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(generated from captions) This Program is Captioned Good morning, welcome Business Today Good morning, welcome to Network, I'm Sue Lannin. Coming

up on the program - record

result, BHP Billiton delivers a

half year profit of over billion. Price half year profit of over $10

billion. Price pressure,

China's stubborn inflation rate likely to prompt more likely to prompt more rate

hikes. And stock exchange operators step up merger negotiations. Those stories

coming up, first let's take a coming up, first let's take

quick look at the markets.

For more on the market action

I'm joined now by Christine Ip from Bell Direct. Good morning, Christine. We saw a rise in

retail sales in the US but it was less retail sales in the US but it right. Those retail sales numbers certainly surprised the

market. The retail sales overall have missed

expectations for January and this is despite downgrade expectations off the

back of those severe snow

storms in the US. The biggest disappointment was purchases managing only a small disappointment was purchases,

gain of 0.3% with the gain of 0.3% with the market

expecting close to 0.5%. On

flipside auto sales were up. Auto dealer s showing a

increase in sales. A bit of

help the US market disappointment on the

finishing in The Wall Street market negative. Christine, if we turn finishing in the

to the UK, Barclays Bank has reported Barclays has announced bank's net profit has jumped over 30% to $3.5 billion. It's

also announced measures to cut

down on excessive pay by

cutting bonuses. cutting bonuses. The banks have been under pressure from Government and taxpayers thanks been under pressure from the

to a number of State years so certainly encouraging years so the announcement market. Barclay shares finishing 3% and the New York stock enction overnight. The Deutsche Borse

change have sealed the deal on

their merger plans been the their merger plans so what's

has created financial market operator the world. Deutsche financial market operator in shareholders will own 60% of the company. The deal has been signed off by the exchange be approved by shareholders.

It's very good news for the New York exchange. Its revenue

dropped recently. It's exchanges in the US and Europe.

So the merger will improve its

future and options trading

contracts. The reaction has been a bit muted. Shares in

both companies falling 2% to both companies falling 2% to 3% after the announcement but that's probably that's probably because investors are' acting to the overall negative economic in the program. How have more on that story later

commodities doing? We saw oil

fall to a near a 2-month low overnight? That's trend we saw trend we saw yesterday. It's fallen 50 cents after pushing back above back above that US $85 a barrel

during the New York session. Political instability in what journalists are calling the trader on the sidelines. those protests in Iran trader on the sidelines. It's

to spill over to peripheral country

country and that's threatening

oil shipments from the OPEC countries. It's to buy countries. It's that reluctance

to buy into oil and that's time. Precious metals time. Precious metals trading higher, gold was high of yesterday. A bit of Copper fell from its record

mixed result for commodities overnight. Thanks for your time. Let's take a look at what's happening in currencies and commodities.

The long-awaited profit

numbers from BHP Billiton have

just been released. The world's biggest miner has more than

doubled its net profit for the half year to $10.5 billion.

Revenue rose by nearly 40% on surging commodity prices. The

company also plans to return

$10 billion to shareholders.

Analysts and investors were

anticipating not only a strong

result but also a significant

have return of capital. Shareholders return of capital.

$4.2 billion share buyback only a quarter $4.2 billion share buyback with

completed so far after it faultered on 3 the past 3 years. the past 3 years. BHP remains undaunted in its takeover ambitions despite having been

forced to ditch it's $39

billion bid for fertiliser maker Potash Corp and iron ore joint venture with Rio Tinto and Rio Tinto and a full takeover

of Rio itself. So BHP acquisitions. Among the

potential targets, Andarko Petroleum, Apache Petroleum or

acquisitions and plans to even Woodside. Even with

acquisitions and plans to spend up

up to $15 billion a year on project, analystsest estimate BHP has the capacity to return 10 to $25 billion to shareholders or special shareholders through buybacks

or special dividends. Rio

Tinto's buyback last week has to announce a substantial

return to shareholders. The big

question now for BHP Billiton

is what can I just mentioned, net profit purchase plans be approved? As

for the half year rose nearly

72% to $10.5 billion on higher

prices for iron ore, copper prices for iron ore, copper and oil. There's also a share oil. There's also a $10 billion

rival Rio Tinto tripled net profit for the half to $14.2 billion

prices. Joining me now to prices. Joining me

discuss the result is resources analyst at Minelife discuss the result is senior

Gavin these figures, better than expected? I think so. I think

market consensus was somewhere

in the vicinity of about $10.3

billion and so the result

come in a little bit that. I think the market should come in a little bit above

like it in terms of like it in terms of the

underlying result. I think the capital management initiatives

should be welcomed by record profits record profits returned as dividends and share buybacks. So buyback is pretty much in with what the market wanted. think the dif don't might be disappointing, increase in interim dividend. I think the market was looking

