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During February and August, most Australian listed companies reveal their profit results and guide how they expect their businesses to perform in the upcoming year. Whilst we regularly meet with companies between reporting periods to gauge how the businesses are performing, companies open up their books during reporting season to allow investors a detailed look at the company’s financials. As company management has been in “blackout” (and prevented from speaking with investors) since mid-June, share prices in the six weeks leading up to the result are often influenced by rumours, theories and macroeconomic fears rather than actual financials. 
The August 2025 company reporting period, which concluded last Friday, showed that most Australian companies were in better shape than expected, especially those exposed to the domestic rather than international economies. 

The dominant themes of the August reporting season were increased volatility and extreme share price moves on reporting day (both positive and negative), with the average intra-day share price move on the day of the results close to 8%! In general, the banks remain strong, with interest rate cuts to support consumer spending and weaker housing markets in Australia and the United States. In this week’s piece, we examine the key themes from the reporting season that concluded last week, along with the best and worst results, and how the Atlas Portfolio performed.

Increased Volatility

The defining feature of the August 2025 reporting season was the heightened volatility on results day, which UBS has demonstrated in the table below has been steadily increasing. Further, this intra-day volatility was not confined to struggling small caps reporting unexpected losses; in August, we saw substantial moves in the share prices from blue-chip companies such as CSL, Woolworths, James Hardie and Wise Tech after releasing results that were below market expectations. In looking for reasons behind this volatility, some have pointed to the high level of the ASX 200, which is at an all-time high. If this were true, we would expect only one-way traffic on the downside; however, several companies saw their share prices jump markedly after reporting results slightly better than expected, namely Coles, Westpac, and Stockland. According to an Atlas view, a significant component of the higher volatility in the reporting season is attributed to the influence of high-frequency trading funds (HFT) and the increased prevalence of trading strategies utilising AI to trade based on the tone of the results day calls. For example, JB Hi-Fi fell 8% on results day after reporting a solid result, and then the share price recovered the following day to finish +7% for the month. 

Banks continue to Shine

As we have seen over the last few reporting seasons, the banks continue to remain well-positioned within the Australian economy, with the Commonwealth Bank providing its annual results and the other banks providing quarterly trading updates. Across the updates, deposit competition appears to be falling, with Westpac and NAB increasing their Net Interest Margin (NIM) over the quarter, while CBA’s NIM remains steady over the half. In combination with lower expense growth, all of the banks were able to increase their profits over the period. Another consistent theme from the banks was extremely low bad debts, with CBA reporting 0.07% impaired loans, which are likely to benefit over the short to medium term as interest rates look likely to fall further. 
 

Consumer Spending strong assisted by rate cuts.

Before the reporting season, one thing that was not fully understood was how much the three interest rate cuts the Reserve Bank made during the year would boost consumer spending. The data from the reporting season suggests that pressure on households is easing, and consumers are continuing to spend on discretionary items. However, consumers are not willing to open their wallets to all companies to the same level. 

Electronics retailers JB Hi-Fi and Harvey Norman both increased revenue by 10% and 4% respectively, driven by the uptake of new AI-enhanced electronic offerings. Both retailers outlined how the demand for AI products and the need for cutting-edge technology across connected home systems (smart washing machines, smart fridges and smart furniture) have captured the interest of many consumers.

The big supermarkets Coles and Woolworths showed that consumers continue to spend more on groceries, with each of them reporting a revenue increase of 4% and 3%, respectively. This stronger spending appears likely to continue, with Coles’ revenue increasing by 5% in the first eight weeks of FY26 and Woolworths’ revenue increasing by 2% over the same period. However, consumers appear to be pulling back on spending on alcohol, with Coles Liquor showing only a 1% increase in revenue over the period and Endeavour’s Dan Murphy’s sales remaining stable throughout the year. 

Notably, the trading outlook for the first six weeks of the 2025 financial year showed that the three interest rate cuts have energised retail sales. Many retailers, including Adairs (+23%), Universal Stores (+17%), Nick Scali (+7%), and JB Hi-Fi (+5%), have all posted strong sales growth post Jun-30. 

