Market opens lower after Wall St falls

THE Australian stock market looks set to open lower after a negative finish on Wall Street and slumping commodities prices.

At 0709 AEST today, the June share price index futures contract was 33 points lower at 4,969 points, with 4,420 contracts traded.

In New York yesterday, the Dow Jones Industrial Average fell 0.94 per cent to 14,618.59 points, while the broad-based S&P500 slid 1.43 per cent to 1,552.01.

Meanwhile, the tech-heavy Nasdaq Composite Index ended down 1.84 per cent at 3,204.67.

Futures contract prices for key commodities such as oil, gold and copper all settled lower in offshore trading.

In economics news on Thursday, the NAB business survey for the March quarter will be released.

Also, the Australian government will auction $1 billion of Treasury Notes.

In companies news, quarterly production reports from Fortescue Metals Group, Woodside Petroleum and Iluka are due for release.

Bank of Queensland and Australian Pharmaceutical Industries publish their interim results, while Wesfarmers will release third quarter retail sales figures.

Today, the benchmark S&P/ASX200 index rose 1.09 per cent to 5004.6 points, while the broader All Ordinaries finished 1.00 per cent higher at 4,993.6 points.

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Virgin's profit falls by 56pc

Sir Rirchard Branson joins crew at the Virgin Australia launch. Picture: AFP Source: AFP

VIRGIN Australia's first half profit has slumped by 56 per cent but it expects to improve its underlying performance despite challenging economic conditions.

The airline made a net profit of $23 million in the six months to December 31, down from $51.8 million in the previous corresponding period.

The difference was mainly the result of Qantas' industrial dispute in the previous corresponding period, which benefited Virgin.

Virgin today also said the carbon tax had a $24.4 million impact on its profit in the six months to December.

The company's underlying profit before tax was $61 million in the six months to December, down from $96.1 million in the previous corresponding period.

Virgin maintained its forecast of a full year underlying profit before tax being higher than the previous year's $82.5 million.

No dividend will be paid to shareholders.

Virgin said revenue rose five per cent to $2.11 billion, with the airline group carrying more than 10 million passengers in a half for the first time.

The airline said yields - an industry measure of average airfares per passenger - fell one per cent in the half, which chief executive John Borghetti said "reflected the aggressive capacity and pricing environment".

Industry figures showed that the 10.8 per cent increase in domestic capacity in the first half was the highest increase in the local market in eight years, he said.

"The group has delivered a solid result in a difficult operating and economic environment, reflecting the significant progress we have made in diversifying our revenue base and improving cost control, while continuing to enhance the customer experience," he said.

Mr Borghetti said the airline found $25 million in "efficiency gains" in the first half, and was on track to deliver $60 million in savings by the end of 2012/13.

Virgin forecast 2012/13 second half domestic capacity growth would be between five and seven per cent up on the prior corresponding period. Qantas gave the same forecast at its half year results on February 21.

Virgin said it would offer twice daily flights from Brisbane to Perth using wide-bodied Airbus A330 aircraft from May. It also would begin flights on "current monopoly routes" Brisbane to Moranbah and Bundaberg, Virgin said.

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Crown profit falls to $181m

James Packer is planning to make blockbuster movies. Picture: Kym Smith Source: Supplied

JAMES Packer's casino operator Crown has posted a 34 per cent drop in first half profit, as weak consumer sentiment and refurbishment work affected its business.

Crown made a net profit of $180.8 million in the six months to December 31, down from $274.4 million in the previous corresponding period.

The result included a $74.3 million loss on Crown's investment in Sydney and Queensland casino operator Echo Entertainment.

Crown operates casinos in Perth and Melbourne, and holds an interest in Melco Crown in Macau.

Chief executive Rowen Craigie said the result for the first half of the 2012/13 financial year was reasonable.

"Revenue growth reflects the benefits of recent property refurbishments, particularly the expansion of the main gaming floor in Perth," he said today. "However, both properties were also impacted by disruption to patron activity arising from the capital works program and weak consumer sentiment, especially in Melbourne."

"Cost control continues to be a focus at both properties."

Crown said its result was also negatively impacted by its lower win rate in VIP play.

That came in Melbourne, where earnings were down nine per cent from the same period in the previous year to $271.6 million.

Perth's earnings rose by 2.5 per cent to $144.6 million.

Main floor gaming in Perth and Melbourne generated revenue growth of 5.9 per cent, compared to the previous corresponding period.

