Azzet reports on three ASX stocks with notable trading updates today.
Orica rallies after hinting at strong 2H
Shares in Orica (ASX: ORI) were up 8% at the open after the explosives and mining technology company hinted at a substantial increase in FY25 earnings following a 40% year-on-year jump in underlying net profit after tax to $250.8 million.
Underpinning a 7.7% surge in sales revenue to $3.94 billion - the group’s strongest 1H result in 10 years – was strong growth across all business sectors.
With earnings up 34% to $472 million, the group declared an interim unfranked dividend of 25 cents per share, up 19% on the previous year.
Demand drivers
A core driver of the group’s strong 1H result was strong demand for premium blasting products, digital mining solutions, and specialty mining chemicals, plus contributions from the Cyanco acquisition.
Key 1H numbers in today’s update include:
- Net operating cash flow of $244.9 million up 29%.
- Earnings per share of 51.5 cents, up 12.7 cents.
- Leverage (ex-lease) at 1.45x, within the target range of 1.25x – 2.00x.
- Return on net assets is 12.9%.
- Up to $400 million on-market share buy-back to recommence.
Key developments
Orica completed the first phase of decarbonisation at its Kooragang Island site, eliminating 1 million tonnes of emissions, and reaffirming its long-term net-zero ambitions.
Orica’s CEO Sanjeev Gandhi told investors that the group is confident about delivering improved earnings in the second half, and said it was well-positioned to navigate the current geopolitical uncertainties.
“Our strategic acquisitions are successfully positioning us as a global leader in geotechnical and structural monitoring for mining and civil infrastructure, as well as in specialty mining chemicals, supporting the gold mining industry and efficient mineral extraction,” said Gandhi.
“Despite trade uncertainties and geopolitical risks, our strong performance highlights our resilience and ability to adapt and optimise, with our global manufacturing and supply chain network being a significant competitive advantage.”
Looking forward
While FY25 earnings are expected to increase across all regions and all segments from the previous period, capital expenditures (including acquisitions) are expected to be broadly in line with FY24.
With gold's outlook strong, increased production is expected within its specialty Mining Chemicals division.
Driven by $340 million in significant items, including a major impairment and restructuring charge in Latin America, the company reported a statutory net loss of $89 million for the half year ended 31 March.
Orica has a market cap of $8.6 billion making it the ASX’s 67th largest stock; the share price is down 3% over one year and up around 7% year to date.
The stock’s shares appear to be in a strong near-term rally within a longer-term bearish trend.
Consensus is Moderate Buy.
Light & Wonder tanks after hinting at cost pressures
CHESS Depositary Interests (CDIs) in Light & Wonder (ASX: LNW) shed 6% at the open after the Las Vegas gaming company flagged near-term cost pressures emanating from White House trade policies.
At face value, the substance of today’s update – which flagged “incremental cost pressures in the near term” - didn’t necessarily warrant the stock being sold-off.
The company hinted at potential adverse impacts on operating results from increased product costs and disruptions in our manufacturing and supply.
But what clearly made the market nervous was the following remark.
“... While we believe we can adapt our business strategy to mitigate these effects, there is no assurance that these efforts will fully offset any increased costs.”
Strong quarterly update
Due to ongoing efficiency measures, the company reaffirmed its FY25 earnings guidance, projecting US$1.4 billion in pre-tax earnings, after posting a net profit of $82 million for the March quarter.
The company delivered revenue growth in the March quarter, expanding margins across all three businesses and generating strong cash flow.
Underpinning the company’s 16th consecutive quarter of year-over-year consolidated revenue growth, was a 4% lift in Gaming and iGaming revenue to $495 million and $77 million respectively.
Future growth
Commenting on today’s results, CEO Matt Wilson said the company’s R&D investment, vast array of product offerings and comprehensive content strategy continue to deliver success in game deployment and franchise expansions.
“We continue to see our omni-channel strategy prosper with enhanced game development and performance fuelling our existing businesses, and further opportunity to extend this strategy with the pending Grover Charitable Gaming Acquisition,” Wilson said.
We remain confident in the various avenues of growth that we see for 2025 with continued execution of our robust product roadmap driving performance across the business.
Light & Wonder’s market cap is $4.3 billion; the share price is down 8% in one year and up 7% in the last month.
The stock’s shares appear to be in a strong near-term rally within a longer-term bearish trend.
Consensus is Moderate Buy.
Transurban rises after flagging restructure
Shares in Transurban (ASX: TCL) were up by around 1.3% at noon following revelations that the toll road giant was embarking on a ‘growth and simplification plan' targeting $50 million-plus in annualised cost savings.
Underpinning this target are plans to cut the payroll by 300 employees without compromising safety or operational excellence.
It’s understood that the provision and expense associated with implementing these changes will be accounted for in the FY25 results (ex-proportional operating earnings).
Meanwhile, there is no change to either distribution guidance for FY25 at 65 cents per security or underlying growth guidance of “targeting a below inflation cost outcome for FY25.
Commenting on today’s update Transurban CEO Michelle Jablko noted that the 300 job cuts would help the group become a more agile and efficient organisation and re-allocate capital and resources in ways that best serve stakeholders.
“Building on the work we have already commenced, there will be a continuation of investment in customer-facing and operational technologies to improve the overall experiences of our customers and our operational effectiveness,” she said.
“This will be a core focus for us as we pursue our pipeline of growth opportunities.”
Transurban has a market cap of $45 billion making it the ASX’s 12th largest stock; the share price is up 12% over one year and up 8% year to date.
The stock appears to be in a strong bullish trend confirmed by multiple indicators.
Consensus is Hold.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