for something up to $10 billion result that really

bodes well for the full bodes well for the full year profit? looking at something between 25 and 30 billion for the year. As you've said, $10 billion share buyback them? We saw $5 billion from Rio Tinto last week. I Rio Tinto last week. I think so although difficult to please. I difficult to please. I think at least difficult to please. I think least BHP and Rio seem to listening now the shareholders and particularly the larger listening now to share shareholders the shareholders and particularly the larger investors. In couple of years ago the

levels of debt

levels of debt so they can be forgiven, I think, for perhaps

hanging on to a bit more of their cash. of course, debt is just about

zero now and I think the company, as Marius has said in

his release, is going to look

at further capital management initiatives down the you said, $80 billion on

projects iron ore, also projects iron ore, also the Olympic Dam uranium mine in South

South Australia. So is that an alternative to takeovers? alternative to takeovers? Well, to some degree it is. I

mean the big problem for BHP

that Rio doesn't have is that Rio doesn't have is its size. I size. I mean it's grown so big through acquisition,

particularly the merger a few years ago between BHP and

Billiton, that to make Billiton, that to make an acquisition of any substance

now sort of puts any sort of acquisition in the laps acquisition in the laps of

competition regulators. So it's

a very, very difficult situation now for BHP to grow significantly through

acquisition and we've seen that with the failed Pilbara iron

ore merger, the failed takeover

or merger with Rio

also the Potash acquisition. So I think for at least the

interim period, I think BHP's

going to concentrate on organic projects which, as you've sate

stated, $80 billion over the

next 5 years. At the same time I think perhaps they will be

looking towards the petroleum

sector in terms of acquisitions. I think the

obvious one that might be

looked at would be Woodside.

We've seen Shell saying that

they're going to sell down their stake and the rest of that stake will go in the next

couple of years. I think that

might be the sort of acquisition where be treading on any potential

regulatory issues. Rio Tinto

made the point last week it was

looking at small to mid sized

companies such as companies such as Riversdale Mining. Is that what do to not Mining. Is that what BHP the regulators? It's an

option. The problem for BHP is

the Riversdale acquisitions because those sort acquisitions like Riversdale are have more to offer the company. It's a wla does - what does it say

about BHP's opposition to the

mining tax, does it make it

look hypocritical? I'm not so sure about that. Personally

I've been opposed to the tax because I think it create

of uncertainty and mining conference if - mining conference if - in Cape Town last week and one of uncertainty and political risk around the world and that really can't change the rules with respect to these days companies' operations or where companies invest

invest money is portable and a lot of incentive for mining

companies worldwide to go and invest their dollars there, South America, etc. think we need to do anything to disadvantage our resource

sector. At the same time I think think the current tax structure capture assufficient amount Mc- income. BHP Mc- income. BHP does pay more tax and so does Rio Tinto. I

don't think don't think there's any need to fiddle system. This morning the executive Marius Kloppers actually confirmed the WikiLeaks revelations that he was concerned about Chinese espionage and he was talking to

the US Consul-General something that surprises you? Well, no, Well, no, not really. And it's amazing amazing all the weird and

wonderful things that have given the level of agro that's been involved been involved with iron ore price negotiations over the last few years with last few years with the Rio Tinto Stern Chinese spying, I think

everybody acknowledges to degree that the there. This more or there. This more or less confirms that. It's something that's well known. I think what

it does is reinforce the

importance of moving away from

the old fashioned way of the old fashioned way of doing things which s the sense in moving towards effectively more a spot revelations also that BHP

Billiton tried to scupper Billiton tried to scupper the alliance Chinalco and it was successful?

successful? No surprises stakes when you're talking about big about big business, particularly in the current environment. So companies are

their shareholders' best

interests, let's put

way. Gavin Wendt from Minelife, us. Pleasure. The from a year earlier. The figure wasn't as bad there is still concerns that economy is economy is falling behind in the fight Much of China's inflation is reflected through food reflected through food prices.

At this bustling market in the no doubt things are more expensive than trance demand exceeds supply. The manufacturers can't produce enough enough for the people. TRANSLATION: I can't buy much

with $100, not I'm merely telling it as it is, like it. At 4.9% China's slightly lower than inflation rates in January were

Analysts had expected it to be

higher, saying a severe drought

in China's wheat belt had

placed pressure on supplies. They also say demand for food

is typically higher this time of year. But

bureau adjusted its bureau adjusted its calculation

method and cut the waiting for

food in the CPI basket. It says this is a regular TRANSLATION: Think about it,

why didn't they adjust this a

few years ago? Why are they

adjusting it now? This is adjusting it now? This is their reason, at least on the

surface, but in reality they

want to lessen the pressure of

the inflation on the market the inflation on the market by

reweighting the CPI. Heads are

now turning to the country's

central bank to see how it will

react in the short term. react in the short term. Last week it raised for the third time in four

months in a bid to dampen the

red hot property market in many

of the country's cities. TRANSLATION: This will TRANSLATION: This will depend on how on how China's central bank interpret s Thiess CPI figures.

