- A bumper company reporting season has delivered a myriad of results on Wednesday, from pizza chain Domino’s to funeral company Invocare.
- Covering the period from July to December, the reports show exactly how Australians were spending their money and going about their day to day during the pandemic.
- From ordering in and boozing at home, to opting to drive over public transport, this is what we gleamed.
- Visit Business Insider Australia’s homepage for more stories.
If you want to understand the pandemic experience of Australians, you need to take a look at how they spent or didn’t spend their money.
As businesses open their books to the public during the February reporting season, the country’s behaviour between July and December is becoming crystal clear.
With a huge number of public companies reporting on Wednesday, these are the big takeaways from how life in Australia has changed and how is profiting or losing money because of it.
1. Australians aren’t dying like they used to
Perhaps the biggest paradox of the pandemic is that an airborne virus that has claimed more than 2.4 million lives around the world has actually kept more Australians alive.
While Australia has managed to largely contain any outbreaks on its shores, the same measures have actually cut a range of other deaths as people are encouraged – or forced – to remain home. Preliminary ABS figures show that deaths up until October “remained below historical averages” owing in part to a minimal flu season.
While that’s all good news, the pandemic has nonetheless hurt the funeral business. Invocare, one of the only publicly-listed funeral companies in Australia, provided an update on Wednesday that it would absorb a $26.5 million pre-tax hit this financial year.
“A material portion is linked to the softening of the funeral services sector in Australia and New Zealand, primarily driven by a range of impacts flowing from the COVID-19 pandemic,” the company said in a statement.
The reasons behind that costing are many, and go beyond a mere dip in the death rate. For one, restrictions on funerals would have helped capped the size, and therefore the expense of many ceremonies. It has also hurt goodwill towards the company’s New Zealand operations, to the tune of $24.4 million Invocare noted, after restrictions hampered its ability to deliver on expectations.
Invocare also acknowledged it is experiencing a rise in bad debts, as families struggle to pay for funerals in full. Meanwhile a lack of foot traffic has led to slower movement among the company’s inventory of crypts, memorials and wall plaques.
2. Traditional retail got smacked
Of course, there are more than a few sectors getting pushed around by the pandemic and its trends.
While online retailers have enjoyed an ecommerce boom, brick-and-mortar stores aren’t what they used to be. Vicinity Centres, one of the country’s largest owners of Australian shopping centres, provides a fairly good barometer for exactly what is going on there.
It made a net loss of $394.1 million in the first half, a long way from the $243 million profit it turned over the same period in 2020.
Much like the funeral industry, retail stores have suffered from store closures and lockdowns, particularly in Victoria where a second wave of cases shut businesses throughout September and October. Foot traffic through centres fell to 80% of last year’s levels while the value of Vicinity’s assets fell by $847.9 million less.
While the second half of the year looks more optimistic, conditions have meant a tough retail period for traditional retailers and their landlords.
“While the retail industry is showing continuing signs of recovery, we recognise that uncertainty remains, with the potential for further COVID-19 restrictions, the unwinding of temporary government support measures, and a prolonged recovery in CBDs on the eastern seaboard,” Vicinity CEO Grant Kelley said.
Of course, not all retailers have done so poorly. Super Retail Group, which owns BCF, Rebel Sport and Supercheap Auto, tripled its first half net profit to $172.8 million. Stalwart JB Hi-Fi’s profits meanwhile rocketed 86% higher, on the back of an online sale boom.
3. Staying home kept us ordering in
Another business enjoying its time in the sun is Domino’s Pizza. As food delivery businesses experience unprecedented demand, the pizza chain reported a 8.5% boom in sales to mint its first ever $100 million first half profit.
“Our view is COVID-19 has brought forward long-term demand for delivered food, ordered online, in all markets,” CEO Don Meij said in a statement. “At the same time, carry-out orders remain challenged in most markets, as specific customer segments — including CBD office lunches — have changed their ordering behaviour.”
It didn’t stop Dominos from opening 131 new stores, up almost 100 from the previous six months. Australia isn’t alone in going mad for $5 pizzas. Meij noted Japan and Germany have become major growth markets for Dominos.
4. Secondhand cars trump public transport
Understandably an aversion to public transport has also led to a resurgence in car purchases, most notably in the second hand market.
While online marketplace Carsales said revealed revenue and profit was down, earnings lifted as its results were lifted on the back of the pandemic.
“Demand for vehicles across all our markets has been strong due to lower public transport usage, the absence of international travel and the evolution of more flexible working arrangements,” chief executive Cameron McIntyre said.
5. China took a bite out of winemakers
Finally, and entirely separate from lockdowns, we can see how China’s ongoing trade feud with Australia is faring.
When it comes to wine, certainly not well. After slapping on huge tariffs to Australia plonk, Treasury Wine Estates, one of the winemakers most exposed to the Chinese market, took a 43% hit to profits, falling to $120.9 million.
In reporting, it conceded it would have to go elsewhere, acknowledging Chinese sales would be anything but “extremely limited” while tariffs remain.
“TWE is becoming increasingly confident around its plans for reallocation of the Penfolds Bins and Icon range from China to other markets,” the company said.
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