CEOs see economic slump
By Jesse Hogan and Ari Sharp | theage.com.au | 15 October
Patchy", "challenging", "tough", "uncertain". The words may differ, but the sentiment among Australia's business leaders is clear - their confidence in the economy is waning.
Be it retailing (Coles), manufacturing (Amcor), publishing (Fairfax Media), building (Lend Lease) or aviation (Qantas), companies revealing their financial results are emphasising the generally difficult outlook for business.
It all adds to the case for the Reserve Bank board to cut interest rates at its next meeting on September 2 — and to keep cutting.
Qantas posted a record $969.7 million in earnings, albeit slightly under market estimates, but warned that level of profitability could only be maintained if there was a fall in oil prices.
Packaging giant Amcor said the fluctuating Australian dollar and rising materials costs made it difficult to accurately predict earnings for the current financial year.
Fairfax, owner of The Age, said it had no "visibility" on how advertising spending would fare between now and Christmas, let alone for the financial year.
Property developer Lend Lease suggested the property downturn in Britain, if significantly prolonged, would be "the end of global capitalism".
Wesfarmers, which has bet its future on buying and reviving the Coles supermarkets chain, believes the patchy retail outlook can only be remedied by sustained rate cuts.
"One of the things that gives me a degree of confidence in terms of the economy," Wesfarmers chief executive Richard Goyder said, "is that there is scope … for an easing of monetary policy."
First published by TheAge.com.au on October 15 2008
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