Roll up for the great write-down shuffle. Year two of the great commodities tank, led by oil and gas, and some of the same cast of characters are backing up for another go at righting their balance sheets. The write-down/impairments bill already tops $17 billion and is on the way to $20 billion or more, and probably a lot higher. The toll so far:
BHP Billiton last month flagged a US$7.2 billion pretax charge against its US shale unit, plus extra write-downs. But it then revealed another US$900 million-plus in restructuring costs and write-downs in the value of copper stocks. All up, close to more than US$8.1 billion or around A$11.4 billion. More write-downs could come on February 23, when BHP reports its half year results — the level of the dividend is the biggest question mark.
South32, the BHP love child sent out into the world last May, is the world’s largest manganese producer and expects to book a US$1.7 billion (that’s almost A$2.4 billion) write-down on assets from Brazil to South Africa. More are likely to come when it reports on February 25.
Woodside — up to US$1.7 billion in write-downs already flagged (that’s also around A$2.4 billion).
Santos — unknown, but could be a couple of billion.
AGL — $795 million (all up $1.9 billion since 2013).
Programmed Maintenance Services — $75 million, on top of $27 million last year. Shares have fallen close to 60% since the most recent high of $2.99 early last November. Yesterday’s fall of 35% was the biggest one-day fall ever for the stock. Programmed is valued at $293 million at Thursday’s close — the takeover of Skilled Group last year was supposed to create a combined company worth more than $700 million — so around $400 million has gone up in smoke.
GU — the mall Sydney industrial took an $18.5 million impairment on its Dexion business. That was not related to the resources downturn.
Dick Smith and its losses are unrelated to the resources tank and are sure to be in the hundreds of millions — a biggie, in other words.
Rio Tinto — reports its full-year figures next Thursday, February 11. Updates as they come to hand! — Glenn Dyer
Red is the new black in oil. Mini-major Conoco Phillips overnight announced impairments of US$2.7 billion (non-cash) on assets in various countries and project such as the APLNG project in central Queensland, which started producing earlier this year. It is owned with Origin, which means it to could be up for more cuts. The company’s accounts suggest the write-down is around US$1.54 billion for 2015, with US$1.503 billion being taken in the fourth quarter. The amount was credited to the groups Asia Pacific Middle East division, but no write-downs were specified in other parts of that division, except for Australia. Conoco reported a US$3.5 billion loss for the fourth quarter, including the impairments, but its underlying loss was a surprisingly large US$1.1 billion against a previous profit of US$732 million in the last quarter of 2014.
ConocoPhillips is the world largest independent oil and gas explorer slashed its dividend for the fourth quarter to 25 cents a share from 75 cents, and is the first major or mini major to do so. — Glenn Dyer
Credit dodgy? Not even in the depths of the GFC in late 2008 did Credit Suisse’s share price fall as low as it did overnight, in touching a new 24-year low. The Swiss bank’s shares fell more than 14% at one stage overnight after it shocked with a fourth-quarter loss and a 90% plunge in full-year investment bank pre-tax profits. The shares are now down 36% so far in 2016. Those sized falls we have come to expect from oil and gas groups and miners — but banks, especially one of Switzerland’s big two? The irony is that during the GFC, the other gnome bank, UBS, was the one that needed bailing out by the Swiss Central bank and authorities — Credit Suisse sort of dodged a bullet, although it had to scramble in October 2008 to grab US$10 billion in much-needed capital from a small group of friendly shareholders. But more than seven years on and CS shares have dropped 32% so far in 2016 to SFr14.44, the lowest level since 1992. They ended just above US$14.80 for a loss of 11% on the day. No matter how the bank’s managers spun it, the result was miserable. — Glennn Dyer
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