Show me the money

A large focus for the August 2025 reporting season was how companies allocated capital management and how best to utilise it within the company before returning future earnings back to shareholders. Companies that earned franking credits saw most of them distributed back to shareholders, with some companies announcing special dividends (JB Hi-Fi and Wesfarmers) that will also be fully franked when paid to shareholders. Whilst only nine companies in the ASX 200 announced on-market share buybacks, the size of these buybacks was quite large, with Telstra announcing a $1 billion buyback, CSL announcing a $750 million buyback, Suncorp announcing a $400 million buyback, and Brambles announcing a $400 million buyback.

Across the ASX Top 20 stocks that reported (excluding the major banks, which have different financial year-ends), the weighted average increase in dividends was 2.4%. On the positive side of the ledger, Wesfarmers, Northern Star and QBE Insurance offset dividend cuts from BHP, Woodside, Fortescue and Woolworths, across the wider ASX 200, corporate dividends declined by -2%.
 

Best and Worst Performers

Over the month, Charter Hall, Seek Limited, Ampol, Life 360 and Coles delivered the best results. Despite looming tariffs and economic uncertainties, these companies were able to increase revenues and prices (Seek and Life 360), grow their businesses through mergers and acquisitions (Charter Hall and Ampol), and improve efficiency and productivity to win market share (Coles).

Looking at the negative side of the ledger, James Hardie, CSL, Telix Pharmaceuticals, Reece, and Ramsay Healthcare reported poorly received results by the market. The common themes for the group included a weaker housing market across both the United States and Australia (James Hardie and Reece), revenue growth slowing (CSL and Telix Pharmaceuticals), and a decline in profit margins due to higher interest costs and wage inflation (Ramsay Healthcare).
 

Result of the Season

Typically, the result of the season is a small company that surprises the market with an unexpectedly good outcome. Still, for August 2025, Atlas have chosen the very large and somewhat boring conglomerate Wesfarmers. Wesfarmers shares were priced for perfection heading into the results, and that is largely what they delivered, something that rarely occurs, and with profit growth far ahead of Australian GDP growth, unusual for such a large company. 

Wesfarmers delivered a robust set of numbers this reporting season, with earnings rising 14% to $2.9 billion—a result that reflects the quiet compounding power of operational discipline across its retail portfolio. The standout performer was the Kmart Group, which saw earnings climb 9% on the back of productivity gains from integrating systems across Kmart and Target. While Bunnings remains the crown jewel with its enviable 12% profit margins and a staggering 72% return on capital, the real surprise packet was Kmart. Once the underdog, Kmart has emerged as a serious contender, posting $1,046 million in profit—up from pre-COVID margins of 6% and a 30% return on capital to now 9% margins and a 68% return. Much of this uplift can be attributed to the success of its Anko brand, which continues to resonate with value-conscious consumers. In contrast, Woolworths‘ BigW reported a $65 million loss, underscoring the divergence in execution between the two discount retailers.

On the capital management front, Wesfarmers continued its shareholder-friendly approach, announcing a fully franked dividend of $2.06, up 4%, and reaffirming its progressive dividend policy. Importantly, the Dividend Reinvestment Plan will be neutralised, with shares purchased on-market—a move that avoids dilution and signals confidence in the share price. To top it off, Wesfarmers will return additional capital via a $1.50 special dividend, split between a $1.10 capital component and a $0.40 special dividend, offering a tax-effective cherry on top for long-term holders. 
 

How did we go?

Overall, we are reasonably pleased with the results from the reporting season for the Atlas Portfolio. In general, the companies in our portfolio were able to increase earnings and dividends, with some reporting record dividends in a more challenging economic environment. This pleasure was tempered by companies such as Sonic Healthcare and CSL falling sharply despite reporting record profits and dividends.  

As a long-term investor focused on delivering income to our investors, we closely examine the dividends paid out by our companies and whether they are growing. After every reporting season, Atlas looks to “weigh” the dividends that our investors will receive. While share prices fluctuate every second between 10 am and 4 pm, driven by changing market emotions, the primary reason for buying a share is to gain access to a share of the company’s profits, which are paid out in the form of dividends and associated franking credits. 

