Latest / What the Flux / Westpac's profit dip | Shell's major takeover plans | Netflix Australia sidesteps tax

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Westpac's profit dip | Shell's major takeover plans | Netflix Australia sidesteps tax · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm Brett and I'm Justin and it's Wednesday, the seventh
• 0:09
  Speaker 2: of May. Boy.
• 0:10
  Speaker 1: Berkshire Hathaway's and Your Shareholder Meeting is the business equivalent
• 0:13
  Speaker 1: of Coachella, and this year Berkshire's CEO, Warren Buffett, ran
• 0:17
  Speaker 1: his typical five hour Q and A session with shareholders
• 0:20
  Speaker 1: and then at the very end, he announced he would
• 0:22
  Speaker 1: be retiring as CEO. And while his successor has been
• 0:25
  Speaker 1: known for years, not even the successor knew it was
• 0:28
  Speaker 1: coming up during this meeting. Talk about a surprise party.
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  Speaker 2: As we get to the end of this financial year,
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  Speaker 2: this is the time where you want to get your spending,
• 0:35
  Speaker 2: your saving all in order for a big twenty twenty
• 0:38
  Speaker 2: six financial year. There is one place to get visibility
• 0:41
  Speaker 2: of all your spending. It's in the Flux Budging tool.
• 0:43
  Speaker 2: Connect your accounts and automate all your spending and savings.
• 0:45
  Speaker 2: You can see where your money's going. Download the Flux
• 0:48
  Speaker 2: app to check it out.
• 0:49
  Speaker 1: Three revolutionary stories today Juzzy Boy, Let's do it for
• 0:52
  Speaker 1: our first. Westpac has seen a dip in its first
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  Speaker 1: half profits, but its new CEO is ramping up instead
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  Speaker 1: of squeezing costs.
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  Speaker 2: Freewheeling new ceo vibes here b mantel were Yeah.
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  Speaker 1: So Westpac is Australia's third largest bank with twelve point
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  Speaker 1: seven million customers across its brands.
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  Speaker 2: We'd be talking Westpac, Saint George Bank, SA and RAMS.
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  Speaker 1: Now does it boy? Westpac's former CEO step down in
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  Speaker 1: December last year after nearly five years.
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  Speaker 2: And now Westpax new CEO delivered his first half year profit,
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  Speaker 2: which dipped by one percent to three point three billion dollars.
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  Speaker 1: Just three point three billion backs.
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  Speaker 2: Yeah and be man. Despite falling short on profit and
• 1:28
  Speaker 2: their dividend forecasts, not everything was disappointing for the big rad.
• 1:32
  Speaker 1: Now Westpac grew its business loans by fourteen percent, and
• 1:34
  Speaker 1: it also grew its mortgages by five percent.
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  Speaker 2: And now west Pax new CEO wants to double down
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  Speaker 2: on these areas.
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  Speaker 1: Yep, he's pulling out the company credit card and planning
• 1:43
  Speaker 1: to hire four hundred and fifty new bankers to drive
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  Speaker 1: more growth and also to cross sell more products.
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  Speaker 2: Mortgage today, business loan tomorrow. Maybe throw in a credit
• 1:51
  Speaker 2: card there for good measure.
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  Speaker 1: But even with those green troots of positivity, he warned
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  Speaker 1: that there is some serious uncertainty in geopolitics.
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  Speaker 2: And this could hit west future funding costs.
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  Speaker 1: Next minute, Westpac share price fell three percent.
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  Speaker 2: So what is the key learning here?
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  Speaker 1: Funding costs are the costs that banks pay to borrow money.
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  Speaker 2: Yep, that's right. Banks borrow money from other sources in
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  Speaker 2: order to lend it to you and I.
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  Speaker 1: For Westpac, about sixty to sixty five percent of their
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  Speaker 1: funding comes from customer deposits.
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  Speaker 2: Thing customer savings accounts and term deposits.
• 2:21
  Speaker 1: But the remainder of their funding comes from wholesale markets.
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  Speaker 2: They borrow money from investors here in Australia as well
• 2:27
  Speaker 2: as overseas and.
• 2:28
  Speaker 1: Jus boy, that part gets tricky when the political climate
• 2:31
  Speaker 1: turns a little gray.
• 2:32
  Speaker 2: Yeah. When the global mood swings with tariff wors and
• 2:35
  Speaker 2: economic uncertainty, investors demand high interest rates to lend their cash.
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  Speaker 1: Which drives up Westpack's funding costs.
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  Speaker 2: And if it costs more for them to fund loans,
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  Speaker 2: the bank's margin shrinks.
• 2:46
  Speaker 1: And given Australian banks live and die by their net
• 2:48
  Speaker 1: interest margin, even a small rise in funding costs can
• 2:51
  Speaker 1: seriously hurt their profits. For our second story, Shell is
• 2:54
  Speaker 1: considering a whopping takeover of its rival BP, and this
• 2:58
  Speaker 1: could become one of the biggest oil mergers of all tag.
• 3:01
  Speaker 2: The oil soap opera might just end in a merger
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  Speaker 2: b Man, So tell me what's going on?
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  Speaker 1: Well, BP, previously known as British Petroleum, is one of
• 3:09
  Speaker 1: the UK's largest oil and gas.
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  Speaker 2: Companies, been pumping oil and gas since nineteen oh nine
• 3:13
  Speaker 2: and it operates in over seventy countries around the world. Now.
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  Speaker 1: Shell was started at a similar time back in nineteen
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  Speaker 1: oh seven and is also one of the largest oil
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  Speaker 1: and gas companies.
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  Speaker 2: And the Man. These two have been the og oil rivals,
• 3:24
  Speaker 2: the cocin PEPSI of the petrol industry.
