1 00:00:05,200 --> 00:00:06,600 Speaker 1: This is what the Flux. 2 00:00:06,680 --> 00:00:09,879 Speaker 2: I'm Brett at Justin and it's Friday, the Spooky thirteenth, 3 00:00:09,920 --> 00:00:11,240 Speaker 2: the February does. 4 00:00:11,119 --> 00:00:14,200 Speaker 3: It boy, It's officially earnings season in Australia, which means 5 00:00:14,240 --> 00:00:17,400 Speaker 3: analysts and investors are dissecting every word coming out of 6 00:00:17,480 --> 00:00:20,520 Speaker 3: CEO's mouths. And if AI wasn't hot last year, it 7 00:00:20,600 --> 00:00:23,200 Speaker 3: is clearly hot now. In fact, We're quote used the 8 00:00:23,200 --> 00:00:26,840 Speaker 3: word AI eighty two times in their presentation, while Combank 9 00:00:26,920 --> 00:00:27,360 Speaker 3: used it. 10 00:00:27,360 --> 00:00:28,600 Speaker 1: Just over sixty times. 11 00:00:28,680 --> 00:00:31,360 Speaker 3: The thinking here is act as if you know AI well, 12 00:00:31,640 --> 00:00:33,720 Speaker 3: so it can't cut your lunch. 13 00:00:34,240 --> 00:00:36,080 Speaker 2: Fox Adam. If you hear a lot about investing and 14 00:00:36,080 --> 00:00:38,800 Speaker 2: it's getting stuck at the starting line of your investing journey, 15 00:00:38,880 --> 00:00:41,280 Speaker 2: we have got you because in this month's Academy Share 16 00:00:41,280 --> 00:00:44,520 Speaker 2: Market Basics from Zero to Investor, we break down share buying, 17 00:00:44,720 --> 00:00:47,720 Speaker 2: decoding a risk tolerance, and unlocking the secrets of ETFs. 18 00:00:47,760 --> 00:00:49,520 Speaker 2: So if you want to learn more about going from 19 00:00:49,720 --> 00:00:52,000 Speaker 2: zero to investor, make sure to download the Flux app 20 00:00:52,000 --> 00:00:53,320 Speaker 2: and check out the Academy this month. 21 00:00:53,440 --> 00:00:56,440 Speaker 3: Three splendid stories Today Josy Boy, Let's do it for 22 00:00:56,520 --> 00:00:59,600 Speaker 3: our first A and Z's profit has jumped six percent 23 00:00:59,720 --> 00:01:02,120 Speaker 3: to all two billion dollars after cutting three and a 24 00:01:02,160 --> 00:01:05,319 Speaker 3: half thousand jobs under its new an Z twenty thirty strategy. 25 00:01:05,400 --> 00:01:07,800 Speaker 2: Well well, well, it turns out trimming the payroll can 26 00:01:07,840 --> 00:01:10,280 Speaker 2: actually fashion the profit line, b Man, So tell me 27 00:01:10,319 --> 00:01:10,680 Speaker 2: more so. 28 00:01:10,760 --> 00:01:13,280 Speaker 3: Am Z is one of Australia's big four banks, founded 29 00:01:13,319 --> 00:01:16,039 Speaker 3: all the way back in eighteen thirty five and now 30 00:01:16,040 --> 00:01:19,119 Speaker 3: employing around forty two thousand people across the region. 31 00:01:19,360 --> 00:01:21,600 Speaker 2: Man in twenty twenty five and ZED brought in a 32 00:01:21,680 --> 00:01:24,240 Speaker 2: new CEO, Nunumatos, to take over the bank, and he 33 00:01:24,319 --> 00:01:26,039 Speaker 2: came in with a Portuguese bang. 34 00:01:26,120 --> 00:01:28,039 Speaker 3: He cut three and a half thousand jobs from the 35 00:01:28,040 --> 00:01:30,920 Speaker 3: AZD workforce, plus one thousand more contractors. 36 00:01:30,959 --> 00:01:33,399 Speaker 2: He shut down a z's venture capital arm eighteen thirty 37 00:01:33,400 --> 00:01:36,759 Speaker 2: five I, including one of their key companies cash rewards. 38 00:01:36,360 --> 00:01:39,839 Speaker 3: And ANZ has already shifted to quarterly reporting after previously 39 00:01:39,880 --> 00:01:41,360 Speaker 3: only reporting half year earning. 40 00:01:41,600 --> 00:01:44,040 Speaker 2: Man his where it gets interesting, because AMZ just announced 41 00:01:44,040 --> 00:01:46,679 Speaker 2: their cash profit rose six percent to one point ninety 42 00:01:46,680 --> 00:01:49,120 Speaker 2: four billion bucks for the first quarter of this year. 43 00:01:49,160 --> 00:01:50,559 Speaker 1: And what was the reason for the big uptick? 