As Australia's business landscape continues to evolve, several key stories have emerged on 25 June 2024, highlighting challenges and opportunities across various sectors. From retail setbacks to luxury hospitality expansions, industrial disputes to aerospace ambitions, the day's news paints a diverse picture of the nation's economic activity.
Cettire Shares Plummet as Brokers Slash Price Targets
Luxury e-commerce retailer Cettire has faced a significant setback as brokers cut their price targets following a profit downgrade. The company's shares plunged nearly 50% on Monday, wiping over $400 million off its market value.
Cettire blamed intense industry discounting for its falling margins, projecting profits more than 20% below consensus estimates. However, analysts are concerned that the downgrade may indicate deeper structural issues within the business.
Factors Contributing to the Downgrade
- Cyclical industry pressures
- Changes in pricing policy
- Recent inquiries into business practices
- Softening luxury market
The company recently changed its checkout process, now charging all-inclusive prices rather than separate duties. This move followed media scrutiny of Cettire's pricing and customs practices.
Barrenjoey analyst Aryan Norozi slashed his price target from $4.50 to $2.60, cutting 2025 earnings forecasts by more than half. Similarly, RBC Capital Market's Wei-Weng Chen reduced his target from $3.80 to $1.50.
Despite Cettire's $100 million net cash position, a share buyback seems unlikely due to slowing growth and potential cash balance unwinding.
As the company grapples with these challenges, investors and industry watchers will be closely monitoring Cettire's ability to restore its earnings power and regain market confidence.
Marriott Expands Luxury Footprint on Gold Coast with Marina Mirage Resort
Marriott International has further solidified its position as the Gold Coast's leading luxury accommodation provider, announcing a partnership with the Makris family to manage a new five-star resort at The Spit.
Set to open in 2027, the 122-room Marina Mirage Gold Coast will join Marriott's prestigious Luxury Collection brand. The resort will feature a rooftop bar and pool, wellness centre, day spa, and premium dining and event spaces.
Project Details and Significance
Jason Makris, CEO of Makris Group, expressed enthusiasm about the project, stating, "It's our first hotel, and we're very excited about it. It will bring significant benefit to our property portfolio."
The hotel is part of a larger redevelopment of the iconic Marina Mirage shopping precinct, originally built by Christopher Skase. The Makris Group acquired the site for $70 million and has already completed the first stage, including a super yacht marina and ferry terminal.
For Marriott, this marks their fifth luxury property on the Gold Coast, joining existing assets like The Ritz-Carlton and JW Marriott Resort & Spa. Richard Crawford, Marriott's head of hotel development in Australia, noted the Gold Coast's strong performance in the luxury market.
"The Gold Coast has been the best-performing hotel market during and coming out of COVID. The flight to luxury has been a genuine phenomenon," Crawford said.
The Marina Mirage Gold Coast is expected to capitalise on the growing demand for high-end accommodation, driven by luxury apartment developments and interstate buyers.
This expansion reinforces the Gold Coast's position as a premier luxury destination and highlights the continued growth of Australia's tourism sector.
Industrial Action Delays 1600 Homes and Warehouses in NSW
Ongoing industrial action by Endeavour Energy workers has stalled the development of 1600 homes and several warehouses across New South Wales. The dispute, which began in February 2024, has now stretched into its fifth month, causing substantial delays and financial losses for major property developers.
Impact on Housing and Industrial Projects
The work bans, initiated by about 750 Electrical Trades Union (ETU) members, have affected projects by ASX-listed giants including Mirvac, Lendlease, and Goodman Property Services. Greenfields Developments reported delays on 400 housing lots valued at $280 million, with each missed appointment pushing timelines back by two months.
The industrial action has also impacted $1.2 billion worth of industrial developments, including an Amazon fulfilment centre. Brickworks Managing Director Lindsay Partridge warned that without a resolution, some projects might be abandoned, exacerbating the housing and industrial property crunch.
Union Demands and Company Response
The ETU is pushing for a 24 per cent pay rise over three years, along with additional benefits. Endeavour Energy has countered with an offer of 11.5 per cent over the same period. The company claims the union's demands would ultimately burden 1.2 million electricity customers.