The company offered no specific update on its trading performance for the first weeks of the second half of the financial year, as the different timing of the Chinese New Year celebration in 2013 made it difficult to compared to the previous year.

"Trading at Crown Perth continues to benefit from the expansion of the main gaming floor while Crown Melbourne continues to be affected by refurbishment disruption," it said.

Crown declared an interim dividend of 18 cents, franked to 50 per cent.

No new details were provided on the company's plans for a hotel and casino in Sydney, for which government approval is still needed.

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Seven West falls to $109m loss

SEVEN West Media has posted a loss of $109.3 million for the first half of the financial year because of restructure costs and the lower value of its magazines.

Seven West, the owner of the Seven Network and West Australian newspaper group, took charges of more than $255 million in the six months to December 31 relating to redundancies and writedowns on its magazines and investment in Yahoo!7.
The loss compares to a $163 million net profit in the previous corresponding period.

Earnings before significant items, net finance costs and tax (EBIT) in the six months to December was $259.3 million, above its previous guidance of $250 million.

"Good progress is being made on driving greater efficiencies across our business to manage our costs," chief executive Don Voelte said in a statement on Wednesday.

"These initiatives will assist in our performance in the second half of 2012/13 and in 2013/14."

The writedowns consisted of a $195.2 million impairment charge on the carrying value of its magazine mastheads, licences and goodwill, and a $60.2 million charge on its investment in Yahoo!7, the company said.

Redundancy and restructuring costs totalled $5.3 million.

Seven West owns The West Australian Newspaper, the Seven free-to-air television network, magazine publisher
Pacific Magazines and is a joint-venture partner on the Yahoo!7 website.

Revenue across group fell 3.4 per cent to $977.9 million, Seven West said.

Its television stations posted revenue of $666.1 million in the first half, up 1.6 per cent compared with the prior corresponding period.

"Seven continues to lead the market in television advertising revenue share, building share in a tough advertising market," the company said.

Seven West said it expected television advertising to experience flat to single-digit growth.

By contrast, Seven's newspaper unit suffered a 14.9 per cent fall in revenue and magazines reported a 10.9 per cent slide in sales.

The company declared an interim dividend of six cents per share, fully-franked.

Seven West said net debt at December 29, 2012, stood at $1.26 billion, compared with $1.85 billion at June 30, 2012.

The company conducted a $440 million capital raising to pay down debt and used $160 million of net operational cash flows to pay down debt during the half.

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Arrium falls further into the red

STEEL and mining group Arrium has flagged further job losses after its writedowns of its struggling steel division pushed it further into the red.

The company blamed a high Australian dollar, low steel prices and weak construction markets for the massive $474 million impairment on its assets, which was announced to the market earlier in February.

Arrium made a net loss of $447.2 million in the six months to December 31, down from a $70.7 million loss in the previous corresponding period. Arrium shares were 2.5 cents, or 1.98 per cent, weaker at $1.235 at 12.20pm AEDT.

"If you look back, we have had significant transformation of our steel manufacturing and distribution businesses and taken out a little bit over 2000 people out of those businesses from where we were at three-four years ago," chief executive Geoff Plummer said in a teleconference.

"The nature of those businesses is such that we have to keep making them sharper and more cost efficient and there has got to be continuing improvement in those businesses in terms of cost base and operating performance.

"Unfortunately labour reductions will continue."

Mr Plummer did not say how many jobs would be shed. The steel manufacturing segment posted a $27 million loss at the earnings before interest and tax level on revenue of $1.157 billion. It employees 3,006 people.

"For the OneSteel steel businesses, we expect continuation of the difficult external environment, including a high Australian dollar and generally weak domestic demand," the company said.

Arrium's underlying profit in the six months to December was $51 million, down from $77 million in the previous corresponding period. Lower iron ore prices in Arrium's mining business was the main factor in the lower underlying profit, the company said today.

No specific guidance was given for the full year, but Arrium said it expected the majority of its full year net profit to be made in the second half as iron ore prices improve.

Lower iron ore prices had a $75 million to $85 million impact on net profit in the mining business, compared to the previous corresponding period, Mr Plummer said.

"While further volatility is possible, we anticipate iron ore prices for the balance of this financial year to continue to be above the average level for the first half," the company said.

The star performer was its rapidly growing mining consumable business, which supplies equipment to resource companies. It posted earnings growth in the six months to December, as it grew in Australia as well as in North and South America. An unfranked interim dividend of two cents per share will be paid to shareholders.

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