Profit reporting season turns grim for health, food, property and financial companies

Profit reporting season has turned ugly this morning, with several companies reporting big falls in profit for 2007-08 and predicting things are looking tough for 2008-09 too.

Profit reporting season has turned ugly this morning, with several companies reporting big falls in profit for 2007-08 and predicting things are looking tough for 2008-09 too.

The worst result of the morning came from the James Packer-backed financial services group Challenger, which reported a loss of $44.2 million for the 2008 financial year, down from a net profit of $255 million last year.

In another shock, chief executive Mike Tilley – who described the result as “very credible” considering the global turmoil on financial markets – announced he would step down, to be replaced by deputy Dominic Stevens.

The new chief should be ready for a baptism of fire in the current bear market.

Food group Goodman Fielder reported an 8% fall in annual profit to $220.7 million as the prices of key inputs such as wheat, dairy products, and food and oil prices reached record levels. Even more worryingly for the company is that it sees little chance for improvement in 2008-09 as the economy slows, and it is not anticipating a rebound in profitability until 2009-10.

Private hospital operator Ramsay Healthcare booked a net profit for 2007-08 of $92.2 million, down 13.9% on the prior year, although this did include some one-off costs.

On a brighter note, the company says it is targeting earnings growth of 10% to 12% in 2008-09 as the ageing population continues to boost demand for health care services.

Cleaning contractor Spotless Group reported a 45% fall in net profit to $26 million in fiscal 2008 as revenue fell 4.2% to $2.4 billion. But the company blamed the poor headline result on one-off restructuring costs – stripping out those items, net profit rose 13.5% to $57.1 million.

In good news, REA Group, owner of property websites including realestate.com.au, announced a 48% lift in net profit after tax to $22.3 million, with a 15% rise in monthly unique visitors to 8.2 million and a 32% increase in subscribing real estate agents across its Australian and overseas sites.

Earlier this month REA Group announced the unexpected departure of chief executive Simon Baker. Acting chief executive Georg Chmiel says he is confident the company’s management team is “the best in the field”.

And national radio station and media group Austereo today announced a 5.1% lift in 2007-08 net profit after tax to 48.8 million.

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