The FY19 full-year reporting season is upon us, and in general, it is not going to be pretty.
Kicking proceedings off are a slate of prominent companies, including ResMed, Rio Tinto, Transurban, Commonwealth Bank, Suncorp, AMP, AGL Energy, Mirvac and Insurance Australia Group.
Earnings growth looks likely to be very hard to come by, except in the resources sector, which will be led by the big iron ore producers. Even that growth can be considered a bonus, with iron ore prices unexpectedly strong on the back of the supply problems that have hit big Brazilian miner Vale in the wake of tailings dam collapses. Vale has indicated that it will produce at about three-quarters of its capacity this year, and analysts suspect that the big Brazilian getting back to full production (about 400 million tonnes a year) will take longer than the market expects – resulting in an iron ore price that is 60% higher than it was before the tailings dam collapses, at a five-year high, and likely to remain higher than the market expected, and for longer.