Johannes Faul: The results beat consensus expectations by about 4.5 per cent which, was a positive takeaway. However, drilling down into the individual divisions, there were some misses and some beats that the divisions that have done really well over the past few halves have continued to outperform and that includes Kmart and particularly, Bunnings Australia and New Zealand. Also, the industrials division has done quite well.
Unfortunately, in our view, Coles has done less well, growing at 2.2 per cent versus our expectation for the year of 2.6 per cent and we actually saw the market overall growing in Australia by 2.9 per cent which implies that Coles lost market share to the other players. That basically underpins or strengthens our thesis that we published a few months ago on the Australian supermarket business where we see the incumbent supermarkets losing share but also seeing EBIT margins tightening and that's also another factor that we've seen at Coles today that EBIT margins are actually declining.
Bunnings has done better than what we thought in Australia and New Zealand. In the UK, Bunning is in still very early days. They haven't had the business for yet a year and only one pilot Bunnings store has been opened so far.
Another surprise in our view was Officeworks is on the chopping block and that adds another business to be sold including resources. So, what that means in our view is, intentionally or not, the conglomerate is being streamlined or dis-diversified with the potential sale of Officeworks and also the Coles assets and basically, they will focus management's attention to core businesses, which in our view, are really supermarkets and Bunnings followed by Kmart. So, for us, that will be a positive if those two businesses were sold.
Mathew Hodge: It was pretty much as expected. I mean, the company releases its quarterly production and cost numbers. So, there's no huge amount of play between that. So, it was largely as expected. They paid a final last year, but they've decided to pay an interim for the first time in quite a while. They had more ability to pay dividends; it's good that they are paying a dividend. So, that was a bit of a positive, but you don't exactly buy these stocks for the dividend. The yield is probably only going to be about 1 per cent. So, it's really just to play on the gold price. But if they've got extra cash, then they should return it to shareholders. I think it's a reasonable thing.
Chris Kallos: The CSL result was very strong. We knew that given the profit upgrade a couple of weeks ago, that we would have a good number on the immunoglobulin side, which has benefited from supply constraints of competitors in the US and also some new indications in Europe which are panning out very well. The real surprise in the result was how good the Seqirus division is doing. This you might remember is the division formed last year through the amalgamation of the Novartis flu vaccine assets. It is a loss-making division at the moment, but we think they are well on track to break even by 2018 and well on track to meet our target of $1-billion contribution by 2021. As we know, CSL is the largest stock in the index in the healthcare sector. But we particularly like the fact that they are well ahead of the competition in terms of supply. They have the most number of collection sites in the US and that provides great certainty on the supply side for the plasma-derived product business.
Brian Han: Telstra's first-half results fell slightly below our expectations. The competitive intensity in the market and the impact of the NBN and their effect on Telstra did catch us a little by surprise. That led to earnings declines across all of Telstra's core business units and the overall earnings only held up because of increasing payments from the NBN. Stepping back from the results, we are not too concerned about a six-month result. After all, the company did reaffirm full-year earnings guidance. Dividend payments are secure and Telstra is winning more than its fair share of customers in the various categories of the telecom market, including mobile, broadband and the NBN. Therefore, we thought yesterday's result, and the negative reaction to the result, was a bit harsh and we are still very positive on Telstra.