Alumina Ltd (ASX: AWC, NYSE: AWC) surged on strong volume on Jan. 9 after its partner in the Alcoa World Alumina & Chemicals (AWAC) joint venture, Alcoa Inc (NYSE: AA), posted expectations-beating results for the fourth quarter of 2012. Alcoa’s revenue for the three months ended Dec. 31, 2012, surpassed estimates, and management forecast a 7 percent increase in aluminum demand in 2013.

Alcoa, traditionally the first publicly traded corporation to report quarterly results, this time around had a generally positive impact on broad sentiment toward equities. Its earnings beat was complemented by the positive forecast, which includes an expectation of increased aluminum demand from China, where need is forecast to grow 11 percent, and the aerospace industry, where growth is anticipated to be 10 percent this year.

Melbourne-based Alumina’s only earning asset is its 40 percent stake in AWAC; Alcoa holds the controlling 60 percent. Alumina received a fully franked dividend of USD20 million from AWAC for the fourth quarter after receiving no dividend for the third quarter. Alumina received USD95 million from AWAC for all of 2012.

Management forecast that Alumina will receive dividends of at least USD100 million in 2013. The company refinanced a USD107 million in debt that was due in November 2013, extending the maturity to December 2017 at a favorable rate. The debt load remains a concern, however, as the total outstanding rose 44 percent to USD602 million in 2012.

Alumina noted on Jan. 9 that its margins for the fourth quarter of 2012 had improved and that earnings for Alcoa’s aluminum division were USD41 million, reversing a loss of USD9 million for the previous quarter. Challenges remain, however, including still-sluggish pricing and demand for its primary output amid what remains an uncertain global economic environment.

Results from its JV partner Alcoa provide reason for hope. But Alumina remains on the Dividend Watch List (see below), though it is likely to make a dividend declaration in February after omitting its August installment.

China Is Growing Again

The National Bureau of Statistics of China reported this week that Chinese exports increased 14.1 percent in December from a year earlier, the biggest gain since May and up from 2.9 percent in November. Analysts had expected an increase of 5 percent.

Imports, which were flat in November, grew by 6 percent. China’s trade surplus almost doubled from a year earlier to USD31.6 billion.

The strong rebound in trade is another signal the world’s second-largest economy has turned around after seven straight quarters of slowdown.

China’s exports rose 7.9 percent for all of 2012, while imports gained 4.3 percent. Overseas shipments increased 20.3 percent in 2011 and imports advanced 24.9 percent. The worst year for trade in the past decade was 2009, when exports declined by 16 percent and imports were down 11.2 percent.

China’s Ministry of Commerce said in a statement last month that it will seek to stabilize the scale of exports and improve support for trade growth in 2013. Commerce Minister Chen Deming forecast that China’s trade will be “slightly better” in 2013 than 2012, with the second half of the current year better than the first half.

China will release fourth-quarter gross domestic product (GDP) data as well as December industrial production and retail sales figures on Jan. 18. Experts expect year-over-year GDP growth of 7.8 percent for the fourth quarter, up from a three-year low of 7.4 percent in the third quarter. Annual GDP growth was likely 7.7 percent, which would be the weakest figure since 1999.

The HSBC China Manufacturing Purchasing Managers Index (PMI) reading for December was 51.5, up from 50.5 in November. This was the highest HSBC PMI reading since May 2011.

The final reading from HSBC Holdings Plc and Markit Economics compares with the 50.9 HSBC Flash China PMI reading posted on Dec. 14.

PMI readings above 50 indicate expansion; readings below 50 indicate contraction.

China’s economy appears to have rebounded after a seven-quarter slowdown, as Beiijing and local governments boosted spending on infrastructure and accelerated approvals for investment projects. According to Qu Hongbin, chief China economist at HSBC in Hong Kong, “Momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilize.”

China’s official manufacturing PMI, published by the National Bureau of Statistics, held steady in December at 50.6, matching November’s seven-month high. Official PMI has been above 50 for three straight months.

China’s official PMI focuses on big, state-owned firms. The HSBC PMI targets smaller, private firms.

RBA’s Index of Commodity Prices Ticks Higher

The Reserve Bank of Australia (RBA) reported Jan. 2 that preliminary estimates for December indicate that its Index of Commodity Prices rose by 0.8 percent on a monthly average basis in special drawing rights (SDR) terms after rising by a revised 1.7 percent in November.

(The SDR is an international reserve asset created by the IMF, the value of which is based on a basket of four key international currencies, the US dollar, the euro, the Japanese yen and the British pound.)