Calls for Government Intervention
Industry leaders are urging the NSW government to step in and help negotiate an agreement. The ongoing dispute threatens to derail efforts to meet the national target of building 1.2 million homes in five years, a key initiative to improve housing affordability.
As the standoff continues, both sides remain firm in their positions, with the ETU planning to escalate work bans in the coming days. The resolution of this dispute will be crucial for the construction industry and the broader Australian economy.
Qantas Tumbles in Global Airline Rankings
Qantas, Australia's flag carrier, has plummeted to its lowest position in over a decade in the prestigious Skytrax Awards. The airline dropped seven places to 24th, marking a significant decline from its consistent top 10 rankings in previous years.
Key Points:
- Qantas ranked 24th, down from 17th last year
- Virgin Australia outperformed Qantas, coming in at 14th
- Qatar Airways crowned world's best airline, followed by Singapore Airlines and Emirates
The Skytrax Awards, based on customer surveys from 100 countries, reveal a concerning trend for Qantas. Internal documents previously showed a sharp decline in consumer consideration for domestic flights, with Qantas only narrowly outperforming its budget subsidiary, Jetstar.
Despite these challenges, Qantas remains optimistic. A spokesperson stated, "We have been listening to our customers and our people and have been acting on this feedback with significant investment already under way." The airline claims recent improvements in customer satisfaction levels.
Qantas CEO Vanessa Hudson has acknowledged the need for improvement, focusing on enhancing in-flight meals, lounges, and introducing Wi-Fi on older aircraft.
As Qantas works to regain its former glory, the airline industry watches closely. With fierce competition from both international and domestic rivals, Qantas faces an uphill battle to reclaim its position among the world's top airlines.
Female Entrepreneurs Call Out Sexism in Startup Funding
In a scathing critique of the Australian startup ecosystem, successful female entrepreneurs have highlighted the persistent gender gap in venture capital funding. Despite recent efforts to address the imbalance, all-male founding teams continue to dominate, securing 85% of the $1.7 billion raised by local startups in early 2024.
Lucy Liu, co-founder of unicorn Airwallex, expressed frustration with investors' assumptions about female leaders. "People want female co-founders for the human touch," Liu said. "I fire people just as quickly as my male co-founders."
Olympia Yarger, founder of climate-tech startup Goterra, pointed to male-led VC funds as the root of the problem. She praised women-led funds like Tenacious Ventures and Flying Fox for achieving near-equal investment ratios, while criticising larger funds like Blackbird for lagging behind.
Modibodi founder Kristy Chong, who sold her business for $140 million in 2022, emphasised the need for more female investors and better networks for women entrepreneurs. She now invests in female-founded startups, recognising that not every company needs to aim for billion-dollar valuations.
Challenges Faced by Female Founders:
- Difficulty raising large funding rounds
- Assumptions about career motivations
- Rigid rules in some female-focused funds
As the Australian startup scene evolves, these outspoken leaders are pushing for meaningful change in funding practices and attitudes towards female entrepreneurs.
Queensland Government to Take Full Control of Callide C Power Station
In a major shake-up of Queensland's energy sector, the state government has announced plans to take full ownership of the troubled Callide C coal-fired power station. This decision comes in the wake of a damning report into a 2021 explosion that caused widespread power outages across the state.
The draft report, released on Tuesday, highlighted significant management failures at the plant, including a lack of understanding of technical risks and inadequate implementation of critical safety programs.
Queensland Premier Steven Miles has appointed special advisers to the board of CS Energy, the state-owned corporation that currently operates the plant. The government will also buy out the $230 million stake held by joint-venture partners, including Czech and Chinese investors.
The move is part of a broader review of Queensland's publicly owned power generation businesses, with the possibility of dissolving CS Energy altogether. This restructure aligns with the state's ambitious renewable energy targets, aiming for 80% of grid power to come from renewable sources by 2035.
"We want to ensure our government-owned corporations are structured for the energy system of the future, one that we believe should be primarily powered by renewable energy and pumped hydro storage," Premier Miles stated.
