KEY POINTS:
Lion Nathan
Lion Nathan is predicting a significant earnings increase from late next year, as the hundreds of millions of dollars spent upgrading its breweries and increasing marketing of its key brands over the past four years start to pay off.
This was after a flat year where operating net profits rose 3.8 per cent to $267.3 million.
But the company claims the result was solid, given the extra A$98.5 million ($114 million) in costs incurred this year, mainly from higher barley and aluminium prices.
Raw material costs are not set to come down and LNN is set for another tough year, made more so by lost revenue in the shadow of smoking bans in pubs in NSW, Victoria and South Australia, which will hurt sales of tap beers and further hurt brands favoured by pub-goers - such as Tooheys New.
Lion's shares have fallen since the cautious statement on its outlook.
Rakon
Rakon delivered 78 per cent growth in sales. But this translated into a mere 5 per cent rise to $5.74 million in net profit for the six months to the end of September due to the weak greenback against the kiwi, which reduces the profit margin on products sold directly into the US.
The Auckland-based producer of high performance quartz crystal components is among the most vulnerable to exchange rates as more than 80 per cent of revenues are US dollar-denominated.
Because of this, the company warned that foreign exchange conditions could make it difficult to achieve the forecast range of $27 million to $32 million for full year earnings.
This is one share that cannot afford to deliver a downgrade because it trades at an astronomically high price to earnings ratio. Rakon could see a very big comeback report when the US dollar weakens.
But the timing is impossible to predict and the share is very risky for that reason.
