Old Mutual may be the asset heavyweight among the SA Giants, but it's the mining companies that hold top position for bottom-line profit . Anglo American is number one and BHP Billiton number two.
Anglo's net profit rose by 69% last year and Billiton's by 88%. Both benefited from the weak rand and high prices for their commodities.
Relatively flat earnings are expected for Anglo in the current year. Though its profit growth was better than BHP Billiton's, its rating suffers from its relatively lower margin and the fact that more than half of its earnings still come from SA.
BHP Billiton's profits are likely to be flat at best this year, but both it and Anglo are likely to retain their relative positions in the net profit table as they are just so far ahead of the pack.
On the other end of the scale, the two most notable declines this year have been Dimension Data and Richemont, which was to announce its results for the year ended March 2003 in early June. Last year Richemont's net earnings were R6,2bn and consensus forecasts are for a reduction of about 40% in this figure, taking the profit back to nearer its 2001 levels.
Didata's net profit fell by 78% between September 2001 and September 2002 and at this year's interim stage the company was in a loss situation.
Richemont's sister company in the Rupert stable, Remgro, was only slightly below Richemont in terms of net profit last year. But it's a much more defensive play than Richemont and will probably overtake it in the rankings after the announcement of financial 2003 results in June.
Of the large banking groups, Nedcor stands out as the most difficult to forecast in the net profit rankings. Standard's earnings advanced strongly in the year to December 2002, FirstRand is expected to improve only marginally and Absa's profits should rebound in the year to March 2003, after the Unifer disaster of 2002.
Sasol, a notable top-five inclusion on net profit, may see a dip in profits in the year to June, mainly as a result of currency translation losses. It is likely to remain near the top of the rankings, however.
SA Breweries' EPS rose by 11% for the year to March 2003. For the year to March 2004, however, the market is looking for a substantial improvement, provided the rand doesn't fall as badly as it did in 2001 and 2002. From 2005 and beyond, provided Miller Brewing can be turned around, the scope for strong net profit growth becomes evident. If all these factors come into play, SAB could well be a top 10 contender in two or three years.
