Reporting season – Australian companies, global opportunities

First Sentier Investors’ David Wilson, Deputy Head of Australian Equities Growth, and Christian Guerra, Head of Research, Australian Equities Growth, recently appeared on First Sentier Investors’ Curious Podcast to discuss the 2025 interim reporting season, delving into the rich opportunity set of Australian companies they believe are well-positioned to deliver earnings growth through global exposure. 

Listen to the full podcast here

Despite a lack of dynamism in the Australian economy and volatility prompted by February’s reporting season, it has remained evident to Wilson and Guerra that Australia is host to a number of companies that are thriving and generating substantial returns for investors.

On the latest podcast episode, Wilson pointed out insurers Suncorp Group and QBE Insurance Group as examples.

“Suncorp sold its banking business to ANZ which represented the final asset to be sold that will allow the company to now solely focus on its Australian and New Zealand insurance operations.”

 “QBE which has historically struggled in North America, but consistently performed well in Europe and Australia has also been able to shrink the unprofitable parts of its North American business. And so both insurers announced earnings and returns improvements in the recent reporting season”.

Wilson noted other Australian companies with international operations that continue to perform well, naming Aristocrat Leisure Limited, CSL, ResMed, and James Hardie. All of which are global leaders in their respective industries and therefore, not reliant on the Australian economy to drive growth.

Additionally, Wilson pointed out Goodman Group, which announced a $4 billion capital raise to support its international data centre strategy, further emphasising the global growth opportunities within Australia’s locally grown cohort.

“These companies are doing very well in their international businesses,” Wilson explained. “They're doing well in Australia too, but that part is relatively small in the context of their total business. So, despite the malaise or lack of dynamism around Australian productivity, we’re seeing these kinds of companies generating a lot of activity, growth and the potential for returns for investors”.

When considering other quality stocks that have the ability to compound earnings through the cycle, Guerra called out an Industrials company Brambles, the global leader in pallet pooling, as an example.

“Brambles delivered a solid interim result, with sales up 4-5%, profit up about 10% and providing good dividend growth.”

“One of the metrics we look at in detail is return on capital and Brambles improved by about one percent to 23%, which is very healthy and strong. Importantly for us, Brambles has delivered strong earnings and profit growth over consecutive financial years.”

Wilson reiterated the attractiveness of Australian companies that are able to continue to capture growth by driving offshore earnings and highlighted Brambles' evolution from a local meat transport business in the 19th century to a global leader in pallet pooling. This point was further emphasised when comparing earnings expectations for domestic earners to their globally focused counterparts, using the industrials sector as an example.

Wilson explained, “From an Industrials perspective, we observed a clear dichotomy between companies with international earnings and those that are primarily Australian based. The expectation for industrials with offshore earnings is an EPS growth of around 10% in FY25, while those more exposed to the domestic market are expected to see only about 1% growth. This presents quite a different growth profile for investors to consider”.

Looking ahead, Wilson expressed optimism about the potential for Australian companies to continue expanding globally and delivering returns for investors. He noted a shift in sentiment, where investors are increasingly recognising the success of Australian firms in international markets. This trend suggests a growing confidence in the ability of local companies to thrive on a global scale

“For many years, people were almost reticent to support Australian companies expanding internationally, whether organically or through M&A. I think we will continue to surprise ourselves with the growth in these companies. Indeed, the list of Australian companies with successful international businesses also continues to expand thus and deliver returns for investors,” said Wilson.