The current reporting season of December half-year results has produced better than expected profits but the bulk of announcements by Australian companies are still to come.
About 60% of ASX-listed companies so far lodging six-month results have increased profits and beaten expectations.
The usual beat rate is around 45% of company results coming in better than analyst forecasts.
But there are still 80% of companies to make their announcements, so this could easily change.
So far, profits for three-quarters of companies have risen from a year ago and 73% have increased their dividends
And this hasn’t gone unnoticed by investors.
The share prices of more than half (54%) of companies outperformed the day results were released, according to Shane Oliver, head of Investment Strategy and chief economist at AMP Capital.
He says the key themes have been weakness among resources shares on falling commodity prices and mining services companies on declining mining investment, continued strength for the banks, ongoing cost control and growth in dividends.
This good news, especially the results from big miner Rio Tinto, helped drive the massive rally on Friday when the Australian market added 2.3% in just one day.
Oliver says the good results tend to come out early in the reporting season.
And this week there are 80 major companies due to report including Amcor, Fortescue Metals, IAG and AMP.
Oliver says consensus earnings growth expectations for this financial year are near zero, driven by an expected 25% drop in resource profits on the back of the slump in commodity prices.
“However, the rest of the market is much stronger with industrials expected to see growth of around 10% and banks to see about 8% growth,” Oliver says. “Expect ongoing cost cutting, help from the lower $A and strong dividend growth to be key themes.”