Overall the reporting season highlighted the continued recovery in corporate earnings, lead by the resources sector – no surprise there.

From a sample of 144 companies in the ASX 200 index that reported results and were covered by our research, 12% exceeded forecasts, 17% were below forecast and 71% were in line with expectations.

In addition, 77% of companies covered by our research experienced growth in operating revenue and 68% saw an increase in after tax profitability. Despite the adverse affects of a higher Australian Dollar many resource companies managed to lift earnings on the back of higher commodity prices. In particular, BHP experienced a 63% increase in earnings per share and Rio Tinto recorded a 46.5% increase.

Whilst earnings growth was broadly strong, dividend growth seemed to lag. However, this was significantly impacted by larger companies such as BHP which only increased their dividend by 10% despite a 68% increase in net profit. Excluding BHP and Rio, which have a pronounced impact on the Australian share index, the overall growth rate in dividends was around 6.1%.

Overall the half yearly reporting season was quite positive, albeit heavily influenced by the large miners. Notwithstanding this, investor confidence has taken a battering in recent months with a number of natural disasters and growing tensions in the Middle East. 

The market has lost more than 9% since its peak in February. This further highlights the ever increasing globalisation of world economies where events thousands of kilometers away impact the performance of our local market, even when conditions seem quite positive in our own backyard.