Qantas share price drops by 6.55% Despite Impressive Full-Year Results

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Despite the release of Qantas Airways Limited’s [ASX: QAN] impressive full-year results, the airline’s stock price experienced a considerable drop of $0.44.

Their share price sits at $6.28 at time of writing.

Qantas’ stellar results fail to impress the market

Qantas saw their revenue increase by 6.2% to $17,060 million in the last financial year. Underlying profit before tax rose by 14.5% to $1,604 million. Statutory earnings per share were up by 21% to $0.56 cents.

The company announced a strong dividend of 10 cents per share, and a $332 million on-market share buyback.

Overall, Qantas’ record underlying profit was driven by strong performances across all aspects of the airline giant, and was supported by healthy demand across key markets.

This comes despite their total fuel bill, which is expected to be $3.920 billion, up by $690 million.

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Qantas Airways chief, Alan Joyce says of the result:

This record result comes despite higher oil prices. We’re facing another increase to our fuel bill for 2018-19 and we’re confident that we will substantially recover this through a range of capacity, revenue and cost efficiency measures, in addition to our hedging program.

And yet, with all this seemingly good news, it doesn’t explain why their stock is one of the worst performing on the ASX today…

Political entanglements?

The drop in the stock price could then possibly be explained by Joyce’s reaction to the recent political squabble in Canberra this week.

Business likes certainty, it likes confidence in what’s going to happen in the future and I think anything that generates uncertainty which is what we’re seeing in Canberra is not helpful,’ Mr Joyce said.

Whilst Joyce gave no opinion toward the spill, he declared that Qantas would continue to speak out about controversial issues, such as gender equality, marriage equality and indigenous rights, if Australia found itself under a more conservative Peter Dutton-led government.

Qantas is no stranger to controversy when it comes to CEO Alan Joyce — and he sees no reason to stop.

Nothing’s going to change our position of being outspoken on issues that are important to our customers, our employees and our shareholders and that will continue.’

And they’re not the only major players reacting to the Canberra crisis — the wider Aussie market fell yesterday with the political uncertainty. BHP fell yesterday, despite posting a record dividend. Today it bounced 1.7%, most likely brought up by bargain hunters trying to fight their way into a stock brought down for no real reason.

A2 Milk also shot up yesterday, and has risen a little bit more so far today — it seems good profit results and a growing market share in China have done well to guard them from the unsettlement at home.

Hopefully time (and an overdue result) will bring calm to those caught in the wave effect of the Canberra crisis.


Matt Hibbard

For Money Morning

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