Woolworths profit falls after Dick Smith write-down: Midday roundup

Shares in supermarket giant Woolworths have fallen 2.8% to $28 this morning after it announced a $420 million write-down for the group’s Dick Smith chain.

For the full year, the company recorded a 14.5% decline in net profit to $1.8 billion.

The company already announced earlier this year it would be selling the Dick Smith business and closing poor performing stores.

In a statement, it said that despite the disappointing result it still has the ability to adapt to changing economic circumstances.

“We expect the Australian and New Zealand retail sectors to continue to experience challenging trading conditions with low consumer confidence continuing to dampen consumer retail spending in FY13,” said the company.

“We expect further earnings growth in FY13, with net profit after tax from continuing operations expected to grow in the range of 3-6% (on a normalised 52 week basis), subject to the uncertainties detailed below.”

Sales rose in food and liquor, petrol, Big W and other divisions.

Chief executive Grant O’Brien said the company continues to face “the toughest retail conditions in recent times”.

RBA chief says Aussie dollar not too high

RBA governor Glenn Stevens has told a House of Representatives economic committee that although he is surprised the currency is not trading lower, it’s not significantly high, either.

“I’m surprised it’s not lower, but it’s not a significant error,” he said.

The RBA has continued to keep rates on hold during the past two months.

Stevens also said he does not see any sign the current mining boom is over.

“I don’t myself think that, at least at this point, I’ve seen evidence to cause us to mark down that side of the outlook materially,” Stevens said, adding there are still projects in the pipeline.

Shares fall on weak offshore leads

The Australian sharemarket has opened lower this morning following weak leads from offshore markets.

The benchmark S&P/ASX200 index was down 40.5 points or 0.9% to 4343.2 at 12.00 AEST, while the Australian dollar remained flat at $US1.04.

In the United States, the Dow Jones Industrial Average fell 115.3 points or 0.9% to 13,057.5.

Tabcorp joins Tatts in legal action

Tabcorp Holdings has joined Tatts in taking action against the state of Victoria, seeking payment due to the decision to operate through gaming licenses.

In a statement to the ASX, Tabcorp said it had filed a write in the Supreme Court seeking $686 million.

“The Gaming and Betting Act 1994 provided for a payment by the State of Victoria to Tabcorp on the grant of new licences, irrespective of whether Tabcorp was the new licensee,” the group said.

“The obligation to make the payment was subsequently recognised by the State of Victoria, including in its annual Budget Papers, over a 14 year period from 1994 until 2008,” the company said.

“The Tabcorp board considers that the company is entitled to a payment, and that the board has a duty to Tabcorp’s many individual shareholders to pursue that entitlement,” it said.




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