The biggest contributors to December’s increase were higher prices for iron ore, thermal coal and aluminium. Other base metals prices also increased in the month, while the price of gold fell.

One of the main points of our long-term thesis for investing Down Under is the fundamental strength of the Australian dollar versus the US dollar. As we’ve noted recently, however, the RBA is concerned about the impact of a persistently high aussie on the domestic economy.

The RBA currently maintains one of the highest benchmark interest rates in the developed world at 3 percent. This level actually matches the all-time low for what the RBA calls its cash rate target, which was first reached during the depths of the Great Financial Crisis in April 2009.

The RBA boosted its benchmark to 4.75 percent by November 2010, but first a slowing global economy and threats to growth from a sluggish China and a messy Europe and now the drag on domestic manufacturing, tourism and other non-resource industries wrought by aussie strength have prompted the central bank into five cuts since November 2011 totaling 175 basis points.

The RBA, which meets 11 times a year, or every month except January, will issue its next cash rate target decision on Feb. 5.

In his most recent statement, released Dec. 4, 2012, RBA Glenn Stevens acknowledged “signs of easier conditions starting to have some of the expected effects” but also noted, critically, that “the exchange rate remains higher than might have been expected, given the observed decline in export prices and the weaker global outlook.”

Chinese leaders appear to have engineered a soft landing that looks like it’s turning into a new, albeit modest, takeoff. Europe seems to have put a floor under its periphery, and, for now, drama over the US fiscal cliff has subsided.

Spain’s situation is far from settled, but the euro as a currency and the eurozone as a construct will remain intact. Far less certain is what happens over the next two months in the US, where a debate over raising the federal debt ceiling is almost certain to intersect with another over the fate of “sequestered” budget cuts that was put off for eight weeks in the recent compromise bill that drove a global equity rally during the last trading day of 2012 and the first of 2013.

One area where Mr. Stevens can continue to press is on the differential between the RBA’s cash rate target and prevailing benchmarks for other developed world central banks.

We should expect further rate cuts by the RBA in 2013. Whether these moves will drag the aussie lower is an open question.

Dividend Watch List

Because Australian companies typically report official earnings and declare dividends only twice a year, changes–additions to and subtractions from–the Dividend Watch List will be rarer than, for example, the Dividend Watch List compiled for AE’s sister letter Canadian Edge.

The next round of earnings reporting Down Under gets underway in early February.

AE Portfolio Conservative Holding Transurban Group (ASX: TCL, OTC: TRAUF), for example, reports its fiscal 2013 first-half results on Feb. 5, while fellow Conservative Holding Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY) posts its results for the same time frame–the six months from Jul. 1, 2012, through Dec. 31, 2012–two days later on Feb. 7.

For a full list of Portfolio reporting dates, see Portfolio Update.

Movements onto or off the Watch List, as of now, are for the most part determined by guidance revisions.

Iluka Resources Ltd (ASX: ILU, OTC: ILKAF, ADR: ILKAY), for example, has made its way onto the List after issuing yet another downward revision to 2012 guidance in late December.

Prospects for Fortescue Metals Group Ltd (ASX: FMG, OTC: FSUMF, ADR: FSUMY) are brighter on a record month in December as well as the strong rally for iron ore prices.

It will, however, remain on the List despite the improvement in its situation.

APN News & Media Holdings Ltd (ASX: APN, OTC: APNDF) validated its place on the list with a downbeat trading update, with advertising and publishing revenue continuing to weaken.

It’s important to note that Australian companies customarily maintain policies of paying out a specified percentage based on particular earnings metrics, whether that metric is statutory net profit after tax (NPAT), underlying NPAT or earnings before interest, taxation, depreciation and amortization (EBITDA).

What this means is that dividend rates will often vary more than they do for Canadian or US companies, which are almost universally pledged to maintaining dividend rates, often at the cost of tapping balance sheets in the absence of sufficient cash flow to cover obligations to shareholders.

This latter is fine in the short term, and it can be manageable in the longer term as well. But Australian firms are traditionally more debt-averse than their North American counterparts.

It’s important to note, too, that the CE Watch List is based on the monthly distribution scheme established during the income trust era, which, to the benefit of investors everywhere, persists even after the forced conversion to traditional corporations for many of these stocks.

Australia’s twice-yearly rhythm varies as well from the quarterly dividend arrangement to which most US companies adhere.

With recent dividend reductions, changes to guidance or policies that suggest non-regular payment the following companies have declared their worthiness for inclusion on the Dividend Watch List.

The List includes all companies that reduced payouts during the recently concluded earnings reporting season Down Under.

