Latest / What the Flux / Wesfarmers' secret weapon | Qantas reports 16% profit drop | Nvidia loses momentum

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Wesfarmers' secret weapon | Qantas reports 16% profit drop | Nvidia loses momentum · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm Brad Justin and it's Friday, the thirtieth of August.
• 0:09
  Speaker 1: Jusey boy. We've spoken about the rollercoaster ride that is
• 0:12
  Speaker 1: Setire a lot over the past few months.
• 0:14
  Speaker 2: Now.
• 0:14
  Speaker 1: Setire has worn the market that its auditors have beil
• 0:17
  Speaker 1: to sign off on their financial accounts. Apparently the situation
• 0:20
  Speaker 1: is quote nuanced and ongoing, but not the best sign
• 0:24
  Speaker 1: from a company that has already been doubted by many.
• 0:27
  Speaker 2: Very worrying signs. B Man sucks. Fam. It is Friday,
• 0:29
  Speaker 2: and that means we are given away fifty bucks once
• 0:32
  Speaker 2: again to the smartest Flux user. All we've got to
• 0:34
  Speaker 2: do is download the Flux app, play quick Sticks and
• 0:36
  Speaker 2: be the first to answer three questions correctly, and that
• 0:39
  Speaker 2: money could be yours to start off the weekend. To
• 0:41
  Speaker 2: make sure to download the app and have your noted
• 0:42
  Speaker 2: patients turned on.
• 0:43
  Speaker 1: Three rip Snorter stories today. Juzzy boy, Let's do it
• 0:46
  Speaker 1: for our first West farmers have seen its annual sales
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  Speaker 1: jump to more than forty four billion bucks, and it's
• 0:51
  Speaker 1: putting a heap of praise on one particular business.
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  Speaker 2: Surely it's came out, Surely it's came out. It's got
• 0:56
  Speaker 2: to be came out, tell me more. Be man, well dyboy.
• 0:58
  Speaker 1: West Farmers is the WABA owner of some of the
• 1:01
  Speaker 1: biggest name brands in Australian retail.
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  Speaker 2: We'd be talking your bannings, your targets, your office works,
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  Speaker 2: your price lines, catches it, your silk, got laser clinics.
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  Speaker 1: But Jasie boy. It also owns industrial and safety businesses,
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  Speaker 1: as well as chemicals and energy and fertilizer businesses.
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  Speaker 2: Clean Heats, Yeah, Black hoods.
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  Speaker 1: Now Jazzi Boy. West Farmers has announced its sales for
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  Speaker 1: the last financial year jumped by one point five percent
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  Speaker 1: to over forty four billion dollars and off.
• 1:24
  Speaker 2: The back of these sales, its delivered a tasty net
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  Speaker 2: profit of two point six billion baccarinis.
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  Speaker 1: All right, Josi boy. So which of these retailers deliver
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  Speaker 1: the goods for good old Wessy's.
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  Speaker 2: Well, no surprises here, but West Fharma CEO called came
• 1:36
  Speaker 2: out the standout performer because it's profit jumped to get
• 1:39
  Speaker 2: this twenty five percent to nearly one billion dollars.
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  Speaker 1: And in particular it's home brand Ancho, which it now
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  Speaker 1: sells in Kmart and Target and to other retailers globally.
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  Speaker 2: But began interestingly, West Farmers Chemicals, Energy and Fertilizers division
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  Speaker 2: got hit hard. It's earning film more than thirty four percent,
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  Speaker 2: largely because of lower commodity prices. But that is the
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  Speaker 2: benefit of having a diversified portfolio of businesses and brands.
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  Speaker 1: So what's the key learning here.
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  Speaker 2: Business diversification is a strategy that involves holding assets across
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  Speaker 2: different sectors to reduce your risk.
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  Speaker 1: Now, West Farmers is a textbook example of this business diversification. Yep,
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  Speaker 1: it has department store retail like Kmart, Target Catch, It's
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  Speaker 1: got hardware retail that would be Bunning's office, and stationary retail.
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  Speaker 1: You've got office works making big things happen, and.
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  Speaker 2: Even chemicals and energy, which we mentioned before.
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  Speaker 1: And having this diverse portfolio helps West Farmers cushion the
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  Speaker 1: blow of a downturn in any single sector.
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  Speaker 2: For example, the chemicals business plummeted, the Kmart's gyptastic products
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  Speaker 2: picked up the slack.
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  Speaker 1: But jes it boy, there's also a flip side to
• 2:40
  Speaker 1: this over diversification.
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  Speaker 2: That's when companies diversified too much and they risk becoming
• 2:45
  Speaker 2: a jack of all trades but really a master.
• 2:46
  Speaker 1: Of none looking at you, General Electric, which used to
• 2:50
  Speaker 1: be the largest company in the United States, but it's
• 2:53
  Speaker 1: found its fingers in way too many pies and has
• 2:55
  Speaker 1: since split up into three separate companies. So the key
• 2:58
  Speaker 1: is diversifying enough to spread risk, but staying focused on
• 3:02
  Speaker 1: core strengths.
• 3:02
  Speaker 2: Yep. For our second story, Quantus has reported a sixteen
• 3:06
  Speaker 2: percent drop in its annual profit in its first annual
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  Speaker 2: update since new CEO, Vanessa Hudson stepped in. Pretty sure
• 3:12
  Speaker 2: if Quantus reported a profit jump like Calls, customers would
• 3:16
  Speaker 2: be for human So what is the story here? We'll
• 3:18
  Speaker 2: be men. Quantuses Australia's national airline carrier. It's also the
• 3:21
  Speaker 2: third oldest airline in the world. Fun fact for you.
