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Nicholas Grove is a Morningstar journalist.

Alesco posts 1H12 "shocker"

Alesco Corporation (ALS) recorded a 39.7 per cent fall in net profit for the first half of fiscal 2012 to $7.3 million, a result that one Morningstar analyst described as "a shocker". Revenue was down 5.1 per cent to $274.6 million due to a further deterioration of market conditions, particularly in the new housing and renovation markets, the company said. Earnings before interest and tax (EBIT) were down 40 per cent to $15.3 million, and this included a $4.7-million loss from the Parbury business. "Renovation activity seems to be going backwards at the same time that building activity is," the analyst said. "What this is all about is weakness in detached housing completions, to which Alesco is highly leveraged," he said.

Caterpillar result augurs well for Seven Group

A rise in fourth-quarter earnings from US equipment giant Caterpillar bodes well for Australia's Seven Group Holdings (SVW), a Morningstar analyst said. Seven Group Holdings' main operating business is Westrac, the sole authorised Caterpillar dealer for New South Wales, the Australian Capital Territory, Western Australia and north-eastern China. This week, Caterpillar announced a fourth-quarter profit of US$1.547 billion, up from US$968 million in the fourth quarter of 2010. Profit of US$2.32 a share was up 58 per cent on the US$1.47 a share recorded in the fourth quarter of 2010. "That's obviously very good for Seven Group Holdings," the analyst said.

Cabcharge gets green light for small acquisition

The Australian Competition and Consumer Commission (ACCC) said it will not oppose Cabcharge Australia's (CAB) acquisition of Yellow Cabs Adelaide. Yellow Cabs Adelaide operates a taxi network that provides services to 250 cabs. "It's a small network," a Morningstar analyst said. Cabcharge and Yellow Cabs Adelaide will work together to complete the transaction in coming weeks, Cabcharge said in a statement. The transaction will be fully funded internally using existing resources, it said. Cabcharge also said it will ensure that business continues as usual for the drivers and passengers of Yellow Cabs in Adelaide.

US new home sales fall 2.2pc in December

New home sales in the US unexpectedly fell 2.2 per cent in December from the previous month, according to Morningstar US. The median price of a new home dropped to US$210,300, off nearly 13 per cent from the year-ago period. "Clearly, any recovery in the US housing market is yet to filter through to the new homes market, which is where the recovery needs to be for there to be any foundation," a Morningstar analyst said. Also in the US, the Federal Open Market Committee earlier this week indicated that interest rates would remain low for an extended period, providing a boost to the Australian dollar.