This week, the FY18 interim reporting season gets underway in earnest. Investors are very keen to see harbingers of a second straight year of robust profit growth, after the market (that is, the S&P/ASX 200 stocks) posted 12% profit growth in 2016-17 – the best performance in six years. In FY17, two-thirds of the S&P/ASX 200 companies reported rising profits.
The downside, however, was that full-year FY17 profit growth was significantly boosted by the resources sector, where profits more than doubled. Excluding resources, the market’s earnings growth figure was more like 5%–6%. Weighted for size, investment bank UBS said the median Top 100 company grew its earnings by 4% in FY17.
At the moment, analysts’ consensus forecasts point to about 6%–8% growth in earnings per share (EPS) in 2017-18 – which UBS describes as a “respectable, slightly-above-trend” pace.