* Record A$38 bln dividends declared in FY21 reporting
* Companies shy about outlook due to pandemic uncertainty
* Sell-side analysts lower FY22 earnings and dividend
SYDNEY, Sept 3 (Reuters) - An Australian earnings season
bonanza for shareholders has masked a more uncertain outlook for
the corporate sector as the Delta COVID variant threatens to tip
an economy that was surging only months ago back into its second
recession in as many years.
Australian-listed companies delivered a record A$38 billion
($28 billion) in promised dividends to investors in the season
that ended this week, driven by banks and mining companies.
However, when it came to the corporate outlook, companies
had much less cheer to offer.
"Companies really pulled back on giving outlook statements
given the uncertainties," said Brad Potter, the head of
Australian Equities at Tyndall Asset Management.
"I think the resilience of the economy has been amazing but
given the situation that we're in, I don't think anyone is
Earnings reported by Australia's top 200 companies in August
for the 2021 year came in slightly above expectations, Eikon
data shows, even as COVID-19 threw most of the country into
However, with the Delta variant and declines in commodity
prices from record highs threatening to tip the economy into a
recession, buy-side analysts and investors have downgraded
earnings and dividend forecasts.
Following a whopping 37% increase in aggregate reported
earnings by the 156 companies covered by Citigroup in fiscal
2021, the broker cut its forecast for fiscal 2022 by 2.9% to
That included a cut of about 5% for the banking sector, due
to soft core earnings prospects and about 4% for mining
companies, driven by sharp falls in iron ore prices.
Dividend consensus expectations for the year also fell by
about 3.1%, according to JPMorgan.
"It does seem that the upward revision momentum in the near
term has slowed down," Credit Suisse portfolio manager Mike
That would still leave a very robust expectation of 16%
growth in earnings by Citi this fiscal year, as vaccination
rates amongst 25 million Australians increase, and pent-up
demand drives an earnings rebound in the second half,
particularly in the financials, materials and consumer
By comparison, Reuters data showed profits at U.S. firms are
estimated to decline 7.2% in the third quarter, after rising
12.4% in the second quarter.
On a calendar year basis, global earnings are expected to
grow 8% in 2022, after a 46% jump in 2021, according to Credit
In Australia, over A$18 billion worth of share buybacks have
been announced on top of the 80% jump in dividends declared
during the reporting season, while record M&A is expected to
deliver an extra windfall.
"There's a whole lot of cash that is going to be hitting
investor's bank accounts over the next few months from those
dividends," said Hugh Dive, Atlas Funds Management Chief
"Looking ahead is a bit uncertain, even for the companies
that have done very well and are tracking very strong numbers,
it's going to be difficult for them to keep going."
Diagnostics firm Sonic Healthcare, whose profit
more than doubled to A$1.3 billion, declined to provide earnings
guidance saying the pandemic had the "potential to cause
fluctuations in both COVID-19 testing revenues and the base
Others withholding explicit earnings guidance included
hospital owner Ramsay Healthcare, retailer Coles Group
and waste management firm Cleanaway Waste Management
($1 = 1.3541 Australian dollars)
(Reporting by Paulina Duran in Sydney; Additional reporting by
Gaurav Dogra; Editing by Sam Holmes)