Using a weighted average across the Portfolio, our investors’ dividends will be +6% greater than the previous period in 2024, and significantly ahead of the -2% decline across the wider ASX. 

Fundies rattled as Woolworths and WiseTech wipe $11b off ASX

Investors in some of the country’s largest listed companies say the August reporting season has been one of the most volatile in recent memory.

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Australia’s biggest company CBA has posted a $10.13 billion net profit but billions were wiped off the bank’s share price, as analysts say the stock was “priced for perfection”.

For equity analysts and fund managers in Australia, Christmas comes twice a year, every February and August, when most Australian listed companies reveal their semi-annual profit results. Companies also guide what growth in profit, revenue, profit margins or dividends that shareholders can expect over the following financial year. 

When companies miss market expectations for earnings, a guide to a bleaker future the day can be very unpleasant. Alternatively, it can be enjoyable when the company reports a result that validates the investment case for including the stock in the portfolio. 

In this piece, we will explore how Atlas approaches each day during the reporting season and what typically occurs during a typical day during the August earnings season that kicks off next week. 

Before Reporting Season   

In the lead-up to reporting season, Atlas reviews all the stocks in the portfolio and considers the key factors and financial metrics that investors will be looking for on results day. We compare our forecasts to the consensus analyst forecasts. What we are trying to do here is to identify which companies are performing ahead of expectations and, more importantly, which companies have the potential to disappoint. For example, in June, we trimmed our positions in Wesfarmers and Commonwealth Bank (again) based on our view that their share price movements in 2025 were excessive compared to our expectations for their upcoming financial results. 

Atlas expects Australia’s largest bank to deliver growth in earnings per share for FY2025 of around 4%, which seems relatively modest, considering the company is trading on 29 times forward earnings and whose growth is largely linked to Australian GDP growth. Similarly, while Wesfarmers is arguably the nation’s top retailer, the expected 1% earnings growth does not mesh with a company trading on 36 times forward earnings.

In the case of the large mining and energy companies, investors have fewer surprises on results day. This occurs as these companies release a production report in mid-July detailing the tonnes of iron ore or LNG produced, along with the average price received. This allows investors to back-solve for expected profits based on assumed production costs. In July 2025, the production reports were mostly benign except for the gold companies, some of which revealed production issues.  

Confessions 
The months leading up to the start of each reporting season are known as “Confession Season”, specifically from late May to mid-July, as companies become aware that they will not meet profit expectations and then “confess” their shortcomings. When business conditions are occasionally stronger than expected, the company will upgrade guidance before results day.  

The Corporations Act imposes continuous disclosure obligations on listed companies, which require companies to keep the market informed of any market-sensitive information that would materially impact the company’s share price. This is done to maintain market integrity and prevent some traders from using inside information on a company to the detriment of others, such as knowledge that a company’s earnings will be below expectations. For example, in June, Domino’s Pizza, IDP Education and Reece all announced that their earnings for the past six months would be substantially weaker than expected. 

When a company has already revealed its unexpectedly poor results before the reporting season, the focus on results day is not on the actual profit numbers but on a detailed explanation of what caused the issue and the management’s plan to address it. This often sees a rebound in the company’s share price when the “facts” are more benign than the “fears”. A retailer of car parts falls into this category for Atlas, and we look forward to having a robust discussion with management immediately after the results are released in late August. 

The Spread over the Month 
Companies listed on the ASX with a June year-end have until the last day of August to release their financial results; otherwise, they are suspended from trading on September 1st. However, results are not released evenly throughout the month, as companies tend to avoid reporting in the first weeks of the month, preferring instead to release them in the middle and last weeks. Consequently, there are days when several large companies report on the same day and often at the same time, which often results in the market making swift and poorly considered decisions about whether the results are good or bad. Frequently, we see a stock trading down on what Atlas considered to be a favourable result, only to see the company’s share price recover the following day after investors have digested the financial reports. This trend has been exacerbated by the impact of high trading “bots” in the market, utilised by high-frequency trading firms that are mostly influenced by momentum algorithms. A factor not imagined during my first reporting season in Canada over a quarter of a century ago.

