Santos Profits Soar On Higher LNG Prices While CSL Profits Fall As Weak Plasma Pickups Bite; The ASX is progressing

Australian stocks started the day slightly higher ahead of the release of the quarterly Wage Price Index.

In the year ending March, payrolls increased by 2.4%, well below inflation, which is now 6.1% for the year, meaning that real wages are falling.

The ASX 200 was up 9 points or 0.1% at 7,115 at 10:16 a.m. AEST.

At the same time, the Australian dollar was stable at 70.19 US cents.

The basic materials and consumer sectors led the gains, up 1.1% each.

Super Retail jumped 7.2% and Brambles firmed 4.1% in early trade.

On the other hand, Lake Resources plunged 10.1% and Magellan lost 7.7% after reporting a 3% drop in adjusted net profit.

Santos earnings supported by higher LNG prices

A Santos gas pipeline in New South Wales.(ABC News: Chris Gillette)

Santos quadrupled its underlying profit in the first half, taking advantage of soaring liquefied natural gas (LNG) prices after Russia invaded Ukraine.

The country’s second-largest independent gas producer said underlying profit was $1.27 billion for the six months ended June 30, up from $317 million a year earlier.

The company declared an interim dividend of 7.6 cents per share, up from 5.5 cents per share a year earlier.

However, its shares fell 1.6% to $6.98.

On Wednesday, Santos also said it would continue with its $2.6 billion oil project in Alaska.

He said he would pay $1.3 billion to develop his Pikka joint venture in Alaska, anticipating an internal rate of return of 19% at an oil price of $60 a barrel.

CSL’s annual profit plummets

A bright red CSL logo on a metal sign.
CSL is the fourth publicly traded company in Australia.(ABC News: Patrick Rocca)

Biomedical giant CSL reported a 6% drop in full-year profit as sales of core plasma therapies were hit following subdued collection of plasma, the key ingredient in its treatments, in the first half.

The company’s blood plasma collection business, its biggest source of profit, has been hit since last year as coronavirus infections reduced physical movement, limiting plasma donations.

CEO Paul Perreault said the pandemic limited “further sales of core plasma therapies in FY22, given the long-term nature of our manufacturing cycle.”

CSL reported underlying net income after tax of US$2.24 billion in constant currency for the year ended June 30.

Plasma collections, however, increased 24% in fiscal 2022, which would lead to improved immunoglobulin and albumin sales going forward, Perreault said.

“That said, the pandemic has put us two years behind the expected growth in plasma collections,” he added.

CSL expects full-year 2023 net profit after tax of $2.4 billion to $2.5 billion at constant currency, excluding the impact of its acquisition of Vifor Pharma for $11.7 billion.

It declared a final dividend of US$1.18 per share, unchanged from a year ago, and its shares plunged, down almost 4%.

S&P 500, higher Dow

Global equity markets held steady as U.S. Treasury yields rose on Tuesday as recession fears lingered amid fears the Federal Reserve would continue its steep interest rate hikes despite emerging signs of a a slowdown in inflation.

The yield curve between two- and 10-year Treasuries, seen as an indicator of an impending recession, remained inverted at minus 0.4 percentage points on Tuesday.

“It seems like the bond market doesn’t quite reflect the inflation that’s happening in the economy,” said George Young, portfolio manager at Villere & Company in New Orleans.

“What’s strange is that over the last couple of weeks bond yields have gone up and stayed high, so there’s kind of a disconnect,” he added.

“There’s kind of a question, maybe inflation isn’t that bad and we could actually go into a recession. Market players are everywhere.”

The MSCI gauge of stocks in 50 countries around the world lost 0.1%.

On Wall Street, the benchmark S&P 500 and Dow Jones reversed earlier losses and closed higher, with consumer discretionary, consumer staples, financials and industrials stocks leading the rebound .

Walmart forecast a lower-than-expected annual profit decline, while Home Depot beat quarterly sales estimates.

The Dow Jones Industrial Average rose 0.71% to 34,152.01, the S&P 500 gained 0.19% to 4,305.2 and the Nasdaq Composite fell 0.19% to 13,102.55.

Oil prices fell more than 3% in volatile trading as recession worries heightened uncertainty over global demand for crude, even as markets awaited clarification on talks to revive a agreement that could allow more Iranian oil exports.

Brent crude oil was down, trading at US$92.70 a barrel as of 7:25 a.m. AEST.

Safe-haven gold fell for a second straight session on Tuesday as a stronger dollar made the greenback-denominated metal more expensive.

Spot gold fell 0.2% to $1,775 an ounce at 7:26 a.m. AEST.


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