The All Ordinaries (ASX: XAO) was trading 2.1% lower on Monday, with shares of Fortescue Metals Group Limited (ASX:FMG), Thorn Group Ltd (ASX:TGA) and Air New Zealand Limited (ASX:AIZ) moving the Australian share market.
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1. Fortescue Metals Group – down 9%
Fortescue Metals Group or FMG is a global leader in the iron ore industry, known for its leading development of world class infrastructure and mining assets in the Pilbara region of Western Australia. Fortescue was founded in 2003 by Andrew Forrest, who is now one of Australia’s wealthiest people. The vast majority of Fortescue’s iron ore, a steel-making ingredient, is shipped and sold to Chinese customers.
Fortescue Metals Group did not publish any material news to the ASX this morning but was leading the market lower nonetheless. More than 90% of Fortescue’s iron ore funnels through Chinese manufacturing hubs, meaning it could be impacted by the Coronavirus-induced slowdown in China. That said, the company has not released material news regarding its profit or growth expectations.
Indeed, the company recently reported a record revenue result and a half-year net profit of $US2.5 billion, largely on account of strong iron ore prices. This seems to have prompted Fortescue Founder and Chairman Andrew Forrest to buy an additional 22 million shares in the company (worth $243 million) this past week, increasing his personal stake to over 35%.
2. Thorn Group – down 38%
Thorn Group is a diversified financial services organisation which owns the Radio Rentals chain and provides alternate consumer and commercial financing solutions, consumer and commercial leasing products and fully integrated debt collection and receivables management.
Thorn Group shares were trading 38% lower today after the embattled finance business told shareholders that its previously anticipated “small net profit” (on an underlying basis) would not eventuate due to arrears in its Business Finance division.
“Debts outstanding for over 30 days have increased from approximately 5% to approximately 8%, partly as a result of Thorn transitioning its collections activities for the expected future growth in Thorn’s receivables,” the company said.
Thorn said it is actively addressing these issues but the impact will likely result in a loss for the full year, although the extent of the impact is yet to be determined.
3. Air New Zealand – down 9%
The flagship airline of New Zealand carries around 17 million passengers a year with a lot of activity in the Pacific Rim between New Zealand, Australia, Asia and the Americas.
Last month, Air Zealand released its financial results to the market and also issued a statement citing the expected impact of the Coronavirus on its full-year 2020 outlook. At the time, the company said: “The airline’s revenue outlook for the remainder of the year is expected to be adversely impacted as a result of softer demand for travel to and from Asian destinations.”
Air New Zealand anticipated a hit of around $55 million, lowering its forecast to between $300 and $350 million in earnings before tax and significant items. The Kiwi authorities have placed a ban on travelers coming from China or Iran after February 2nd, but the NZ Herald reports that Prime Minister Jacinda Ardern has held off placing additional restrictions on travel.
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