Management can take a bow
Management can take a bow
By Alan Kohler
August 24, 2005
Sydney Morning Herald
The 2005 profit season is less than halfway through but it's already clear that there is plenty to like about the current crop of Australian management teams.
Sometimes it's easy to be distracted by aberrations such as Sons of Gwalia, or to be cynical about some of the lumpy pay packets revealed in the annual reports, but company after company these past few weeks has over-delivered with very powerful profit results. That's not because expectations were too low, or because they are being swept along by an Australian economy that is outperforming, but simply because of consistent, high quality management.
It's something investors are celebrating, judging by the outperformance of the Australian market in August so far (up 2.7 per cent versus steady for the World MSCI index).
Typical of what we have been seeing lately is Qantas, which has earned more than the entire American airline industry in the face of stiff headwinds. Most of the attention when Qantas reported was on Geoff Dixon's warnings about future profits and the fact that he always says that sort of thing while announcing record earnings - but perhaps we should pause to reflect on what he has achieved. Running airlines is a terribly difficult business, especially when fuel prices have been rising so much, but Qantas beat expectations by 3 per cent, held net profit margin at close to 6 per cent and return on equity at 12 per cent during a down cycle in his industry. It's times like this when good management really matters.