Issues of the Week

THE Federal Government has received a wake-up call in the lead up to the election due later this year. Labor’s hopes of victory have been buoyed after last weekend’s Northern Territory poll, which looks set to bring an end to 26 years of Country Liberal Party rule.

Claire Martin, a former ABC journalist and mother of two, is set to become the first Labor leader in the Territory’s 27 years of self government.

Labor is expected to claim victory in the Territory’s Legislative Assembly by Thursday. The CLP previously had a 10-seat majority.

Prime Minister John Howard’s office is playing down the significance of the Territory election, while Opposition leader Kim Beazley is claiming that federal issues such as banking, the sale of Telstra and the GST were the background of every campaign in regional Australia.

COLES Myer has appointed former Brambles chief executive John Fletcher as its new head, triggering a highly positive sharemarket response to his expected tough management style. Since the announcement, Coles’ shares have soared, adding $1 billion to the retailing giant’s marketing value.

Mr Fletcher has said his first priority will be to fix Coles’ ailing non-food businesses Target, Myer Grace Brothers and Kmart. Coles Myer has more than 170,000 employees and managing the business is considered to be one of the toughest jobs in Australia. Mr Fletcher knows he will have to learn fast after admitting that he lacks knowledge of the retail industry. He said that, before the past few weeks, he had not been shopping in a supermarket for 25 years, preferring to leave it to his wife, Noela.

MEDIA sector investors have been given a taste of what to expect in 2000-01 financial results with West Australian Newspapers Holdings reporting a 10.6 per cent slide in operating net profit. The publishing group posted a net profit before abnormal items of $61 million, down from $68.2 million previously.

Bottom line net profit dropped more than one quarter to $66.6 million, as previous abnormal gains were not repeated. The tough trading environment and strong competition were also shown in the annual sales, which declined 6.6 per cent to $328.9 million.

JBWere media analyst Lou Capparelli has come forward in saying that the WANH result was likely to be indicative of figures to come from other media companies.

BHP-BILLITON has carved off $1.2 billion in write offs and merger costs but that failed to take the shine off the company’s inaugural results, which cruised to a massive $ 2.95 billion net profit. As expected, BHP cleared the way for its final exit from the controversial Ok Tedi, due later this year. This means writing off the remaining $US148 million value of its 52 per cent stake, compounding in April’s $US410 million write off of its half-owned Orinoco hot briquetted iron project in Venezuela and $US98 million in merger costs. Though the pre-abnormal result of $US2.19 billion was at the lower end of market expectations, bottom line earnings were still 27 per cent higher than BHP and Billiton’s combined profits in the previous years. Importantly, BHP’s “stand alone” net earnings, reported in Australian dollars came in at a record $2.01 billion even after abnormals. Billiton also achieved a record stand-alone result at $US693 million. Chief executive Paul Anderson said the result vindicated the underlying strategy of the $57 billion marriage.

THE Australian Magnesium Corporation’s $1.3 billion magnesium project near Rockhampton has been thrown a lifeline by the Queensland and Federal governments, who have agreed to increase their unprecedented financial support for the project at the expense of taxpayers.

Share prices of the Normandy Mining controlled AMC rocketed in response to the news of an additional $200 million in soft loans and loan guarantees from taxpayers, climbing 19 cents, or 12.7 per cent, to $1.68.

Queensland’s Beattie Government has committed to providing $100 million to fund a three-year yield enhancement on the new shares to be offered by AMC, which is said should make that equity offer more attractive to an investment community focused on short-term returns. A quietly jubilant AMC spokesman said that details of the restructured package were expected soon.

THE launch of Big Kev’s cleaning products business on the boards of the Australian Stock Exchange failed to excite investors. Shares in Big Kev hit the boards at 54 cents but weakened during the day as 1.8 million shares changed hands. The stock closed 11 cents lower at 43 cents after dipping as low as 41 cents to give the company a market capitalisation of $6.9 million.

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