Mines, factories and salaries in the spotlight on Tuesday

Scrapping R339m spent on software development is likely to knock Alexander Forbes into a basic loss per share for the first half of its 2019 financial year.

The insurance group warned shareholders on November 23 it expected to report on Tuesday a basic loss per share of about 4c for the six months to end-September. It reported basic earnings per share of 22c in the first half of its 2018 financial year.

Interim headline earnings per share (HEPS), which exclude the impairment of software assets, would decline by up to 26%, the trading update said.  

Alexander Forbes said the drop into a basic loss per share was partly due to its decision to scrap a R287m software development project, with an additional R52m cost to “amicably terminate the contract with the primary implementation partner”.

Besides the impairment of software assets, earnings fell due to operating profit declining by about 3%, the trading statement said.

Tuesday is a busy day on the economics front, with Stats SA scheduled to release October’s mining figures at 11.30am and manufacturing at 1pm.

Mining is expected to have continued September’s 1.8% decline, but at a slightly slower pace of about 1.5%, according to a poll of economists by Trading Economics.

Manufacturing output is expected to have picked up to 0.8% from 0.1%.

Stats SA is also scheduled to release the third quarter’s employment statistics at 11.30am. 

In contrast to its quarterly labour force survey, which was released on October 30, showing that SA’s headline unemployment rate was 27.5% in the September quarter, the Quarterly Employment Survey (QES) report focuses on average wages.

“The performance of both sectors has been affected by softening global economic activity and international trade tensions, reflected in both weaker demand and commodity prices,” Investec Bank economist Kamilla Kaplan said in her weekly note e-mailed on Friday.

“Going forward, elevated operating costs, electricity supply shortages and perceived policy and political uncertainty will constrain the growth potential in both sectors.”

The JSE received no clear signals from Asian markets on Tuesday morning.

Naspers’s main asset Tencent was up 0.71% to HK$310.20, and BHP was up 1.02% to A$31.61 in Sydney, indicating the JSE may recover some of Monday’s 1.18% loss.

The rand was trading at R14.37/$, R16.33/€ and R18.07/£ at 6.30am.

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Source: businesslive.co.za