44 00:01:50,600 --> 00:01:53,120 Speaker 2: Well, no surprise here, largely driven by cutting those three 45 00:01:53,120 --> 00:01:55,120 Speaker 2: and a half thousand jobs. As part of his new 46 00:01:55,360 --> 00:01:58,000 Speaker 2: twenty thirty strategy, and investors they loved it. 47 00:01:58,040 --> 00:02:01,120 Speaker 3: ANZ shares jumped more than eight percent in early trading 48 00:02:01,120 --> 00:02:03,360 Speaker 3: after this news, bro So what is the key learning here? 49 00:02:03,480 --> 00:02:06,279 Speaker 3: When growth is hard to come by, companies often turned 50 00:02:06,280 --> 00:02:07,240 Speaker 3: to cost control. 51 00:02:07,560 --> 00:02:10,480 Speaker 2: Man Ancet didn't grow profits because lending exploded or their 52 00:02:10,560 --> 00:02:11,440 Speaker 2: margins searched. 53 00:02:11,760 --> 00:02:15,240 Speaker 3: No, it grew profits because it reduced its expenses. In fact, 54 00:02:15,360 --> 00:02:18,160 Speaker 3: its cost to income ratio dropped below fifty percent, but 55 00:02:18,240 --> 00:02:21,079 Speaker 3: in the previous reporting period it was over sixty five percent. 56 00:02:21,160 --> 00:02:23,119 Speaker 2: Wow, and its profit drop this period as well. 57 00:02:23,200 --> 00:02:25,280 Speaker 3: But here is the catch, Jazzy boy. Cutting cost is 58 00:02:25,320 --> 00:02:28,320 Speaker 3: within management's control. The growing revenue is a little harder 59 00:02:28,320 --> 00:02:28,760 Speaker 3: to come by. 60 00:02:29,120 --> 00:02:32,480 Speaker 2: Revenue growth depends on winning new customers, growing lending volumes, 61 00:02:32,520 --> 00:02:35,160 Speaker 2: and taking market share from its competitors. And right now, 62 00:02:35,280 --> 00:02:38,200 Speaker 2: while the broader banking system is seeing strong lending growth, 63 00:02:38,200 --> 00:02:40,880 Speaker 2: handes that is capturing only a small slider. So it 64 00:02:40,880 --> 00:02:43,120 Speaker 2: seems like phase one, the cleanup, looks to have been 65 00:02:43,160 --> 00:02:45,440 Speaker 2: executed successfully from a financial perspective. 66 00:02:45,560 --> 00:02:47,880 Speaker 1: Phase two, the growth part, that's a little bit harder. 67 00:02:48,320 --> 00:02:51,440 Speaker 2: For our second story, Temple and Webster's share prices plummeted 68 00:02:51,480 --> 00:02:54,079 Speaker 2: thirty percent, but it's promising to double down on its 69 00:02:54,080 --> 00:02:57,240 Speaker 2: discounts to compete heavily against Ikea and Harvey Norman. 70 00:02:57,400 --> 00:02:59,680 Speaker 3: Nothing quite like a thirty percent share price tumble to 71 00:02:59,760 --> 00:03:02,040 Speaker 3: test the nerves, don't you reckon, Josie Boy, tell me 72 00:03:02,080 --> 00:03:02,320 Speaker 3: more so. 73 00:03:02,360 --> 00:03:06,760 Speaker 2: Temple and Webster is Australia's largest pure play online furniture retailer. 74 00:03:06,760 --> 00:03:08,440 Speaker 2: It was founded in twenty eleven and listed on the 75 00:03:08,440 --> 00:03:09,920 Speaker 2: ASX in twenty sixteen. 76 00:03:10,040 --> 00:03:12,720 Speaker 3: Jose Boy, Temple and Webster has grown a lot over 77 00:03:12,760 --> 00:03:13,960 Speaker 3: the past decade. 78 00:03:13,600 --> 00:03:16,480 Speaker 2: That's true, But now they've just delivered a pretty ugly 79 00:03:16,600 --> 00:03:17,359 Speaker 2: quarterly update. 80 00:03:17,400 --> 00:03:18,840 Speaker 1: All right, give me the good parts first. 81 00:03:18,960 --> 00:03:21,040 Speaker 2: The good news is that its revenue still rose twenty 82 00:03:21,080 --> 00:03:23,080 Speaker 2: percent to over three hundred and seventy five mil, and 83 00:03:23,160 --> 00:03:26,160 Speaker 2: active customers jump fourteen percent to over one point three 84 00:03:26,200 --> 00:03:26,800 Speaker 2: million people. 