If they know the CPI has decreased because of its reweighting then the central

bank will continue tightening

its monetary policy be it

through the increase of the interest rate or the reserve ratio. The mounting inflation

pressures will test China's policy stock exchange has sweetened

the terms of its $8 billion merger plan with the Australian

Stock Exchange. The board of a

combined company now has combined company now has an

equal number of Australian Singapore citizens. The number

of board members has been of board members has been cut to 13 from 15. The head of the

Singapore Exchange says the

changes address concerns about

national interest in Australia but the deal still needs

regulatory approval. I think

what we are both committed to, both boards are very committed

to a good corporate governance.

I think there is I think there is a similar structure about corporate governance in Singapore and Australia. It's very clearly that the shareholders over time need to elect the board it's the board that elects the

chairman. What we have committed to is that we bring

the same, the equal numbers of citizens from Australia and Singapore. I think it's a

strong commitment to this is

something we need to make happen, making these two companies come together. I think that we are committing to

a time that is forseeable more

than very long time in our industry which is five think to make commitments

beyond that time is very, very difficult because our industry

is changing and emerging and

what we've seen over the last 2

weeks is good examples. I

what we've seen over the last few year, in interest for companies outside Asia but also outside Asia to outside Asia but also outside Asia to list Kong and Asia to list on Kong and Australia. I think Kong and Australia. I think if

we can bring the Kong and Australia. I think if we can bring the two companies

together no doubt will we have

a stronger combined company and I think we will opportunity to offer more listed companies coming to

us, whether they come from

Europe or North America or from

Russia or Africa, I think Russia or Africa, I think we

will be better. I think we will win more deals. That's win more deals. That's the chief executive of the Singapore Stock Singapore Stock Exchange. The operator of Exchange and Deutsche Borse have detailed

their plans for a combination

that would create the largest exchange operator. The

companies aim to

by tend of year although it might take two months to choose

a in which Deutsche Borse investors would own 60%. The Stock Exchange euro Nex share horlds a 10% premium to horlds a 10% premium to its share price. There's no

question that you have to feel first of all nostalgic, a bit worried, politicians will certainly be worried, outsiders, those that aren't

members of the stock exchange will be American capitalism dead sure that you're going to see the loss are largely supportive of the companies. Westpac is the possibility of lower the possibility of lower borrowing borrowing costs for customers as it refinances high funds borrowed during funds borrowed during the height of the global financial crisis. The lure of tomorrow from Westpac boss Gail

Kelly was part of the bank's battle with the National Australia Bank.

a very visible a very visible kind appears to be returning to the banking industry to the point where least some bank investors are starting to worry. Healthy competition is fantastic and it should be to address but too much

competition, excessive, can be destabilising for our

economy. Westpac has hit abolition of mortgage exit fees

with a package of cost

reductions across a range reductions across a range of products aimed at keeping the customers it's been winning in the battle for home buyer

business. This is not a single

product play, it's about product play, it's about a

package approach, depth of

customer relationships.

Mrs Kelly was speaking as she unveiled Westpac's first quarter trading update. Cash

earnings were up 5% over $1.5

interest margin was also up and impairment charges continue to

fall as the impact of the

global financial through. It wasn't all good

news though. Lending at St expected and the Queensland

floods took at least $50 million off pretax earnings. A

tad more than perhaps I would


the insurance market but in the scheme of things it's just a bit of bit of noise. Overall the bank's quite well positioned. With positioned. With the big 4 banks under pressure in recent time oefrs increases in borrowing charges, Gail Kelly cutting lending rates borrowing charges, Gail Kelly has cutting lending rates in the

next 2 to 3 years. We've got

the 5-year money that we put in

in 2014, 2009 and that rolls off and that was expensive

money at the time. Then you will see quite reduction in costs and it will

be great to be able to pass some of that benefit on to customers. However

Constellation Capital's Peter

Vann say there's a lot of water to flow under the bridge before

that happens. I assume that

will follow through and we'll

wait with baited breath to see

if that happens by that time there

there will be many other moving parts flagged the possibility of

lower borrowing costs for its

customers in the medium to long term, in the short term they

may be going up. The minutes of this month's meeting of the board of Reserve Bank indicate

