Big Changes Coming for Australia's Major Companies as They Share Their Profits

Over the next few weeks, hundreds of Australian companies — including big names like Commonwealth Bank, BHP, and CSL — will announce how much money they made over the past year. These announcements, which happen twice a year, are called 'reporting season.' Investors, workers, and everyday Australians watch closely because the results can show how healthy the country's economy really is.

When a company shares its profits, investors decide if the result is better or worse than they expected. If a company does better than expected, its share price often jumps. If it does worse, the price can drop quickly. During the last reporting season in February, one in five companies saw their share price rise or fall by more than 10 per cent in a single day. That kind of change usually takes years to happen in a normal stock market, so it shows just how important these announcements are.

Australia's biggest 200 companies are expected to have grown their earnings by about 12 per cent over the past financial year. That sounds great, but there is a catch. When you remove profits from mining and banking, that growth number falls sharply to just 2.5 per cent — which is quite low.

Many investors don't just look at past profits. They also pay close attention to what company leaders say about the future. This is called 'forward guidance.' Right now, experts say the outlook is not very encouraging. UBS strategist Richard Schellbach said that profit forecasts are now being cut across all 11 major areas of the Australian stock market, including mining, which had previously been a bright spot.

Higher interest rates are one big reason companies are struggling. When interest rates go up, it costs more to borrow money, so people spend less. Portfolio manager Jun Bei Liu from Ten Cap said this will be the first reporting season where we really see the effects of those rate rises. She also pointed out that changes to property tax rules by the Albanese government have made people feel less confident about spending money.

Falling house prices are also hurting the way people feel about money. For most Australians, their home is their biggest asset — meaning it's worth more than anything else they own. When house prices drop, people tend to spend less, which hurts businesses across many industries. Retailers like JB Hi-Fi, Baby Bunting, and Temple & Webster will all report their results soon, and analysts expect them to give cautious outlooks for the months ahead.

Not all companies are struggling, though. Mining giant Rio Tinto recently reported a 43 per cent jump in profits, its best result in four years. This was helped by high commodity prices and strong demand for copper. Copper is in high demand because it is needed for clean energy technology and for building the massive data centres that tech giants like Amazon, Microsoft, and Google are constructing to power artificial intelligence, or AI.

BHP, Australia's largest mining company, is expected to announce similarly strong results. In fact, BHP has recently overtaken Commonwealth Bank to become Australia's most valuable company, with a market value of $307 billion. Oil companies like Santos, Woodside Energy, and Ampol have also benefited from higher oil prices and are likely to report strong earnings.

Healthcare companies may have a mixed reporting season. Jun Bei Liu said that cost-of-living pressures are making it harder for some customers to afford medical products, including hearing implants from Cochlear and medicines from CSL. However, she is most excited about industrial companies and businesses connected to data centres and AI technology. Companies that supply cables, equipment, cement, energy, and financing to data centres are seen as being in a strong position right now.

Looking ahead, experts have different views on where the market is headed. AMP's chief investment officer Anna Shelley said the general outlook 'is not as strong as it was,' partly because of high oil prices and ongoing uncertainty in Iran. Jun Bei Liu is more hopeful, believing much of the market will do well even if banks face some difficulties. But Richard Schellbach was blunt, warning of 'a pretty tough slog for markets and the economy over the next six months.' For everyday Australians, the results matter because most superannuation funds invest heavily in Australian shares, meaning the performance of these companies affects people's financial futures.