The half-year profit reporting season (or the mid-year Oscars for ASX-listed companies) is drawing to a close. How did the Aussie companies perform? Which companies excelled and which ones flopped?
At a glance
Generally speaking, the wide range of results reflects the ongoing nature of Australia as a ‘two-speed’ economy. AMP chief economist Shane Oliver says this was a reporting season with modest results. 
“The worst has been factored in, but it’s subdued and is likely to remain like that by the end of the financial year for the non-mining sector,” Oliver says.
At the time of writing, 90% of ASX-listed companies announced their first-half net profit results. Oliver says about 46% of results met analyst expectations. About 31% of companies reported above market predictions, albeit less than the average rate of 45%. On the other hand, 23% came in below expectations, slightly better than the average 25%. 
For just over half of the companies, share prices fell the day its profit results were announced.
The financials
In the six months to December, the Commonwealth Bank experienced a 7% rise in net profit. Unlike the other major banks, the Commonwealth Bank’s CEO, Ian Narev, stated they have no plans to make redundancies.
The other major banks reported quarterly results. Westpac’s quarterly profit was down 3% in the December 2011 quarter, whilst NAB recorded a 7.7% rise and ANZ posted a quarterly profit that was 5.7% higher than the previous year.
Oliver says the Big Four’s results were okay, yet reveal the pressure on interest rate margins and the impact of subdued credit demand.
“It's a testament to the big banks' pricing power - they're still eking out higher profits despite consumers' propensity to save,” says Nathan Bell, research director of Intelligent Investor.
Despite the clear profit margins, improving return on equity and falling bad debts, the outlook for capital gains in banking stocks is likely to be limited. 
Westpac and the Commonwealth Bank are still great buys, but there tends to be disagreement about ANZ shares. Bell says ANZ’s expansion into Asia is risky, whilst Mal Whitten, portfolio manager from Tyndall AM, says the strategy is showing signs of success.
On the other hand, Macquarie Group has had better days. Its first-half profit fell by 24%, surprising analysts who predicted a 12% fall. Macquarie’s chief executive, Nicholas Moore, said the global economic uncertainty had dampened trading activity. Bell says their fortunes are tied to the financial markets, but Macquarie shareholders will see better results soon.
“When markets eventually return to some form of normality, Macquarie should benefit enormously,” says Bell.
Bell says the latest results reveal the insurance industry is still reeling from the spate of natural disasters, although Insurance Australia Group (IAG) is starting to show signs of improvement.
“If the number and severity of natural disasters diminishes in 2012, expect IAG and QBE in particular to report higher profits,” Bell says.
Despite the Whitten adds that IAG shares continue to show underlying value regardless of natural disasters, such as the Melbourne storms last December. 
“The market is clearly impressed with the operating strength and has confidence in [IAG] CEO Michael Wilkins’ stewardship,” Whitten says.
The Telco
First-half profit for Telstra rose by 23%, although this was just short of market expectations. Whitten says the telco’s attention to market differentiation, competitive pricing and customer satisfaction has paid off, in terms of more mobile, mobile broadband and fixed line customers. 
“Telstra delivered the goods,” Whitten says. 
Oliver notes that Telstra is naturally a defensive stock, so the good results aren’t surprising. Existing Telstra shareholders should be thrilled.
Mining magnates
Whitten says both BHP Billiton and Rio Tinto have experienced temporary constraints on their production capacity and that the market responded negatively to way management has allocated the spending of capital.
“The performance of the Alcan investment by Rio has been a massive disappointment, which led to an asset write-down of US$9.6 billion,” Whitten notes.
Oliver says the sector has fallen from such a high position last year and was impacted by the drop in commodity prices in the past several months.
Whilst the absolute size of these profits is still large, Bell notes that BHP and Rio are increasingly reliant on higher volumes rather than rising prices, as well as China’s unbalanced economy. 
Intelligent Investor currently has a “sell” recommendation on Rio; Bell says neither stock is suitable for value investors.
-- By Stephanie Hanna