Basic Materials

Aditya Birla Minerals Ltd’s (ASX: ABY, OTC: ABWAF) board approved and management declared a AUD0.05 dividend on May 30, 2012, finally getting back to a paying basis after “omitting” a mid-year payment. It appears the company pays an annual dividend, but policy remains “to seek to maximise cash returns to Shareholders whilst having regard to ensuring a sound financial structure for the Company and providing for value accretive development and exploration activities and targeted growth opportunities.”

Because there’s no clarity on the payment interval this stock will probably be an emeritus member of the Dividend Watch List. It is, however, a speculative buy under USD0.50 for aggressive investors only.

Alumina Ltd (ASX: AWC, NYSE: AWC), whose place on the List is detailed at the top of News & Notes, will report its results for 2012 on Feb. 21, 2013, at which time it’s likely to declare a dividend of at least AUD0.03 per share.

Alumina didn’t declare an interim dividend when it reported 2012 first-half results on Aug. 16, 2012. Management had reduced its final dividend for 2011 by 25 percent, in step with guidance issued late that year. Hold.

Aquarius Platinum Ltd (ASX: AQP, OTC: AQPBF) is likely to benefit from the multiple mine outages in South Africa during 2012, as resulting supply shortages should provide a boost for platinum prices in 2013.

Aquarius halted operations at its Everest mine shortly after its partners in the Marikana mine mothballed the No. 4 shaft due to the continuing weakness for platinum-group metals (PGM) prices. Marikana accounts for approximately 18 percent of Aquarius’s annual production.

The company reported that fiscal 2012 third-quarter earnings slid 137 percent to a AUD9.4 million loss, as production declined 18 percent and prices for PGMs dove 14 percent. Cash costs, meanwhile, surged by 26 percent.

The company didn’t pay an interim dividend on its fiscal 2012 first-half results. The stock has bounced off recent lows. Hold.

Arrium Ltd (ASX: ARI, OTC: ARRMF, ADR: OSTLY) reported the first shipments of iron ore from is Southern Iron project through its newly expanded Whyalla Port, as it continues to bring parts of its supply chain and infrastructure online. Sales from Southern Iron will support more down-the-line expansion of its commodity-production operations.

Management noted that the company remains on time and on budget for its plan to expand port capacity to 13 million metric tons per annum and boost sales to 11 million metric tons by June 2014 from 6 million at present.

Arrium posted fiscal 2012 underlying net profit after tax of AUD195 million, down 17 percent from the prior corresponding period but in line with management guidance. Unfortunately, the final dividend was 25 percent lower than it paid a year ago, at AUD0.03 per share.

Positives include a 2 percent increase in cash flow to AUD470 million and a 4 percent reduction in net debt. Arrium, formerly OneSteel Ltd, paid a AUD0.03 per share interim dividend, down 50 percent from the AUD0.06 it paid for the first half of fiscal 2011.

Arrium has posted another strong rally off a near-term low, rising from AUD0.50 as recently as Sept. 13, 2012, to above AUD1 on Jan. 7. We’ll revisit our recommendation after management reports fiscal 2013 first-half results on Feb. 19. Hold.

BlueScope Steel Ltd (ASX: BSL, OTC: BLSFF) posted a fiscal 2012 net loss after tax of AUD1.044 billion, better than the AUD1.054 billion loss for fiscal 2011.

A joint venture with Japan’s Nippon Steel Corp (Japan: 5401, OTC: NISTF) that generated about AUD540 million for the company helped it shave AUD580 million in debt.

Management had already “omitted” the interim dividend and didn’t declare a final dividend either. But the balance sheet repair job merits an upgrade. Hold.

Fortescue Metals Group (ASX: FMG, OTC: FSUMF, ADR: FSUGY) posted a company-record run rate of 100 million metric tons of iron ore through its Herb Elliott port facility in December following the ramp-up of a second processing facility at its Christmas Creek operation, first iron ore its Solomon mine and the opening of the Fortescue Hamersley Rail Line.

A sharp rise in iron ore prices will likely help Fortescue keep its dividend steady when it reports fiscal 2013 first-half results Feb. 20, 2013. The company paid an interim dividend of AUD0.04 for fiscal 2012, up from AUD0.03 in fiscal 2011. Hold.

Grange Resources Ltd (ASX: GRR, OTC: GRRLF) will also benefit from a sharp increase in iron ore prices during the last four months of 2012.

Grange, which enjoyed a short membership in the AE Portfolio Aggressive Holdings, cut its 2012 interim dividend from AUD0.02 a year ago to AUD0.01. That move on top of an abrupt change in leadership, prompted its removal from the Portfolio via an Aug. 31 Flash Alert, after just joining the Aggressive Holdings as of the July issue.

