Trading Day – York Timber reports significant decline in earnings. 

York Timber reports a significant decline in earnings as earnings per share (EPS) declined nearly 80%, from R0.43 to R0.09.

Rand Merchant Investment Holdings also release a trading statement, expecting headline earnings per share (HEPS) to increase around 12% to roughly R1.70.

In other news, Australia’s central bank suffers billions in losses but says it’s not insolvent because it can print money.

Here is the biggest news of the day.

• York Timber reports a significant decline in earnings. Although revenue was only slightly down, decreasing 5% to R1 839 million, earnings per share (EPS) declined nearly 80% from R0.43 to R0.09. Cash generated from operations also more than halved, declining from R425 million to R202 million. The company did manage to reduce its debt by R133 million. No dividend was declared.
• Rand Merchant Investment Holdings expects a significant increase in earnings. The company released a trading statement, expecting headline earnings per share (HEPS) to increase around 12% to roughly R1.70. When the once-off gains from the sale of Hastings and the unbundling of Discovery and Momentum Metropolitan are considered, earnings per share will increase around 673% to roughly R14.60. RMI’s annual results are due on 22 September.
• Australia’s central bank has its equity wiped out by billions in losses from pandemic-era bond buying, but says it’s not insolvent because it can print money and will continue as normal. Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock said the bank had taken a valuation loss on its bond holdings of A$44.9 billion. Bullock noted that while this would bankrupt a normal commercial entity, the government guaranteed the RBA’s liabilities. “Furthermore, since it has the ability to create money, the Bank can continue to meet its obligations as they become due and so it is not insolvent,” said Bullock.
• Bytes Technology expects strong results. Gross profit is expected to grow by more than 20%, while adjusted operating profit growth is expected to be in the high-teens. The company also expects to report a strong cash balance. Bytes’ results for the year’s first half are due on 26 October.
• Coronation Asset Management has increased its stake in MTN from 4.9% to 5.1%.
• Thungela signs a 3-year wage agreement with the National Union of Mineworkers (NUM). The union represents 86% of unionised employees at Thungela. The agreement runs from June 2022 until May 2025 and will increase the total labour cost-to-company by approximately 6% per annum.
• The EU plans to impose a €180/MWh day-ahead wholesale price cap on electricity to ease consumer inflation. Historically, price caps have negatively affected economies, removing the incentive for businesses to increase supply and leading to further shortages.
• Sweden’s central bank hikes its repo rate by 1.00% to 1.75%. The bank signalled further tightening in future.