85 00:03:26,880 --> 00:03:28,200 Speaker 1: Mm hmm. What's the bad news? 86 00:03:28,280 --> 00:03:31,359 Speaker 2: The bad news is that net profit fell thirty six percent, 87 00:03:31,600 --> 00:03:33,600 Speaker 2: just under five point eight mil for the half year. 88 00:03:33,680 --> 00:03:34,200 Speaker 1: Why is that? 89 00:03:34,960 --> 00:03:37,920 Speaker 2: It's pretty simple because they went for aggressive promotions and 90 00:03:38,080 --> 00:03:41,840 Speaker 2: aggressive discounting, which really hurt its margins. And while most 91 00:03:41,920 --> 00:03:44,480 Speaker 2: CEOs would pause for a second and choose to pull 92 00:03:44,520 --> 00:03:47,720 Speaker 2: back potentially on this margin compression. Temple and Webster is 93 00:03:47,760 --> 00:03:50,360 Speaker 2: doubling down. Yeah, its CEO says he won't back off 94 00:03:50,400 --> 00:03:51,560 Speaker 2: the discounting strategy. 95 00:03:51,600 --> 00:03:54,160 Speaker 3: In fact, he reckons that the grabbing market chare now 96 00:03:54,280 --> 00:03:57,520 Speaker 3: is key as millennials enter peak home furnishing years. 97 00:03:58,080 --> 00:03:59,360 Speaker 2: So what is the key learning here? 98 00:03:59,400 --> 00:04:02,080 Speaker 3: One of the biggest tensions in growth businesses is that 99 00:04:02,200 --> 00:04:05,119 Speaker 3: pesky trade off between market share and margins. 100 00:04:05,440 --> 00:04:07,960 Speaker 2: The market share is the percentage of total sales in 101 00:04:08,000 --> 00:04:10,520 Speaker 2: an industry it's captured by a company, and Temple westa 102 00:04:10,600 --> 00:04:13,240 Speaker 2: They've got two point nine percent of the Australian furniture. 103 00:04:12,880 --> 00:04:15,080 Speaker 1: Market, up from just one percent six years ago, and. 104 00:04:15,040 --> 00:04:17,400 Speaker 2: They maan to win more market share. Companies often need 105 00:04:17,440 --> 00:04:20,480 Speaker 2: to lower their prices or increase promotions. 106 00:04:20,040 --> 00:04:21,320 Speaker 1: And that has flow and effects. 107 00:04:21,360 --> 00:04:23,040 Speaker 2: It can squeeze their profit margins. 108 00:04:23,080 --> 00:04:25,719 Speaker 3: In Temple and Webster's case, its revenue increase twenty percent, 109 00:04:25,760 --> 00:04:27,960 Speaker 3: but net profit fell thirty six percent. 110 00:04:27,680 --> 00:04:30,640 Speaker 2: And the man investors tend to act pretty negatively when 111 00:04:30,640 --> 00:04:32,880 Speaker 2: profit shrink, even if the revenue grow strongly. 112 00:04:32,960 --> 00:04:35,080 Speaker 3: The long term bet is that once you've built enough 113 00:04:35,080 --> 00:04:37,719 Speaker 3: scale and customer loyalty, you can improve those margins. 114 00:04:37,720 --> 00:04:40,359 Speaker 2: But the risk is that if competition never stops, it 115 00:04:40,400 --> 00:04:42,200 Speaker 2: becomes a race to the bottom. 116 00:04:41,880 --> 00:04:44,240 Speaker 1: And profits may stay thin for longer. 117 00:04:44,080 --> 00:04:46,159 Speaker 2: Longer than investors are willing to tolerate. 118 00:04:46,360 --> 00:04:49,520 Speaker 3: For our third and final story, Hasbro and Mattel have 119 00:04:49,680 --> 00:04:53,760 Speaker 3: both worn the market of a slowdown in the toy market. 120 00:04:53,560 --> 00:04:56,640 Speaker 2: Well well well, two toy titans, two gloomy forecasts, and 121 00:04:56,680 --> 00:04:58,719 Speaker 2: two very different share price reactions. 122 00:04:58,760 --> 00:05:00,400 Speaker 1: So tell me what we I know. 123 00:05:00,440 --> 00:05:02,760 Speaker 3: You're a big toy guy, So why don't you break 124 00:05:02,800 --> 00:05:04,320 Speaker 3: down who these two companies are? 125 00:05:04,320 --> 00:05:06,760 Speaker 2: Okay? So, Mattel's the US toy company found in nineteen 126 00:05:06,800 --> 00:05:09,359 Speaker 2: forty five and the brains behind Barbie and Hot Wheels. 127 00:05:09,360 --> 00:05:11,520 Speaker 3: Fisher Price sells in more than one hundred and fifty 128 00:05:11,560 --> 00:05:14,520 Speaker 3: countries and built its empire on toys. And what about 129 00:05:14,560 --> 00:05:17,000 Speaker 3: Hasbro will They date back even further back to nineteen 130 00:05:17,040 --> 00:05:20,520 Speaker 3: twenty three, and they own brands like Monopoly, NERF and Transformers. 