The company recently announced it would delay start-up of its key growth project, the AUD3 billion Southdown magnetite mine, and reduce spending on it. That preserves cash, though it remains to be seen whether the company will distribute it to shareholders or plow it back into growth initiatives such as a smaller-scale acquisition. Hold.

Independence Group NL (ASX: IGO, OTC: IPGDF) reduced its final dividend for fiscal 2012 from AUD0.07 to AUD0.05. The company is showing improved production metrics at its key nickel mine, and its efforts to diversify what it produces–including the development of the Tropicana gold mine–will help it in the long run.

Revenue was up 32 percent to AUD216.6 million. Nevertheless, Independence reported a full-year net loss after tax of AUD285.3 million, reversing a year-ago profit of AUD5.5 million. Hold.

Iluka Resources Ltd (ASX: ILU, OTC: ILKAF, ADR: ILKAY) issued another production and sales downgrade for 2012, citing lower demand for zircon and other mineral sands products, a lack of confidence in the market, inventory de-stocking and modern manufacturing techniques reducing the use of zircon in tiles.

Management will report 2012 results on Feb. 21, 2013, at which time a dividend cut from the AUD0.55 paid a year ago is likely. Hold.

Medusa Mining Ltd (ASX: MML, OTC: MDSMF), an un-hedged, low-cost gold producer, saw a steep decline in fiscal 2012 gold sales, from 96,217 ounces to 55,446 ounces. Costs remained on the extremely low side, and management reiterated its target of 400,000 ounces of production per year by 2015.

We like the company, as we detail in the November In Focus feature. But it did cut its final dividend by 60 percent to AUD0.02 per share. This remains, however, a great way to gain gold exposure and get paid at the same time. Buy under USD6.50.

Mount Gibson Iron Ltd (ASX: MGX, OTC: MTGRF) reported a slide in fiscal 2012 sales of 3.6 percent, and net profit after tax declined 27.8 percent. That led to a 50 percent reduction in its final dividend, to AUD0.02 per share.

Iron ore tons mined increased by 29 percent, though tons sold declined by 0.5 percent. Costs were up, selling prices down. Hold.

Oz Minerals Ltd (ASX: OZL, OTC: OZMLF, ADR: OZMLY) reported an 18.6 percent decline in first-half revenue and a 32 percent decline in earnings before interest, taxation, depreciation and amortization (EBITDA). It also raised its full-year cash cost guidance to USD1.10 to USD1.20 per ounce from USD1 to USD1.10.

That, on top if the fact that it reduced its interim dividend to AUD0.10 from AUD0.30 a year ago, suggests the final dividend, which will be declared on or about Feb. 14, will be lower than last year’s. Buy under USD8.50.

Panoramic Resources Ltd (ASX: PAN, OTC: PANRF) didn’t declare a final dividend for fiscal 2012 after paying AUD0.02 per share a year ago. It paid 50 percent less for its fiscal 2012 interim dividend than it for fiscal 2011.

Fiscal 2012 net revenue was down 7 percent, and the company posted a net loss after tax of AUD18.2 million. Average realized nickel prices declined by 23 percent, the source of all its dividend trouble. Cash costs, however, were down 4 percent, and management continues to put up solid production numbers. This is for speculators on a stimulus-driven global economic turnaround. Buy under USD1.00.

Western Areas NL (ASX: WSA, OTC: WNARF) cut its final dividend from AUD0.15 a year ago to AUD0.06, as fiscal 2012 revenue was down 29.4 percent on a 29 percent decline for nickel prices. With production flat, sales volumes down and cash costs up, the thing to hold onto is a return of more normal growth for the global economy.

Fiscal 2013 first-quarter production was, and a reorganization effort has had a significant impact on the company’s cost structure–Western Areas is Australia’s lowest-cost nickel miner. Buy under USD4.60.

Whitehaven Coal Ltd (ASX: WHC, OTC: WHITF) declared a final dividend of AUD0.03, down from AUD0.041 a year ago, as underlying net profit after tax slid 13 percent. Revenue from coals sales actually grew by 2.6 percent, however. The company posted fiscal 2013 first-quarter total coal sales that were 5 percent lower than year-ago levels. Hold.

Consumer Goods

Billabong International Ltd (ASX: BBG, OTC: BLLAF, ADR: BLLAY) cut its interim distribution by 81 percent, which we said was likely an interim step on the way to zero. And that’s where we are after management didn’t declare a final dividend in August.

