IN FOCUS6-8 min read

Reporting season wrap up: Storytelling over substance

This year’s reporting season illustrates the value of long-term company plans in a volatile economy. While continued lockdowns mean Australia hasn’t yet moved into a recovery phase, opportunities still await patient investors.



Martin Conlon
Head of Australian Equities

Investors looking long term

This year’s reporting season has revealed a fascinating divergence between companies with strong short-term results and those attracting investor interest due to underlying price trajectory, growth projections, durability and thematics. Strong financial performance by big mining companies, courtesy of iron ore and steel prices, was not reflected in stock movements. However, the tech sector was a standout as investors look to companies that can tell an optimistic story about the future. The COVID pandemic has created beneficiaries such as online supermarket retailers, as well as companies making large losses. Again, however, investors are distinguishing between the immediate effects of lockdowns and medium to long-term profitability.

This season’s winners and losers

Tech generally performed well and can be put in the winner’s column, reflecting the growth of major US players like Amazon and Google. The tone of reporting season was set by payments fintech Square’s US$29 billion acquisition of Afterpay. WiseTech Global achieved approximately a 50% share price increase in August, based on solid but unspectacular results. Outside of the technology sector, Domino’s Pizza was a winner, with investors embracing its plan for a longer-term store rollout.

Some companies like BHP, Fortescue Metals Group, Rio Tinto and BlueScope had good company performance; however, a dip in spot prices (as opposed to future prices) for iron ore and steel subdued stock gains. Property giants like Lendlease are facing challenging times and haven’t been able to deliver the value that shareholders expect.

The outlook post-COVID

Despite how good things seemed a few months ago, the current Delta outbreak in Sydney and Melbourne means Australia isn’t yet entering an economic recovery. Online retail and supermarkets are understandably doing well in a lockdown environment. Amidst ongoing uncertainty, people remain hopeful about the prospects of travel stocks like Qantas and Flight Centre. Their share prices are holding up despite the companies posting large losses, as investors await the return of Australians’ massive propensity to travel once borders reopen.

Other companies are doing it tougher than normal. One example is Ramsay Health Care, which has faced challenges due to postponed hospital elective surgery. In general, though, investors are able to see through short-term challenges in favour of long-term value.  

Without a crystal ball to say when lockdowns will end, it’s unclear which companies and industries will come out strong. Tourism and hospitality remain incredibly challenged by lockdowns, as do sectors such as property and commercial office space. And will the transition to online retail survive, or will we revert to more normal ways of shopping post-COVID? Only time will tell.

A new approach to sustainability

The strong actions of some of Australia’s largest companies in support of ESG (Environmental, Social and Governance) has become a major trend. In this respect, BHP probably provided the highlight of reporting season. Not even the most optimistic observer would have expected it to divest its petroleum business by merging with Woodside: one of the biggest deals of recent times and an amazingly well-kept secret.

The important point for investors is that the ESG debate needs to transition away from a portfolio emissions approach. Simply moving investments to companies with lower emissions is not going to be enough. We’re at the juncture where high-emitting companies that invest aggressively to clean up their energy consumption can make the biggest difference to Australia’s carbon footprint.

Positioning our equities portfolio

There are some great opportunities in the market; however, we are not looking for “momentum darlings” but businesses with a reasonable price trajectory, valuations and underlying performance. At the moment, that includes telcos, aluminium, and insurance; in other words, sensibly priced stocks with underlying assets that are headed in the right direction.

Broadly speaking, industries like insurance – including QBE – and even some businesses affected by lockdown, such as Vicinity Centres, did reasonably well for us during the month. Because we don’t have massive portfolio positions in companies that have been impacted by iron ore and steel price fluctuations, we didn’t fare too badly.

Extreme bull market conditions have meant that speculative stocks have done especially well. However, this is “no time for heroes” when investment managers should be super aggressive in portfolio positioning. Instead, we are looking to sustainable businesses across a broad range of sectors – in commodities, materials, financials, insurers and supermarkets. These offer the prospect of durability without being subject to too many external factors.

Learn more about investing in Schroders' Australian Shares.

Important information

Important Information:

This document is issued by Schroder Investment Management Australia Limited (ABN 22 000 443 274, AFSL 226473) (Schroders). It is intended solely for wholesale clients (as defined under the Corporations Act 2001 (Cth)) and is not suitable for distribution to retail clients. This document does not contain and should not be taken as containing any financial product advice or financial product recommendations. This document does not take into consideration any recipient’s objectives, financial situation or needs. Before making any decision relating to a Schroders fund, you should obtain and read a copy of the product disclosure statement available at or other relevant disclosure document for that fund and consider the appropriateness of the fund to your objectives, financial situation and needs. You should also refer to the target market determination for the fund at All investments carry risk, and the repayment of capital and performance in any of the funds named in this document are not guaranteed by Schroders or any company in the Schroders Group. The material contained in this document is not intended to provide, and should not be relied on for accounting, legal or tax advice. Schroders does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this document. To the maximum extent permitted by law, Schroders, every company in the Schroders plc group, and their respective directors, officers, employees, consultants and agents exclude all liability (however arising) for any direct or indirect loss or damage that may be suffered by the recipient or any other person in connection with this document. Opinions, estimates and projections contained in this document reflect the opinions of the authors as at the date of this document and are subject to change without notice. “Forward-looking” information, such as forecasts or projections, are not guarantees of any future performance and there is no assurance that any forecast or projection will be realised. Past performance is not a reliable indicator of future performance. All references to securities, sectors, regions and/or countries are made for illustrative purposes only and are not to be construed as recommendations to buy, sell or hold. Telephone calls and other electronic communications with Schroders representatives may be recorded.


Martin Conlon
Head of Australian Equities


Australian Equities
Alpha Equity
Martin Conlon
Follow us

This website is owned and operated by Schroder Investment Management Australia Limited (ABN 22 000 443 274, AFSL 226473).  Your access to this website is subject to the Terms of Use found by clicking the ‘Important Information’ link below.  By using this website, you agree to be subject to these Terms of Use.