival Coles this week reported 2.2 per cent comparable supermarket sales growth for the third quarter.

Easter-adjusted comparable sales at Woolworths’ Endeavour Drinks segment increased by 5.9 per cent for the quarter with positive comparable growth from BWS and Dan Murphy’s assisted by the timing of New Year’s Eve and weather.

3

Wesfarmers makes play for Kidman Resources

Wesfarmers has made a bid for another lithium miner with a $776 million proposal for Kidman Resources.

The Bunnings hardware owner says the Kidman board has backed its offer of $1.90 cash per share, which represents a premium of 47.3 per cent to the price before the start of trade on Thursday.

Wesfarmers managing director Rob Scott said the planned acquisition of Kidman – which comes after a $1.5 billion offer for rare earths miner Lynas Corp – would be an attractive investment that will benefit from the global uptake of electric cars.

Kidman has a 50 per cent stake in the Mt Holland lithium project – which includes a mine, a concentrator and a refinery – that is expected to start production in 2022 in Western Australia.

4

Rate cut won’t stimulate economy: NAB CEO

NAB chief executive Philip Chronican says a Reserve Bank rate cut next week would be unlikely to have much impact on the Australian economy.

The chances of a cash rate cut from the RBA’s long-standing record low increased after inflation slowed to zero in the first quarter, but Mr Chronican doesn’t believe a move by the central bank would do much to the overall picture.

Mr Chronican says that with the rate having sat at 1.5 per cent since August 2016, the impact on consumption of the 0.25 percentage point cut many expect on Tuesday would be negligible.

“When interest rates are at absolutely very low levels, the effect of further changes in interest rates are relatively muted,” Mr Chronican said on Thursday.

“So I don’t expect, whether there is or isn’t an interest rate change in the next little while, that it will have much effect and I don’t think the last two or three changes had much effect either.”

5

AMP names new CFO ahead of AGM in Sydney

AMP has announced the appointment of a new chief financial officer, John Patrick Moorhead, ahead of the wealth manager’s annual general meeting in Sydney.

The current CFO and chief operating officer of AMP Capital will replace Gordon Lefevre from June 1, the company said in an announcement on Thursday.

“I’m delighted that JP will join our new leadership team … as we change and reinvent AMP, he will bring the valuable international experience of leading finance,” AMP chief executive Francesco De Ferrari said.

Mr Lefevre will retire after more than five years as group CFO, including a “challenging” 18 months in which the company was hauled over the coals at the financial services royal commission.

The 170-year-old company also faces the possibility of a second strike on executive pay at Thursday’s AGM, which would trigger a vote on a board spill.

6

Aluminium, lead hit lowest in over 2 years

Aluminium and lead prices slid to their lowest in more than two years overnight as computer-driven funds sold after an options expiry amid concerns about demand in top metals consumer China.

Traders said there was no specific news that triggered a sharp reversal in the market around midday in Europe after most metals prices had been slightly firmer in the morning.

“The market was spooked and we’ve seen quite a few stops hit in zinc and copper. It was more technical selling than anything in a thin market since most of the Chinese are out today,” said a trader at a major broker.

Many markets were closed for the May 1 holiday, including China.

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