Billabong posted a fiscal 2012 net loss of AUD275.6 million, as sales declined 7.9 percent. There are now competing AUD1.45 per share offers to buy the company. Management has guided to fiscal 2013 EBITDA guidance of AUD100 million to AUD110 million. Sell.

Goodman Fielder Ltd (ASX: GFF, OTC: GDFLF, ADR: GDFLY) didn’t pay an interim dividend nor did it pay a final dividend for fiscal 2012. Fiscal 2012 revenue was down 1.7 percent, while normalized earnings before interest, taxation, depreciation and amortization (EBITDA) slid 16.6 percent. The company did reduce net debt by 23.8 percent, and the sale of its edible oils business to Aggressive Holding GrainCorp Ltd (ASX: GNC, OTC: GRCLF) for AUD472 million will help the balance sheet. Hold.

Consumer Services

APN News & Media Holdings Ltd (ASX: APN, OTC: APNDF) management issued a downbeat trading update in December, noting that the advertising market weakened in the second half of 2012 across all media and that publishing revenue decline 10 percent. Guidance is for full-year earnings before interest, taxation, depreciation and amortization (EBITDA) of AUD150 million to AUD155 million.

APN cut its 2012 interim dividend to AUD0.015 from the AUD0.035 it paid a year ago.

APN reported a net loss of AUD319.4 million for the six months to Jun. 30, which included a AUD485 million writedown on its New Zealand assets. Revenue fell 6 percent to AUD477 million, and EBITDA slid 12 percent to AUD74.9 million. Debt remains a concern. Sell.

David Jones Ltd (ASX: DJS, ADR: DJNSY) reported that fiscal 2012 sales declined 4.6 percent, as like-for-like sales were off 4.3 percent. The company cut its final dividend to AUD0.07 per share from AUD0.15 a year ago. Hold.

Harvey Norman Holdings Ltd (ASX: HVN, OTC: None) declared a final dividend of AUD0.04 per share, down from AUD0.06 a year ago, as fiscal 2012 sales revenue slid 9.6 percent, earnings before interest and taxation (EBIT) declined 24.8 percent and net profit after tax (NPAT) fell 31.6 percent. Fiscal 2013 first-quarter sales were down 10 percent. Sell.

JB Hi-Fi Ltd (ASX: JBH, OTC: JBHIF) reduced its final dividend to AUD0.16 per share from AUD0.29 a year ago. Total dividends for fiscal 2012 were AUD0.65 per share, down from AUD0.77 for fiscal 2011.

Management noted during its fiscal 2012 earnings call that July margin trends have started to rebound. Though the environment for discretionary retail purchases isn’t great this company competes hard and is expanding its offerings to meet the new digital age.

The company reported that fiscal 2013 first-quarter sales rose 3.8 percent, though comparable sales declined 2.4 percent. Management is confident in its ability to grow market share. Buy under USD9.75.

Myer Holdings Ltd (ASX: MYR, OTC: MYGSF) cut its fiscal 2012 final distribution to AUD0.09 from AUD0.115 a year ago. The company posted a 1.3 percent decline in sales to AUD3.12 billion, though fourth-quarter comparable sales were up 3 percent and operating profit increased by 1.3 percent to AUD1.29 billion.

Myer posted a 1 percent rise in total sales for the first quarter of fiscal 2013 and a 0.8 percent increase in like-for-like sales. We’re raising our rating on this, though conservative investors should steer clear. Buy under USD2.40.

Navitas Ltd (ASX: NVT) reduced its fiscal 2012 final dividend to AUD0.101 from AUD0.12 in fiscal 2011. Total dividends for fiscal 2012 were AUD0.195 per share, down from AUD0.207 per share in fiscal 2011. The company continues to build its global education franchise, however, and will benefit from changes to Australia’s visa system. Buy under USD4.

Seven West Media Ltd (ASX: SWM, OTC: WANHF) cut its final dividend to AUD0.06 from AUD0.24 a year ago, though earnings before interest and taxation came in right at revised guidance at AUD473.4 million. Management forecast low single-digit advertising growth for fiscal 2013, suggesting this difficult period for media companies will continue.

Management did, however, provide quantitative guidance for fiscal 2013 first-half earnings before interest and taxation (EBIT) of approximately AUD250 million and noted signs of stabilization in the advertising market. That’s worth an upgrade to make this a worthy speculation for very aggressive investors. Buy under USD1.65.

2day FM will donate “at least” AUD500,000 to the nurse’s family.

Management says the broadcast violated no laws, regulations or code, but Southern Cross shares have slid on the news, as advertisers have pulled business. The incident is now under investigation.