The report also noted high turnover in key management positions at Callide C, which may have contributed to the safety issues. This revelation has raised concerns about operational competence and the effectiveness of safety processes at the plant.
As Queensland moves towards a greener energy future, the Callide C buyback marks a significant step in the state's efforts to overhaul its power generation infrastructure and management.
Iconic Tasmanian Brewery Shifts Mainland Production Amid Industry Challenges
James Boag's Brewery, a 160-year-old Tasmanian icon, has announced significant changes to its operations due to ongoing industry challenges. The brewery, owned by Lion Australia, will move production of its mainland-sold beers to the continent, while continuing to brew locally-consumed products in Tasmania.
Key Changes and Impacts
- 13 roles made redundant as the brewery shifts from two shifts to one
- Affected staff offered positions at other Lion-owned breweries
- James Boag's Premium beer for mainland consumption to be brewed on the mainland
- Tasmanian-sold Boag's beers will continue to be produced locally
Lion Australia's managing director, James Brindley, cited several factors driving this decision:
- Declining beer market
- Rising manufacturing costs
- Expensive transportation of raw materials to Tasmania and finished products back to the mainland
"It's a very sad decision and one we felt we couldn't avoid," Brindley stated, acknowledging the emotional impact on the brewery's staff and the local community.
Industry-wide Challenges
The Australian beer industry has been grappling with numerous issues:
- Changing consumer preferences
- Cost-of-living pressures
- Continual increases in federal government excise
The Brewers Association has been campaigning for tax relief, highlighting that Australia's beer tax rate is the fourth highest in the OECD. This has led to rising beer prices, with pints now costing over $10 in many establishments.
Despite these changes, James Boag's Brewery remains committed to its Tasmanian heritage and will continue to play a significant role in the state's brewing industry.
Westpac Sanctioned for Abrupt Tennant Creek Branch Closure
Australia's Banking Code Compliance Committee (BCCC) has found Westpac in breach of its obligations following the sudden closure of its Tennant Creek branch in 2022. The decision highlights ongoing challenges faced by vulnerable customers in remote areas.
Key Points:
- Westpac's Tennant Creek branch closure deemed a "serious and systemic" breach
- Closure impacted over 6,000 people in the remote Barkly region
- Many affected customers are Indigenous, with limited English and technology access
- BCCC found Westpac failed to provide adequate support and information
Community Impact
The abrupt closure left many residents unable to access their money, particularly affecting pensioners and those with limited English skills. Local organisations like CatholicCare NT continue to assist Westpac customers with basic banking needs.
Westpac's Response
Westpac cited "ongoing safety and security threats" as the reason for the sudden closure. The bank acknowledges more could have been done to support customers and has since strengthened its branch closure protocols.
Looking Ahead
Financial advocates stress the importance of proper notice, support, and access to money when banks close branches in remote areas. The BCCC's decision serves as a warning to other banks about following correct procedures for branch closures.
While Westpac maintains an ATM in Tennant Creek and offers some remote banking services, the impact of the closure continues to be felt by the community.
This decision highlights the ongoing challenges of providing banking services in remote Australian communities and the importance of adhering to industry codes of practice.
Aussie Rocket Launch Delayed by Red Tape
Australia's first homegrown rocket launch faces delays due to regulatory hurdles, mirroring challenges in the renewable energy sector. Adam Gilmour, CEO of Gold Coast-based Gilmour Space Technologies, expressed frustration at the lengthy approval process for their inaugural satellite launch.
Speaking at a recent conference, Gilmour highlighted the Australian Space Agency's inexperience in managing such launches, leading to a barrage of unexpected questions. These ranged from concerns about potential collisions with cruise ships to avoiding the International Space Station.
"It's taken us almost two years to get our first rocket launch approved. That is crazy," Gilmour stated. He drew parallels with the clean energy sector, where wind turbine and solar farm approvals can take up to two years.
The regulatory challenges have diverted resources from rocket development, with engineers focusing on paperwork instead of innovation. Gilmour hopes this stringent process is a one-off, anticipating a more streamlined approach for future launches.
