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PRESS DIGEST-Australian Business News - June 4

Source: Reuters - Mon, 3 Jun 2013 20:52 GMT
Author: Reuters
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Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.

THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)

Hearing implant specialist Cochlear downgraded its forecast for full-year net profit to between A$130 million and A$135 million, well below the consensus estimate of A$155 million. Sales and market growth were down as customers delayed purchases due to the imminent release of new technology. Cochlear's market share has declined to 62 percent of the global cochlear implant market, but over the next year should remain steady, said Nomura analyst David Stanton. Page 15.

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Merger talks between superannuation funds Visions Super and VicSuper have been terminated as different investment strategies could not be reconciled. Although the funds shared a cultural alignment based on membership drawn from state and local government employees, the passive computer-based strategy of VicSuper could not be aligned with the active manager methods of Vision Super, said Vision Super acting chief executive Peter Rowe. Page 15.

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Rio Tinto appears positioned to divest its US$2 billion diamond division and then its US$3 billion Pacific Aluminium component. Market conditions will determine the timing of the diamond float, which could be done in stages starting in the second half of this year, and Rio may sell mines individually if appealing offers are received. Page 17.

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Cricket Australia's five year broadcast rights for international cricket have been acquired by Nine Entertainment Co for A$450 million. Nine has also secured a new affiliation deal with WIN Television, but will purchase WIN Adelaide for about A$140 million. Ten Network has outlaid A$100 million to secure the rights for the Big Bash competition. Page 17.

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Australian regulators considering a new framework for systemically important banks will consider a proposal released by the Bank of International Settlements which recommends faltering banks considered "too big to fail" be wound up over a weekend with assets sold, so losses are taken by shareholders and creditors rather than taxpayers. The proposed mechanism would rely on a hierarchy of claims in such an event and would protect the safety of insured deposits. Page 19.

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The Australian Securities Exchange (ASX) has received approval from Australia's largest investment banks to extend a compensation fund to cover over-the-counter (OTC) derivatives, taking the exchange a step closer to entering the lucrative OTC clearing market. Last financial year, Australian dollar-denominated OTC derivative trading reached about A$18 trillion. Final regulatory approval is the last hurdle the ASX needs to clear for the OTC clearing market. Page 19.

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THE AUSTRALIAN (www.theaustralian.com.au)

Royal Dutch Shell has booked an additional A$203 million writedown, following the A$638 million writedown last year, for its troubled Geelong refinery in Victoria it proposes to close or sell. Shell said it did not expect the writedown to affect the potential sale value of the refinery, and plans to convert the site to an import terminal if it does not sell. Page 17.

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Global ratings agency Moody's Investors Service has placed A$30 billion worth of subordinated debt issued by Australian banks under review for downgrade as government attitudes shift against full bailouts on faltering banks. Moody's said the review followed changes to its "probability of support" measure following losses suffered in recent years by creditors conventionally deemed safe. Page 17.

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April coal shipments increased 5 percent, from 26.24 million tonnes in March to 27.55 million tonnes as mining regions recovered from inclement weather earlier this year. April volumes were 15 percent lower than December's, but shipments were 6.9 percent higher compared to the same month last year. Page 18.

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Commodities giant Glencore Xstrata, private equity firm Blackstone, and Indian companies Vedanta and Hindalco are investigating the purchase of Rio Tinto's 59 percent holding in Iron Ore of Canada, according to The Wall Street Journal. Rio currently values its stake at US$1.7 billion with analysts predicting a sale could bring Rio twice that amount. Page 19.

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SCALe is a new angel funding organisation created to provide high-net-worth Australian women opportunities to invest in female-led businesses. The chair is Susan Oliver, a former director at Programmed Group, Transurban and Just Group, with directors including Carol Schwartz, who also is a director at Stockland, and Annette Kimmitt, Melbourne managing partner of Ernst & Young. Laura McKenzie, formerly of Starfish Ventures, will run SCALe which has backing from United States angel funder Golden Seeds. Page 19.

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Engineering, construction and maintenance company Forge Group is adding to its geographic diversity with the purchase of United States coal industry maintenance and management specialist Taggart Global. Forge's initial outlay will be US$43 million with up to a further US$25 million, depending on Taggart's future performance. Forge is currently focused on projects in Australia and Africa. Page 19.

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THE SYDNEY MORNING HERALD (www.smh.com.au)

The Reserve Bank of Australia is expected to keep interest rates on hold at 2.75 percent when it meets today despite signs of a softening labour market. Data released yesterday by the Australian Bureau of Statistics shows wages have increased at their slowest rate since 2009, rising by just 0.7 percent for the first quarter of 2013, following the same increase in the December quarter. Page 23.

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The activities of high-frequency traders (HFT) on Australian share-markets cause losses to superannuation funds and long-term investors of up to A$1.9 billion a year, according to a report from Industry Super Network (ISN) to be released today. Reforms to the structure of the equity market are required, said Zachary May, director of policy at ISN. HFT activity caused no significant problems, concluded a taskforce established by the Australian Securities and Investments Commission to investigate the issue. Page 23.

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Transpacific Industries predicts the sale or closure of underperforming operations due to a "difficult trading environment". The waste management company's projected earnings before interest, tax depreciation and amortisation would fall to between A$405 million and A$415 million, from A$440.2 million last year. It forecast a net profit of between A$46 million and A$53 million for this financial year. Page 24.

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The latest CBRE global office report shows mixed results for the first quarter, sales robust but rent flat. Medium to large towers in Australia received A$3.64 billion invested by private and super funds with the office sector receiving A$2 billion of investment during this period. However rents were stable and are predicted to remain level throughout the year. Page 24.

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THE AGE (www.theage.com.au)

Pressure is increasing on Westpac Banking Corporation to cut its mortgage rates as National Australia Bank and Australia and New Zealand Banking Group seek to expand their share of the A$1.3 trillion mortgage market. Westpac, which has the highest standard variable rate among the big four, has steadily been losing market share and may need to cut rates to increase growth. Page 23.

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The Australian Securities and Investments Commission is reviewing documents that suggest 51,584 shares in Hancock Prospecting were removed from a Rinehart family trust on April 26, 2012. The shares changed hands during a sensitive 10-day period during mining magnate Gina Rinehart's court battle with her children over access to family trusts. Page 24.

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Insurance comparison website iSelect is diversifying its revenue sources ahead of its listing on the Australian Securities Exchange later this month. Around 80 percent of current revenue it produced from online comparisons between health insurance products, but iSelect is seeking to expand into comparisons between products which impact household budgets on a recurring basis, such as utilities and broadband providers. Page 24.

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