Southern Cross paid a AUD0.05 final dividend, which was actually up from the AUD0.03 it paid as a final dividend for fiscal 2011. Hold.

Financials

QBE Insurance Ltd (ASX: QBE, OTC: QBEIF) reduced its 2012 interim distribution to AUD0.40 from the AUD0.62 it paid as an interim distribution in 2011. Operating results were actually solid, as net profit after tax (NPAT) was up 13 percent on lower claims. Insurance profit was up 26 percent, and management reiterated its “positive” full-year outlook for underlying insurance margin and profitability.

That, however, was before Superstorm Sandy hit the east coast of the US. Management has said that damage from the storm could mean costs of AUD350 million to AUD450 million for the insurer and reduced its earnings outlook. Hold.

Industrials

Boral Ltd (ASX: BLD, OTC: BOALF) reduced its fiscal 2012 final dividend by 50 percent to AUD0.035 per share, though statutory net profit after tax (NPAT) was up 5.3 percent. Hold.

Emeco Holdings (ASX: EHL, OTC: None) reduced fiscal 2013 first-half operating net profit after tax (NPAT) guidance to AUD23 million to AUD26 million from AUD29.2 million. The company also reduced its sustaining capital expenditure budget; though this may help preserve the payout it’s not a good long-term sign. Hold.

GWA Group Ltd (ASX: GWA, OTC: GWAXF, ADR: GWAXY) has completed a restructuring that will push about AUD4 million directly to earnings before interest and taxation (EBIT) and boost cash flow. The shares have rallied strongly on the news, rising from a five-year low in mid-November to as high as AUD2.40.

Management has, however, adjusted the company’s payout policy. The company now plans to pay 80 percent to 95 percent of net profit after tax (NPAT), up from 70 percent to 80 percent. But the AUD0.18 per share “floor” that had underpinned the policy has been removed. Buy under USD2.

Leighton Holdings Ltd (ASX: LEI, OTC: LGTHF) slashed its interim distribution from AUD0.59 per share to AUD0.20 per share.

The company reported 2012 first-half statutory net profit after tax (NPAT) of AUD114.6 million, at the low end of its AUD100 million to AUD150 million guidance. Management, however, maintained full-year NPAT guidance of AUD400 million to AUD450 million, which is a reduction from previous guidance for 2012 NPAT of AUD600 million to AUD650 million. Hold.

Toll Holdings Ltd (ASX: TOL, OTC: THKUF) maintained its final distribution at AUD0.135 per share, despite chopping its guidance for fiscal 2012 underlying earnings before interest and taxation (EBIT) to AUD400 million to AUD420 million from a prior target of AUD450 million. Fiscal 2011 underlying EBIT was AUD436 million.

The company posted actual EBIT of AUD410.8 million, right in the middle of the revised forecast.

Australia’s largest trucking company and freight handler has a relatively strong balance sheet, and its operating performance remains sound. But external pressures in the form of a weakening Chinese economy and a still-recovering Japanese economy suggest an overabundance of caution is in order. Hold.

Oil & Gas

Boart Longyear (ASX: BLY, OTC: BOARF, ADR: BLGPY) maintained its 2012 revenue guidance of USD2 billion but reduced its earnings before interest, taxation, depreciation and amortization (EBITDA) guidance to USD310 million to USD320 million from USD360 million to USD390 million due to margin pressures.

The company will report final 2012 results on Feb. 18, 2013, at which time it will likely also reveal a reduced final dividend. Hold.

The ADR List

We continue to track the How They Rate coverage universe and beyond for Australia-based companies that afford US investors the convenience of ADR investing, either on their initiative or via the effort of an interested financial institution.

Here again is our primer on Australian stocks, US OTC symbols and ADRs.

The great majority of the companies under How They Rate coverage have US symbols, many because they actively seek to raise capital here on their own accord. That means they comply, to varying degrees, with US Securities and Exchange Commission filing requirements for foreign companies and with US accounting principles. Others trade here because a sponsoring institution has effectively created a secondary market for the shares, without the underlying company’s active participation.

Shares traded on US OTC markets bearing a final “F” in their five-letter symbols are basically home-listed shares trading in a market created by and for US institutions. Individuals can buy and sell here, too. Prices basically reflect ASX prices and also reflect changes in the relationship between the US dollar and the Australian dollar. One “F” share represents one ASX-listed share. The dividend you receive in respect of an “F” share is the dividend paid in respect of the ASX-listed share, adjusted for currency effects.