the RB A is ready to raise

interest rates again if they

feel it is necessary. Despite the floods in Queensland,

despite some developments globally, at the end of the day

the story is very much the same

that the term of trade are

historically high underpinned

by a strong China and by a strong China and

Asia. Which Su-Lin Ong believes Asia. Which Su-Lin Ong believes

will lead to 2 interest rate

hikes this week. Inflation is gone up in the UK leaving

millions struggling to pay

their bill. It's the their bill. It's the highest

reading since November 2008 and

is double the Government's

target. Rising prices for imports and higher value added

tax are being blamed. tax are being blamed. Inflation

is up yet again, that has big

implications for implications for household

budgets and for borrows and savers with on interest rate rises this

year. And one big factor is year. And one big factor is the

surge in food prices. This chocolate factory in Norfolk

knows all about that. The annual inflation rate annual inflation rate was 3.7%

at the end of last year but in

January it accelerated to 4%.

The company says it's doing all

it can to hold prices but admits that increases are

coming down the track. At the

moment we have managed to hold the

the line but with the cost

pressures that we're now under

I think there will be I think there will be some feeding into next six months. Food manufacturers are confronted with soaring raw material costs

around the world. This company

has seen a 20% increase in has seen a 20% increase in what it pays

last year and card board for packaging has packaging has jumped by 40%. Price rises on a whole range of goods and services are now putting real pressure on household budgets. For many

people incomes are lagging well behind the rate of inflation. Stacey and Ben Norfolk, they can cope with

food prices in the shops but they told me things like they told me things like gas bills were really beginning to

bite. It's quite scary really.

It's one of our major It's one of our major bills.

And yet you have the heating on

that much to have to use - try

and put it down as low as

possible. A wage doesn't possible. A wage doesn't go as

far as it used to. Noticeably when we're looking at the when we're looking at the bill

s at the end of the month it's

difficult to think where's all

the money going. Inflation is

now double the Bank of

England's 2% target

have to raise interest have to raise interest rates

soon. The governor Mervyn King

has had to write to the chancellor explaining why

inflation is so high and he hinted that financial markets might

might be right to expect rate rises this year. The Bank of

England will be worried about

inflation at the moment and

will be under pressure to

increase interest rates. The markets are expecting a 0.7%

increase by the end of the year

. The UK has the worst of all

words with the inflation rising

so fast. The chancellor say he's doing his inflation by cutting spending. Inflation is a big issue. The

fashion industry is feeling as though it's been hung though it's been hung out to

dry as it suffers from

lacklustre sales. For more than 30 years Covers has been a

staple in many a woman's wardrobe, now the company's involuntary administration closing some outlets this week

and it's not the only and it's not the only one struggling. It's a case of

retailers trying to survive.

You've got sluggish retail

salesand a culture of discounting. Thrifty shoppers

are learning they don't have to

pay full price. I'm not going to buy something like outrageously expensive. Save

all the money I can. The sales

come just twice a year at this boutique but constant discounting elsewhere discounting elsewhere is sending mixed messages to

consumers. I think the big problem with sales is the

stores are on sale

stores are on sale all the time so the consumer doesn't think

anything of it. Wage increases

in China are pushing up manufacturing costs and cotton

prices are at record highs

after major flooding in Australia and overseas. It's

very, very, very challenging in these current these current conditions to maintain healthy margins. How

can you raise the prices when

retail trade is very retail trade is very slow? But then how can you turn a profit

when your margins are when your margins are being squeezed by the supply chain? The designer chain? The designer Camilla

Franks is bucking the trend.

Her business has grown 200% Her business has grown 200% a

year for the last few years and

there was a sales spike when there was a sales spike when a certain talk show host donned

her design. We had to close our

online boutique the day before Chris - Christmas because Chris - Christmas because we sold out of sold out of stock. Camilla

Franks has turned a backyard

business into an export success

shipping to Europe, the US and

Japan. She says the key to her

success is finding a niche and

being a workaholic helps

too. Now let's take a look at

what's making headlines around

the region. The Hong Kong

Standard reports that the Standard reports that the Bank

of East Asia has posted a

record profit of US $540

million up 61% on the previous year. And the 'Financial Times'

reports on the proposed deal

between the Deutsche Borse and

the New York exchange that will create the world's largest stock and operator. That's all for this

edition of Business Today. If you'd like to look you'd like to look back over

any of our interviews visit our

website at

We look forward to your

feedback. I'm Sue Lannin.

Thanks for joining me, have a great day. Closed Captions by CSI

This morning, Julia Gillard

becomes the first foreign

leader to address New Zealand's

Parliament. This is the Asia

Pacific century, and we are at its heart.

Also this morning, Italian Prime Minister Silvio

Berlusconi to stand trial on an underage sex charge. New South

Wales Labor heading for electoral annihilation

according to the latest poll. Alberto Contador cleared of doping.

Good morning. You're

watching ABC News 24. O'Brien.