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  Speaker 1: But while they were once bit of rivals juzzy Boy,
• 3:29
  Speaker 1: they've kind of gone down different paths over the last
• 3:31
  Speaker 1: few years.
• 3:32
  Speaker 2: Shell dull down on its climate targets.
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  Speaker 1: Well BP, he's been trying to reinvent itself as Captain Planet.
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  Speaker 1: He captained net zero as it pivoted hard into renewable.
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  Speaker 2: And the Man. BP's pivot has come with a hefty
• 3:43
  Speaker 2: price tag because it shares have fallen thirty percent in
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  Speaker 2: the past year.
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  Speaker 1: So now Shell is reportedly chatting with advisers about whether
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  Speaker 1: to make a bid for the BP entire company, and with.
• 3:53
  Speaker 2: BP's current market value more than fifty seven billion pounds,
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  Speaker 2: this would be an enormous takeover.
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  Speaker 1: But never say never, because activist investors are pushing for
• 4:02
  Speaker 1: big changes at BPHQ.
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  Speaker 2: So what is the key learning here?
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  Speaker 1: Activist investors are shareholders who use their equity stake in
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  Speaker 1: a company to pressure management for change.
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  Speaker 2: The man Elliott Investment Management, who's the owner of a
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  Speaker 2: five percent stake in BP now, is one of the
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  Speaker 2: most well known activist firms. YEP.
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  Speaker 1: They have a standard playbook that they've used across a
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  Speaker 1: number of major companies like Twitter, Perno, Ricard, Samsung.
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  Speaker 2: Step one, buy a stake in the company.
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  Speaker 1: Then step two is tell the whole world about their
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  Speaker 1: demands for a change.
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  Speaker 2: Step three push for moves they think will increase shareholder value.
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  Speaker 1: By a major strategic shift or maybe a big asset
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  Speaker 1: sale or yes, even a merger. Either way, when activists
• 4:39
  Speaker 1: like Elliott show up, things always get interesting real quick.
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  Speaker 2: For our third and final story, Netflix made one point
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  Speaker 2: three billion dollars in Australia last year and no surprises here,
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  Speaker 2: they sent ninety three percent of it overseas.
• 4:53
  Speaker 1: Not a surprise after we spoke about Facebook with the
• 4:56
  Speaker 1: Shifty Shifty, So tell me more.
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  Speaker 2: Netflix was founded back in nineteen ninety seven a It's
• 5:00
  Speaker 2: a humble DVD rental service.
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  Speaker 1: And was laughed out the door by Blockbuster when Netflix
• 5:05
  Speaker 1: offered to sell its company two Blockbuster for fifty million dollars.
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  Speaker 2: Now Netflix is the world's biggest streaming service and no
• 5:13
  Speaker 2: longer exists.
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  Speaker 1: Who is laughing now?
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  Speaker 2: In fact, be man. Netflix is so dominant it claims
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  Speaker 2: that seventy seven percent of Ozzie households have a subscription
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  Speaker 2: and now be man Netflix. Australia's local revenue for twenty
• 5:23
  Speaker 2: twenty four has been revealed and it generated one point
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  Speaker 2: three billion bakarunis.
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  Speaker 1: A nice little bump up from one point one bill
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  Speaker 1: in twenty twenty three.
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  Speaker 2: Bush It posted a teeny tiny profit of just twenty
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  Speaker 2: three million dollars in Australia.
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  Speaker 1: That's because it paid one point two billion dollars in
• 5:39
  Speaker 1: distribution fees to other Netflix entities overseas.
• 5:42
  Speaker 2: In other words, ninety three percent of revenue was shifted offshore.
• 5:45
  Speaker 1: But there might be some revenge served soon via Canberra YEP.
• 5:50
  Speaker 2: The federal government has floated plans to introduce content quotas
• 5:53
  Speaker 2: the streamers like Netflix.
• 5:54
  Speaker 1: To an interesting call, Jazzy boy. So I'm wondering over here,
• 5:56
  Speaker 1: what is the key learning?
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  Speaker 2: Content quotas are regulations requiring media companies to produce or
• 6:01
  Speaker 2: show a minimum amount of local content.
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  Speaker 1: Now right now, there are content quotas on traditional broadcasters
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  Speaker 1: like Channel nine and seven and ten, but not the
• 6:09
  Speaker 1: streaming services.
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  Speaker 2: And the Australian government wants streaming giants to invest more
• 6:14
  Speaker 2: in local productions.
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  Speaker 1: All right, so how would this one work?
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  Speaker 2: There are two models that have been explored. The first
• 6:19
  Speaker 2: is a subscriber based model.
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  Speaker 1: That's where companies with more Oussie subscribers must spend more.
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  Speaker 1: The other is a revenue based model that's where a
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  Speaker 1: percentage of local income is invested into Australian content. And
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  Speaker 1: b man Well, Netflix says it's already spent one billion
• 6:32
  Speaker 1: bucks on Ossie content since twenty nineteen. The local production
• 6:35
  Speaker 1: industry claims that ain't enough.
• 6:37
  Speaker 2: Bluck dame. If you get to the end of every
• 6:38
  Speaker 2: single month in one doubt, where did my money go
• 6:41
  Speaker 2: this month? There is only one way to find out.
• 6:42
  Speaker 2: It is straight in the flux app or It takes
• 6:44
  Speaker 2: thirty seconds to connect your accounts and see all you're
• 6:46
  Speaker 2: spending each and every month. If you want to learn
• 6:49
  Speaker 2: more about where your money's going, make sure to download
• 6:51
  Speaker 2: the Flux app and check out the budgeting tool.
• 6:53
  Speaker 1: Thanks for listening, and we'll send you on Friday