An ADR is a certificate that represents stock of a foreign company. ADRs are listed on US stock exchanges or the OTC Bulletin Board or Pink Sheets. Those that trade OTC have five-letter symbols ending with the letter “Y.” All transactions, including dividend payments, are conducted in US dollars.

One ADR certificate may represent one or more shares of the foreign stock; it can also represent a fraction of a share. For example, one Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY) ADR, which trades under the symbol TLSYY, is worth five ordinary shares that trade on the Australian Securities Exchange under the symbol TLS. Australia & New Zealand Banking Group Ltd’s (ASX: ANZ, OTC: ANEWF, ADR: ANZBY) ADR, ANZBY, is worth one Australia-listed ANZ share.

Because many ADRs don’t have a one-to-one ratio between the depositary receipts and the shares of stock, financial ratios are often not included in stock listings. Data in Australian Edge Portfolio tables and How They Rate is derived based on Australian Securities Exchange symbols so is as complete as you’ll find anywhere.

Foreign companies themselves often “sponsor” the creation of their own ADRs. These are called “sponsored ADRs.” There are three levels of sponsorship.

A Level I sponsored ADR is created by a company because it wants to extend the market for its securities to the US. It does not, however, want to register with the Securities and Exchange Commission (SEC) or conform to generally accepted accounting principles (GAAP). Level I ADRs trade on the OTC Bulletin Board or Pink Sheets trading systems, usually but not exclusively by institutional investors. Australia & New Zealand Banking Group’s is a Level I ADR.

Level II and Level III sponsored ADRs must be registered with the SEC, and financial statements must be reconciled to generally accepted accounting principles. A Level II ADR requires partial compliance with GAAP, while a Level III ADR requires complete compliance. A Level III sponsorship is require if the ADR is a primary offering and is used to raise capital for the company. Only Level II and Level III sponsored ADRs can be listed on the New York Stock Exchange (NYSE), the American Stock Exchange or Nasdaq. Telstra Corp sponsors a Level III ADR in the US, meaning it’s actively seeking to raise capital here.

An unsponsored ADR is created by a US investment bank or brokerage that buys ordinary shares on the underlying company’s home market then deposits them in a local custodian bank. This depositary bank then issues shares that represent an interest in the stocks and handles most of the transactions with American investors, serving both as transfer agent and registrar for the ADR.

The shares of the foreign stock held in the custodian bank are called “American Depositary Shares,” although this term is sometimes used as a synonym for “American Depositary Receipts.” Unsponsored ADRs can’t be listed on the major American stock exchanges because they aren’t registered with the SEC and lack other necessary qualifications.

The price of an ADR is determined by supply and demand but will generally track the price of the underlying ordinary share. When dividends are paid, the custodian bank receives it and withholds any foreign taxes, exchanges it for US dollars and then sends it to the depositary bank, which then sends it to the investors.

The US depositary bank handles most of the interaction with US investors, including rights offerings, stock splits and stock dividends. Sponsored ADR investors may receive communications, including financial statements, directly from the company.

Here is a list of companies in the How They Rate coverage universe that have an ADR listing in the US, along with the number of ordinary ASX-listed shares the ADR represents.

Basic Materials          

• Alumina Ltd (ASX: AWC, NYSE: AWC)–One ADR is worth four ordinary shares.
• Aquarius Platinum Ltd (ASX: AQP, OTC: AQPBF, ADR: AQPTY)–One ADR is worth two ordinary shares.
• Arrium Ltd (ASX: ARI, OTC: ARRMF, ADR: OSTLY)–One ADR is worth 20 ordinary shares.
• BHP Billiton Ltd (ASX: BHP, NYSE: BHP)–One NYSE-listed ADR is worth two ordinary shares.
• BlueScope Steel Ltd (ASX: BSL, OTC: BLSFF, ADR: BLSFY)–One ADR is worth five ordinary shares.
• Fortescue Metals Group Ltd (ASX: FMG, OTC: FSUMF, ADR: FSUMY)–One ADR is worth five ordinary shares.
• Iluka Resources Ltd (ASX: ILU, OTC: ILKAF, ADR: ILKAY)–One ADR is worth five ordinary shares.
• Kingsgate Consolidated Ltd (ASX: KCN, OTC: KSKGF, ADR: KSKGY)–One ADR is worth one ordinary share.
• Mineral Resources Ltd (ASX: MIN, OTC: MALRF, ADR: MALRY)–One ADR is worth one ordinary share.
• Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY)–One ADR is worth one ordinary share.
• Oz Minerals Ltd (ASX: OZL, OTC: OZMLF, ADR: OZMLY)–One ADR is worth 0.5 ordinary shares.
• Rio Tinto Ltd (ASX: RIO, NYSE: RIO)–One ADR is worth one ordinary share.

