FNArena’s Weekly Insights – August 16 2021

In this week’s Weekly Insights

-August: It’s A Joke
-September Index Reviews
-Conviction Calls

By Rudi Filapek-Vandyck, Editor FNArena

August: It’s A Joke

Corporate reporting season in Australia; in most investors’ mind that is February and August, every year.

In practice, however, the bulk of companies tends to release its market update in the second half of each month, so we might as well call it the second-half-of-August reporting season.

I am not even exaggerating, not by the slightest. When the team at FNArena started updating the Corporate Results Monitor, some eight years ago now, we had to account for a lopsided schedule from day one, but -for reasons unknown- things have only grown even more lopsided since.

From memory, eight years ago we’d end up with some 100 companies having reported by mid-month, which meant there were a further 150-plus left for the closing two weeks of the season. The numbers have since gradually moved slimmer and slimmer for the first two weeks, and thus larger and larger for the second half. Also because the stockbrokers we monitor have broadened their coverage over time.

Four years ago, we’d have 80-plus companies in the Monitor by mid-month. Last year that number had shrunk to a little over 50. This time around we ended up with 44. At this pace -dropping -50% in four years- we might as well shorten the whole season to two weeks only from next year onwards. Nobody’s going to notice the difference!

Post-2018, my suspicion had been this shift to reporting later in the season was due to more and more local companies having to report bad news for shareholders. If it wasn’t a big miss on forecasts, it’d probably involve a capital raising, or a dividend reduction, or a large write-down (non-cash, thus not-so-bad).

But if this were the case over the past three years, businesses clearly do not feel optimistic or confident enough to pull forward the timing for their financial results release. See the numbers this year. Or maybe this is simply a case of: it’ll never revert back to a more spread-out scheduling worthy of its common label.

Once we’ve created a new habit, maybe there is no turning back from it.

Is two weeks long enough to talk about a results “season”?

What this lopsided scheduling does prevent is the ability to draw in-depth, far-reaching conclusions at the half-way point. By early September we expect to have covered off on circa 350 companies. So far, we have hardly scratched the surface in terms of numbers.

Hence, it’s getting busy from here onwards. I do not precisely know what the coming two weeks might bring, nor what the exact impact will be on writing Weekly Insights on the coming two Mondays.

I’ll do my best.

Meanwhile, I happily refer to my previews and early observations from the past two weeks:

-August Bonanza, But What’s Next?

Click to read the Full Report