131 00:05:20,560 --> 00:05:23,159 Speaker 3: But in recent years its real star has been magic 132 00:05:23,200 --> 00:05:25,960 Speaker 3: the Gathering, as well as dungeons and dragons. 133 00:05:25,480 --> 00:05:27,719 Speaker 2: If you don't mind, mm hmm, and the Man. Both 134 00:05:27,760 --> 00:05:30,839 Speaker 2: Hasbro and Mattel have just delivered their forecast for twenty 135 00:05:30,839 --> 00:05:31,760 Speaker 2: twenty six. 136 00:05:31,480 --> 00:05:34,000 Speaker 3: And both gave a pretty disappointing update on the demand 137 00:05:34,080 --> 00:05:36,320 Speaker 3: for traditional toys like NERF. 138 00:05:36,600 --> 00:05:39,119 Speaker 2: Mattel reckons their growth willay between three to six percent, 139 00:05:39,160 --> 00:05:42,240 Speaker 2: but adjusted earnings per share will drop as much as sixteen. 140 00:05:41,880 --> 00:05:45,240 Speaker 3: Percent, and similarly, Hasbro's expects toy growth of about three 141 00:05:45,240 --> 00:05:48,920 Speaker 3: to five percent, which is also below many analyst expectations. 142 00:05:48,920 --> 00:05:51,080 Speaker 2: But then, man, here's the interesting part. Because Hasbro's share 143 00:05:51,120 --> 00:05:54,960 Speaker 2: price jumped eight percent, but Mattel's that plummeted twenty five percent. 144 00:05:55,160 --> 00:05:56,520 Speaker 1: What is the reason for this? 145 00:05:56,880 --> 00:05:59,280 Speaker 2: Hasbro is a lot more than a physical toy company 146 00:05:59,279 --> 00:06:02,599 Speaker 2: these days. It's we've got digital games that are booming interesting. 147 00:06:02,640 --> 00:06:03,719 Speaker 1: So what's the key learning here? 148 00:06:03,800 --> 00:06:06,520 Speaker 2: Sometimes the biggest upgrade isn't what you sell, but how 149 00:06:06,640 --> 00:06:07,440 Speaker 2: you make the money. 150 00:06:07,480 --> 00:06:10,960 Speaker 3: Hasbro shift into digital games has changed the quality of 151 00:06:10,960 --> 00:06:12,080 Speaker 3: its earnings, and not. 152 00:06:12,080 --> 00:06:12,960 Speaker 1: Just the size of them. 153 00:06:13,040 --> 00:06:16,160 Speaker 2: Yeah, traditional toys or a physical product business, you design them, 154 00:06:16,200 --> 00:06:18,760 Speaker 2: you manufacture them, you ship them, you store them. 155 00:06:18,720 --> 00:06:20,600 Speaker 1: And discount them if they do not sell. 156 00:06:20,640 --> 00:06:23,320 Speaker 2: In other words, the man, every single additional NERF gun 157 00:06:23,400 --> 00:06:25,040 Speaker 2: has real production costs attached to it. 158 00:06:25,120 --> 00:06:26,919 Speaker 3: But digital games work a little bit differently to a 159 00:06:26,920 --> 00:06:28,120 Speaker 3: NERF gun, don't they they do. 160 00:06:28,240 --> 00:06:31,040 Speaker 2: They require a big upfront investment, but once the game's built, 161 00:06:31,080 --> 00:06:33,880 Speaker 2: the cost of delivering an extra download or purchase is 162 00:06:33,920 --> 00:06:34,599 Speaker 2: almost zero. 163 00:06:34,839 --> 00:06:38,200 Speaker 3: That is why Hasbro's digital gaming division delivered a forty 164 00:06:38,200 --> 00:06:40,880 Speaker 3: five percent operating margin, almost double what it was the 165 00:06:40,960 --> 00:06:41,599 Speaker 3: year before, and. 166 00:06:41,680 --> 00:06:44,839 Speaker 2: Hasbro's digital gaming has become a key to their financial 167 00:06:44,839 --> 00:06:47,160 Speaker 2: performance and share price. Fux dam If you want to 168 00:06:47,240 --> 00:06:48,640 Speaker 2: learn a little bit more about how to get into 169 00:06:48,640 --> 00:06:50,560 Speaker 2: the share market, how to buy and sell shares, the 170 00:06:50,600 --> 00:06:53,200 Speaker 2: Flex Academy this month is your go to. Download the 171 00:06:53,240 --> 00:06:55,280 Speaker 2: Flex app and check out the Academy this month. Thanks 172 00:06:55,279 --> 00:06:57,560 Speaker 2: for listening and we'll see you on Monday.