Consumer Goods

• Billabong International Ltd (ASX: BBG, OTC: BLLAF, ADR: BLLAY)–One ADR is worth two ordinary shares.
• Goodman Fielder Ltd (ASX: GFF, OTC: GDFLF, ADR: GDFLY)–One ADR is worth 10 ordinary shares.

Consumer Services

• Crown Ltd (ASX: CWN, OTC: CWLDF, ADR: CWLDY)–One ADR is worth two ordinary shares.
• David Jones Ltd (ASX: DJS, ADR: DJNSY)–One ADR is worth one ordinary share.
• Metcash Ltd (ASX: MTS, OTC: MCSHF, ADR: MHTLY)–One ADR is worth six ordinary shares.
• TABCORP Holdings Ltd (ASX: TAH, OTC: TABCF, ADR: TACBY)–One ADR is worth two ordinary shares.
• Wesfarmers Ltd (ASX: WES, OTC: WFAFF, ADR: WFAFY)–One ADR is worth 0.5 ordinary share.

Financials

• Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY)–One ADR is worth one ordinary share.
• Commonwealth Bank of Australia Ltd (ASX: CBA, OTC: CBAUF, ADR: CMWAY)–One ADR is worth one ordinary share.
• National Australia Bank Ltd (ASX: NAB, OTC: NAUBF, ADR: NABZY)–One ADR is worth one ordinary share.
• QBE Insurance Ltd (ASX: QBE, OTC: QBEIF, ADR: QBIEY)–One ADR is worth one ordinary share.
• Westfield Group Ltd (ASX: WDC, OTC: WEFIF, ADR: WFGPY)–One ADR is worth two ordinary shares.
• Westpac Banking Corp Ltd (ASX: WBC, NYSE: WBK)–One ADR is worth five ordinary shares.

Health Care

• Cochlear Ltd (ASX: COH, OTC: CHEOF, ADR: CHEOY)–One ADR is worth 0.5 ordinary share.
• CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY)–One ADR is worth 0.5 ordinary share.
• Sonic Healthcare Ltd (ASX: SHL, OTC: SKHCF, ADR: SKHCY)–One ADR is worth one ordinary share.

Industrials

• Amcor Ltd (ASX: AMC, OTC: AMCRF, ADR: AMCRY)–One ADR is worth four ordinary shares.
• Boral Ltd (ASX: BLD, OTC: BOALF, ADR: BOALY)–One ADR is worth four ordinary shares.
• GWA Group Ltd (ASX: GWA, OTC: GWAXF, ADR: GWAXY)–One ADR is worth four ordinary shares.
• Toll Holdings Ltd (ASX: TOL, OTC: THKUF, ADR: THKUY)–One ADR is worth two ordinary shares.

Oil & Gas

• Beach Energy Ltd (ASX: BPT, OTC: BEPTF, ADR: BCHEY)–One ADR is worth 20 ordinary shares.
• Boart Longyear Ltd (ASX: BLY, OTC: BOARF, ADR: BLGPY)–One ADR is worth two ordinary shares.
• Caltex Australia Ltd (ASX: CTX, OTC: CTXAF, ADR: CTXAY)–One ADR is worth two ordinary shares.
• Oil Search Ltd (ASX: OSH, OTC: OISHF, ADR: OISHY)–One ADR is worth 10 ordinary shares.
• Santos Ltd (ASX: STO, OTC: STOSF, ADR: SSLTY)–One ADR is worth one ordinary share.
• Woodside Petroleum Ltd (ASX: WPL, OTC: WOPEF, ADR: WOPEY)–One ADR is worth one ordinary share.
• WorleyParsons Ltd (ASX: WOR, OTC: WYGPF, ADR: WYGPY)–One ADR represents one ordinary share.

Technology

• Redflex Holdings Ltd (ASX: RDF, OTC: RFLXF, ADR: RFLXY)–One ADR is worth eight ordinary shares.

Telecommunications  

• Singapore Telecommunications Ltd (Singapore: ST, ASX: SGT, OTC: SNGNF, ADR: SGAPY)–One ADR is worth 10 ordinary shares.
• Telecom Corp of New Zealand Ltd (ASX: TEL, NYSE: NZT)–One ADR is worth five ordinary shares.
• Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY)–One ADR is worth five ordinary shares.

Utilities

• AGL Energy Ltd (ASX: AGK, OTC: AGLNF, ADR: AGLNY)–One ADR is worth one ordinary share.
• Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY)–One ADR is worth one ordinary share.