• 3:23
  Speaker 1: And for a better part of the pandemic, Quantus was
• 3:26
  Speaker 1: consistently in the news for pretty much all the wrong reason.
• 3:29
  Speaker 2: We're talking mass layoffs, profiting off ghost flights and h POC.
• 3:32
  Speaker 1: Inquiry and a new CEO brought in with the hopes
• 3:35
  Speaker 1: to turn Quantus's fate around.
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  Speaker 2: And now be man. Quantus has brought in a two
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  Speaker 2: point one billion dollar profit, but this is a sixteen
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  Speaker 2: percent drop compared to last year.
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  Speaker 1: And this one has come after Quantus amped up spending
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  Speaker 1: to settle some legal cases and really focus on building
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  Speaker 1: customer relationships. They also spent four hundred million baccarinis on
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  Speaker 1: a share buy back to keep investors happy. And just Boy,
• 3:56
  Speaker 1: a big part of Quantus's narrative is that it's repairing
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  Speaker 1: itself and its customer relation.
• 4:00
  Speaker 2: And so it's new CEO's first earnings update was focused
• 4:03
  Speaker 2: on cleaning up the damage caused by its previous management.
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  Speaker 1: Interesting, so I'm wondering what is the key learning here.
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  Speaker 2: When a new CEO steps in, they often get a
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  Speaker 2: free pass in their first few earnings updates.
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  Speaker 1: Especially if that new CEO is replacing someone who is
• 4:16
  Speaker 1: considered to have underperformed.
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  Speaker 2: That means they can blame previous management for any poor
• 4:21
  Speaker 2: results in the first earnings update.
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  Speaker 1: Ah, yes, our profit drops sixteen percent.
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  Speaker 2: Well, don't look at me, it was the last guy,
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  Speaker 2: then this way, b man. New CEOs can also justify
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  Speaker 2: making bowl and sometimes costly decisions as a way to
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  Speaker 2: reset the company.
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  Speaker 1: And JOSEP Boy is not just Quantus, even old tab Corps.
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  Speaker 1: New CEO has just axed a turnaround strategy that was
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  Speaker 1: introduced by previous.
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  Speaker 2: Management and written down more than five hundred million bucks
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  Speaker 2: worth of assets with the hope of resetting the business.
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  Speaker 1: So Quantus's new CEO might be able to pinpop performance
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  Speaker 1: on the previous CEO for.
• 4:51
  Speaker 2: Now, but she'll be held accountable for a lot more
• 4:54
  Speaker 2: when the next annual update comes around.
• 4:56
  Speaker 1: For our third and final story, in Vidia, the AI
• 5:00
  Speaker 1: chip designer, exceeded its quarterly guidance on all the key metrics,
• 5:04
  Speaker 1: but Jessie boy Its share price dropped more than seven percent.
• 5:06
  Speaker 2: Tough gig for InVideo investors always wanting more, so give
• 5:09
  Speaker 2: me the chippy update.
• 5:11
  Speaker 1: So we know. In Video was founded in nineteen ninety
• 5:13
  Speaker 1: three as a computer chip company mainly designing for video games. Whatever.
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  Speaker 2: The last few years, in Videos become the chip behind
• 5:20
  Speaker 2: many of the world's biggest tech companies who were hoping
• 5:22
  Speaker 2: to get into AI.
• 5:23
  Speaker 1: Think Amazon, Meta, Microsoft, Alphabet. Its share price has increased
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  Speaker 1: by two nine hundred percent over the past five years.
• 5:31
  Speaker 2: And in Video skyrocketed to become the third most valuable
• 5:34
  Speaker 2: company in the whole wide world.
• 5:36
  Speaker 1: Now, Dozzy Boy in Video CEO, strutted on stage in
• 5:39
  Speaker 1: his leather jacket and reported the company's quarterly update. Yeap
• 5:42
  Speaker 1: in Video's revenue for the previous quarter hit thirty billion
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  Speaker 1: US dollars. Now, this number was up sixteen percent on
• 5:48
  Speaker 1: the previous quarter and one hundred and fifty four percent
• 5:50
  Speaker 1: on this time last year. That all sounds pretty down
• 5:53
  Speaker 1: good juzzy boy. So I'm wondering, just having a look
• 5:54
  Speaker 1: over here, what the bananas happened to its share price?
• 5:57
  Speaker 2: Well, my friend, it dropped nearly seven percent off the
• 6:00
  Speaker 2: back of this news.
• 6:02
  Speaker 1: Well, good news just isn't good enough for invideos investors.
• 6:05
  Speaker 2: So what is the key learning here?
• 6:06
  Speaker 1: Continually smashing your guidance can create almost too high expectation,
• 6:11
  Speaker 1: you seeb Man.
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  Speaker 2: When a company consistently smashes its revenue forecast, it sets
• 6:14
  Speaker 2: a high bar for future.
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  Speaker 1: Performance, which can be difficult to maintain over the long term.
• 6:19
  Speaker 1: And does it wait the moment when in Video meets
• 6:21
  Speaker 1: but doesn't significantly exceed expectations, That might be a signal
• 6:24
  Speaker 1: to investors, a signal, well, a signal of the peak
• 6:28
  Speaker 1: of the AI boom might be rearing its ugly head.
• 6:31
  Speaker 2: Flux Sam, if you can see yourself a bit of
• 6:33
  Speaker 2: a business buff, then you need to test yourself with
• 6:35
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• 6:38
  Speaker 2: questions on business and finance, and the first person to
• 6:40
  Speaker 2: answer correctly wins fifty bucks to kick off the weekend.
• 6:43
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• 6:44
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• 6:45
  Speaker 1: Thanks for listening, and we'll see you on Monday.