AU Evening Wrap | ASX Climbs on Consumer Stock Gains; Beach and Aurizon Shares Tumble

JB Hi-Fi reported better-than-expected FY24 results, surpassing consumer spending concerns and declaring a special dividend. The company demonstrated effective cost control with EBITDA margins of 6.75%, exceeding analyst expectations of 6.5%. Despite a year-to-date rally of 36%, JB Hi-Fi shares opened 6.5% higher on Monday, briefly hitting a record high of $74.66. Key highlights include a 0.4% decline in total sales to $9.59bn, a 16.4% drop in net profit after tax to $438.8mn, and a special dividend of 80 cents per share. Additionally, JB Hi-Fi's net profit was 3.7% ahead of consensus expectations, and the company announced an acquisition of E&S Trading Co. CEO Terry Smart noted continued sales momentum into July. The company will trade ex-dividend on 22 August, with a payment date of 6 September, yielding approximately 2.5% at current prices.

Aurizon shares have declined to levels not seen since April 2023 following FY24 earnings and a FY25 outlook that missed market expectations. FY24 highlights include a 14% increase in EBITDA to $1.62 billion, an 11% rise in net profit after tax to $406 million, a 123% jump in free cash flow to $661 million, and a 13% increase in the full-year dividend to 17 cents per share. The company also announced an on-market buy-back of up to $150 million. However, net profit and dividend figures were 5.1% and 2.2% below Macquarie estimates, respectively, and FY25 EBITDA guidance of $1.66 billion to $1.74 billion fell 4.4% short at the midpoint. Divisional performance showed mixed results with Coal, Bulk, and Network segments all reporting earnings growth, but Bulk saw a 2% drop in rail tonnes hauled. CEO Andrew Harding emphasized the strength of cash flows and increased shareholder returns, including a higher dividend payout ratio and the buyback announcement.

The recent switch off of the carry trade has led to a significant reduction in global liquidity, as Japanese pension funds sell non-Japanese assets in favor of higher-yielding, risk-free Japanese Government Bonds (JGBs). This shift has resulted in Yen appreciation against currencies like the AUD and USD, falling JGB yields as Japanese funds purchase them, and declining stock and bond markets in key funding currency countries, including Japan's Nikkei, due to the dual impact of higher-yielding JGBs and a stronger Yen. Conversely, if the carry trade "heals," characterized by positive carry due to yield differentials, we would expect Yen depreciation, rising JGB yields, and increasing stock and bond markets. Since last week's market turmoil, we've seen signs of recovery, with modest rallies in the Nikkei, AUDJPY, and USDJPY, although momentum has slowed in recent trading sessions.