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Results wrap: QBE, Downer EDI, Invocare, OZ Minerals

Lex Hall  |  16 Aug 2018Text size  Decrease  Increase  |  
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QBE lifts half-year net profit by 4pc

QBE Insurance Group (ASX: QBE) has lifted first-half net profit by four per cent to $358 million, helped by higher average premiums across its operations and a more streamlined business structure.

The insurance giant said its group-wide premium rate rose 4.6 per cent in the six months to June 30, while gross written premiums were up 1 per cent to $7.9 billion.

The company has declared a partially-franked interim dividend of 22 cents a share, unchanged from a year earlier.

Morningstar analyst David Ellis last month stripped QBE of its moat rating, citing a fall in its competitive advantage in underwriting.

However, the company remains undervalued in Morningstar's eyes. It has a fair value estimate of $12, below its current trading share price of $10.66.

"Despite our concerns around QBE Insurance's competitive position, our longer-term investment thesis is broadly positive," Ellis says.

"The substantial loss reported for 2017 disappointed as global insurance catastrophe costs skyrocketed, but we expect a long-awaited earnings recovery in 2018 underpinned by improving insurance margins and productivity, rising insurance premiums, strong cash flow, and lower gearing."

Downer EDI in 60pc profit fall

Mining services company Downer EDI (ASX: DOW) has posted a 61 per cent fall in net annual profit.

Net profit fell from $181.5 million to $71.4 million because of previously announced write-downs of its mining business, a loss on the sale of its freight rail business, and costs associated with its takeover of services group Spotless.

Underlying net profit after tax and before amortisation of acquired intangible assets in the year ended June 30 totalled $296.5 million, slightly up on the $295 million Downer had forecast.

Downer will pay a final dividend of 14c per share, up from the 12c-year-earlier payout.

In June, Morningstar analyst Mark Taylor increased the fair value estimate for no-moat Downer by 8 per cent to $5.40 from $5, but the shares remain overvalued, he says, and are currently trading at $7.51.

Invocare share price plunges 7pc on profit fall

Funeral services provider Invocare's net profit after tax attributable to equity holders has fallen 50 per cent to $20.8 million.

Shares have fallen almost 6 per cent on the news this morning to $13.56.

InvoCare said the results were in line with the May guidance and reflected the anticipated impact of the increasing number of locations being renovated under its $200m "Protect & Grow" plan, as well as soft market conditions.

invocare funeral article results article

Invocare attributes to fall in profit to softer market conditions

The company has also announced it will acquire New Zealand’s William Morrison funeral firm.

Morningstar last month increased its fair value estimate for Invocare by $1.50 to $17 per share, after taking a more bullish view on the company's future market share, and to reflect the increasingly valuable prepaid funeral business.

Invocare reported net profit for the June half had fallen from $41.7 million a year ago to $20.9 million.

Operating revenue rose 0.4 per cent to $225.7 million; operating EBITDA fell 0.3 per cent to $53.7 million.

The company will pay an interim dividend of 17.5 cents a share, which is down 1 cent on the previous year.

OZ Minerals in 60pc profit boost

OZ Minerals (ASX: OZL) has posted a 59 per cent rise in half-year net profit as it benefited from a higher copper price and lower average production costs.

OZ Minerals reported a net profit of $127.8 million for the six months through June, up from $80.6m a year ago.

The company will pay an interim dividend of 8 cents per share, up from 6 cents a year earlier.

Oz Minerals is up about 2 per cent in trading this morning at $9.14. Morningstar last month raised its fair value estimate for the company from $8 to $8.30.

 

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Morningstar with AAP

Lex Hall is a Morningstar content editor, based in Sydney.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is content editor for Morningstar Australia

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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