The Australian share market ended last week slightly lower. Uncertainty over economic recovery both domestically and abroad, as well as geopolitical tensions with China, dampened sentiment despite some better than expected earnings results. The S&P/ASX 200 Index (ASX: XJO) ended the week 0.2% lower while the All Ordinaries Index (ASX: XAO) performed marginally better, down just 0.02% for the week.
Earnings season has laid bare the economic damage of the coronavirus pandemic. The Westpac Banking Corp (ASX: WBC) share price slumped after the bank cancelled its interim dividend. BHP Group Ltd (ASX: BHP) shares also fell after the miner’s profit and dividend came in below expectations. Let’s take a look at some of the worst performing shares on the ASX last week.
Treasury Wine Estates Ltd (ASXL: TWE)
The Treasury Wine Estates share price fell 22.82% last week to close the week at $9.91. The winemaker has become embroiled in geopolitical tensions with China, which has accused Australia of dumping cheap wine in the country. China has moved to impose significant import duties on Australian wine and is investigating all Australian wine imported in containers of two litres or less.
China is a priority market for Treasury Wine Estates, which said it would cooperate with any requests for information received from Chinese or Australian authorities.
Treasury Wine Estates had a difficult FY20 with NPAT falling 25% to $315.8 million. The fall reflected challenging conditions in the US wine market and the impact of COVID-19 on trading across all geographies. A final dividend of 8 cents per share was declared, taking full year dividends to 28 cents per share, a 26% decline in FY19. Treasury Wine Estates says it is positioning for the next phase and was optimistic about its ability to return to sustainable profit and margin growth over the medium to long-term.
Unibail-Rodamco-Westfiield (ASX: URW)
The Unibail-Rodamco-Westfield share price fell 12.89% last week to finish the week at $3.21. Rumours began circulating about a rights issue by the shopping centre operator last week. The company was forced to issue an announcement stating no decision had been taken. Deleveraging is a priority for Unibail, which has taken a number of steps to strengthen its balance sheet and liquidity in response to the pandemic. The second dividend installment was cancelled, non-essential capital expenditure deferred, and the development pipeline reduced.
Unibail has disposed of €4.8 billion in assets since 30 June 2018 and intends to sell an additional €4 billion of assets in the next couple of years. Management continues to weigh the merits of potential strategies to strengthen the company’s financial profile, but Unibail says no decision has been made. Having been forced to close its shopping centres for an average of 67 days from March, Unibail saw recurring earnings per share decline 27.2% in 1H20.
Cooper Energy Ltd (ASX: COE)
The Cooper Energy share price fell 10% last week to close the week at 36 cents. Cooper Energy is an oil and gas company supplying customers like AGL Limited (ASX: AGL) and Origin Energy Ltd (ASX: ORG). Cooper Energy announced an agreement with APA Group (ASX: APA) last week to work together to complete commissioning of the Orbost Gas Processing Plant. The agreement provides a practical and commercial way forward for both entities to deliver much needed additional gas to south-east Australia.
Commissioning of the plant has taken much longer than anticipated. But despite the plant’s variable processing rates and 21 days offline, the company was able to deliver a 61% increase in gas revenue in the June quarter. Quarterly production was up 118% giving FY20 production of 1.56 million boe, a 19% increase. A substantial increase in production is expected in FY21 through improvements to output thanks to the plant upgrade.
Resolute Mining Limited (ASX: RSG)
The Resolute Mining share price dropped 9.88% last week to finish the week at $1.14. The gold miner issued an operational update during the week after Mali president Ibrahim Keïta resigned. Resolute’s Syama Gold Mine is located in the country. The president’s resignation and the subsequent dissolution of government follows action by the military seeking to resolve the recent political crisis. Resolute advised that operations at the Syama Gold Mine were continuing as normal with no impact on production. Resolute has operated the mine since 2003 under the well-established mining laws of Mali.
In the June quarter, Resolute produced a total of 107,183 ounces of gold, placing the company in a strong position to deliver full year guidance of 430,000 ounces of gold. The gold price has outperformed in 2020, and was trading close to $2850 an ounce earlier this month. It has since pulled back, and is now trading below $2750 an ounce. Plans are in place to improve production and deliver lower costs at Syama in the second half while exploration opportunities are evaluated.
GWA Group Ltd (ASX: GWA)
The GWA Group share price fell 9.42% last week to close the week at $2.50. The industrial company delivered its full year result last week revealing a drop in earnings and profits. The company’s top line was significantly impacted by lower construction activity and the impact of the COVID-19 pandemic. Earnings before interest and taxes EBIT from continuing operations declined 8% to $71.8 million. The lead to a 12% decrease in net profit after taxes from continuing operations, which was down to $44.9 million. Statutory profit, which was $94 million in FY19, fell to $43.9 million in FY20. However FY19 results included $50.8 million profits from the sale of the door and access systems business.
CEO Tim Salt said: “While markets were challenging and compounded by the unforeseen impact of COVID-19, our focus continues to be on controlling those elements within our control.”
The company’s cost out program has delivered $5 million savings in FY20 and further short-term cost reduction delivered an additional $10.5 million in savings.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of APA Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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