The chart below shows the distribution of results during the upcoming reporting season, with the week starting August 19th being the heaviest. Tuesday, August 19th, will be challenging for many investors, with BHP, Reliance, CSL, Challenger, Hub24, Region, Sims Metals, and Woodside all reporting.  

 

On a busy day with multiple companies reporting simultaneously, we will skim through the results and look at the initial price movement at the market open to guide which companies to prioritise. The focus will then shift to those companies whose share prices are falling, either to understand the flaw in our investment thesis or to see whether the weakness is temporary and could represent a buying opportunity.

On the Day 
Generally, companies post their financial results with the ASX around 9 am; this gives investors an hour to digest the facts and figures before trading on the stock exchange begins at 10 am. 

During this period, we will review the profit and loss, balance sheet, and cash flow statements, comparing our forecasts to what the company actually delivered. Additionally, it is crucial to compare a company’s performance against its competitors. For example, in isolation, JB Hi-Fi or Coles reporting a slight decline in sales and a steady profit margin could signal a great result if Woolworths or Harvey Norman reported significant decreases in sales and shrinking profit margins earlier in the week. A better result than competitors indicates superior operational performance and a market share gain. 

Company management will then formally present their results to shareholders on a conference call or in person during the morning, generally between 10:30 am and midday. Occasionally, we see similar companies give presentations at the same time, which leads to questions to their investor relations teams about coordinating calendars. 

These presentations are directed towards the institutional investment community and are generally closed to the media and public. They can take 45 minutes to two hours, depending on the company’s complexity, the analyst’s interest, or the negative result that requires management explanation. Before the COVID-19 pandemic in 2020, these events were held in person at a hotel auditorium or the company’s offices, which allowed for some discussion with the management team afterwards. However, in 2025, most companies (except a few financial companies) will host the presentation online. Institutional investors appreciate this change as there are often days when several companies report, some at the same time. 

During the call, the management team details the factors contributing to the profit result and explains any potentially contentious issues. The most informative part is always the question-and-answer session, which allows investors to gauge management’s confidence in addressing the most controversial issues from their financial accounts. 

Typically, it will only be the sell-side analysts asking management questions, with the large institutional investors saving their questions for behind closed doors. The problem with this is that, in addition to writing research, some sell-side analysts want to protect their relationship with the company and maintain a good relationship for future lucrative investment banking deals. Maintaining a good relationship with company management has become increasingly important, as investment banking deals, such as capital or debt raises, are far more profitable than the meagre brokerage fees paid to buy and sell shares. Consequently, a sell-side analyst has fewer incentives to skewer a management team or institute a sell call on a company. Frustratingly, this can sometimes result in soft questions being served up for management or avoiding the hard questions when management has made mistakes. 

After presenting the results, Atlas will typically have a brief discussion to assess whether there have been any significant changes to our thoughts and to discuss the market reaction. The immediate market reaction can often be misleading, as most trading on results day is conducted by hedge funds or high-frequency algorithmic trading, which is driven by computers rather than long-term, fundamental investors.

Immediately Afterwards 
Over the following week, the company will organise individual one-hour meetings with their largest institutional shareholders in Australia and overseas. Before these meetings, it is essential to be well-prepared, as this is frequently the best forum to determine whether you should buy more of a company’s stock or completely sell out. 

During our meetings with the management teams, we will generally seek clarity (on behalf of our investors) on specific issues that we feel weren’t covered to our satisfaction at the formal presentation. While some of these meetings can be quite hostile or very friendly, they are a valuable forum for both parties to give feedback on how our client’s capital has been managed in the past and how that capital should be employed in the future. 

After the management meetings and reviewing the financial results of a company’s competitors, Atlas is then in a position to determine what changes (if any) are made to our valuation of the company and whether the results have changed our investment thesis for owning the company. We will also look at the key themes emerging from the reporting season. For August 2025, this is likely to revolve around the health of the economy and the impact (if any) of Trump tariffs.