MELBOURNE (S&P Global Ratings) July 31, 2024--Corporate Australia faces a choppy earnings season. A cocktail of persistent cost pressures, high interest rates, and softening demand confronts issuers.
That's according to a video-podcast S&P Global Ratings released today, titled, "Credit Pulse: Australian Corporate Earnings Preview."
A robust labor market and consumer sentiment have helped Australian companies navigate shifting operating conditions. But things are changing, said S&P Global Ratings credit analyst and podcast co-host Sam Playfair.
In the video-podcast, Mr. Playfair and Paul Draffin, Pacific corporate analytical manager and managing director, examine whether these pressure points will finally take their toll on corporate earnings and cloud the outlook for fiscal 2025.
"How cost and margin pressures are affecting companies will be a key driver of how this cycle pans out, and whether a soft landing is achievable," said Mr. Draffin.
The video-podcast outlines our forward-looking views of the most urgent themes affecting Australian corporates ahead of the fiscal 2024 earnings season. Key questions include:
- How can office REITs alleviate pressure on stretched metrics amid declining valuations?
- Will the wane in pricing power among corporates heap more pressure on earnings margins?
- How is the COVID-19 inventory overhang affecting credit?
- Which sectors are most likely to attract capital investment as higher-for-longer interest rates and slowing demand force greater capital discipline?
This report does not constitute a rating action.
AUSTRALIA
S&P Global Ratings Australia Pty Ltd holds Australian financial services license number 337565 under the Corporations Act 2001. S&P Global Ratings' credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act).
S&P Global Ratings, part of S&P Global Inc. (NYSE: SPGI), is the world's leading provider of independent credit risk research. We publish more than a million credit ratings on debt issued by sovereign, municipal, corporate and financial sector entities. With over 1,600 credit analysts in 27 countries, and more than 150 years' experience of assessing credit risk, we offer a unique combination of global coverage and local insight. Our research and opinions about relative credit risk provide market participants with information that helps to support the growth of transparent, liquid debt markets worldwide.
| Primary Credit Analyst: | Sam Playfair, Melbourne + 61 3 9631 2112; sam.playfair@spglobal.com |
| Secondary Contact: | Paul R Draffin, Melbourne + 61 3 9631 2122; paul.draffin@spglobal.com |
| Media Contacts: | Ning Ma, Hong Kong (852) 2912-3029; ning.ma@spglobal.com |
| Richard J Noonan, Melbourne + 61 3 9631 2152; richard.noonan@spglobal.com |
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