CLICK HERE TO VIEW THE 2019 SYDNEY'S TOP LISTED COMPANIES LIST
THIS is your access to the definitive list of Sydney's Top Listed Companies, compiled by the editorial team at Business News Australia.
This is the first of what will be an annual list of companies that are some of the heavyweights of Australia's business scene.
The next 10 companies continue to demonstrate Sydney's strength in both the financial and property sectors, as well as features the ASX itself among consumer services.
11. Sydney Airport
Market cap: $13.65b
MD & CEO: Kerrie Mather
FY16 profit: $160m
FY16 revenue: $661.9m
SYDNEY Airport is a growth story that shows no sign of slowing any time soon.
Big gains in both international and domestic travel, largely driven by inbound tourists, have been a fundamental feature of this growth.
International passengers, particularly from China, Japan, Korea and the US, rose 9.3 per cent from the previous year to 7.2 million for the first six months of calendar 2016. The airport is expected to see 1.5 million more passengers pass through its doors over the full year compared with 2015.
Major events have driven strong visitor numbers across the board with the NSW Government revealing the 2016 Vivid Sydney festival attracted 2.3 million visitors, up 35 per cent on 2015.
Major capital works programs under way include the redevelopment and expansion of the international terminal, taxiway widening to accommodate larger next-generation aircraft and expansion of the multi-storey carpark to add an extra 480 spaces.
Sydney Airport has more than 200 business expansion projects under way which include building direct paths through the airport, more seating, better wayfinding and a more streamlined baggage processing and collection process.
Work is also continuing on access improvements in and around Sydney Airport. The work is expected to be completed in 2018.
Sydney Airport is evaluating the prospects of developing and operating the proposed Western Sydney Airport. The company has first right of refusal on the project and is still weighing up hurdle rates of return, potential yield and growth prospects for the rival facility.
12. AGL Energy
Market cap: $13.53b
MD: Andy Vesey
FY16 loss: $408 million
FY16 revenue: $1.15b
A BOTTOM-LINE annual loss hasn't hurt investor sentiment in AGL over the past year.
After solid growth in 2015, and despite a minor setback in mid-2016, the power supplier's shares have managed to rise about 50 per cent in the two years to the end of calendar 2016, driven by strong underlying results.
Chairman Jerry Maycock put it succinctly at the company's 2016 annual general meeting. Although he lamented the FY16 loss of $408 million, driven by writedowns of upstream gas assets in NSW and Queensland, Maycock also highlighted the complexity of statutory accounting standards. He says the true measure of AGL's performance for many years is reflected in net profit after tax, which rose 11.3 per cent to $701 million.
As a result of ongoing volatility in commodity markets, AGL has announced that upstream gas assets would no longer be core business activities for the group, even though they have bolstered shareholder value over the past decade.
Among major milestones of 2016 was the appointment of Oil Search (ASX:OSH) CEO Peter Botten as a non-executive director. Botten is seen as playing a major advisory role in AGL's plans to scale down its upstream gas assets.
Meanwhile, AGL chief executive Andrew Vesey (pictured) says the company cannot rely on charging higher electricity rates to maintain margins because competition is intense. Consumer sales fell by 1.5 per cent in the last financial year and the Victorian and South Australian markets were hit the hardest. Business sales also fell by 4.1 per cent.
Instead, Vesey's focus has been on cost reduction. AGL announced a $300 million investment over three years to improve digital applications for customers, a strategy he believes will reduce administrative costs.
AGL is also turning over a new leaf as it repositions itself from being the country's biggest emitter of greenhouse gases by investing in renewable technologies. This includes a partnership with QIC for a $2-3 billion future fund to develop and own about 1000 megawatts of new large-scale wind and solar projects.
13. Insurance Australia Group
Market cap: $13.23b
MD & CEO: Peter Harmer
FY16 profit: $625m
FY16 revenue: $16.77b
INSURANCE Australia Group was poised for a significant push into Asia at the end of 2015, although a year later the company revealed that a strategic review caused it to scale back this strategy.
Chairman Elizabeth Bryan assured shareholders that China and Asia remain on the radar, although risks associated with those markets also need to be weighed.
In an increasingly tough market for insurance companies, IAG posted lower than expected FY16 results with a 14.1 per cent drop in net profit to $625 million.
The weaker profits were largely due to a $126 million drop in its investment portfolio caused by a combination of low interest rates and volatile markets.
However, IAG's insurance profit rose 6.8 per cent to $1.18 billion driven by growth in personal insurance particularly in home and motor divisions. Chief executive Peter Harmer (pictured) found the overall results 'pleasing', singling out this measure to reflect the true underlying health of the business.
In recognition of the company's strong capital position, IAG is has undertaken a $300 million off-market share buy-back.
The insurance giant also announced that its strategic alliance with US conglomerate Berkshire Hathaway was a success as it has reduced the company's earnings volatility and released capital. As part of the alliance, the US group headed by billionaire investor Warren Buffett took a 3.7 per cent stake in IAG via a $500 million placement.
Among the non-financial achievement by the company, Harmer notes IAG's moves towards diversity and inclusion. IAG has a group target to ensure women comprise 38 per cent of senior management by 2020, up from 32 per cent at the end of June 2016. The company has also implemented a [email protected] program to help parents cope with school holiday arrangements.
14. Goodman Group
Market cap: $11.66b
CEO: Greg Goodman
FY16 profit: $715m
FY16 revenue: $2.944b
GOODMAN Group is one of the world's largest listed industrial property groups.
It owns a portfolio of 188 commercial and industrial properties in major metropolitan markets across Australia and manages a slew of funds in the property sector globally, including the UK, Europe, Japan and Hong Kong.
Goodman Group is among the many companies in this sector domestically to have performed strongly over FY16.
The group exceeded market expectations by increasing its operating profit by 9 per cent to $715 million, with CEO Greg Goodman (pictured) attributing the strong results to the focus on development and funding that development through asset rotation.
Developments contributed to an operating EBIT of $366 million, a 43 per cent increase from the previous year driven by rising demand for logistics space. In Australia, the strong demand for storage space has seen the Moorabbin Airport business park attract new tenants such as Spectrum Brands and Costco.
Goodman Group, formerly known as Macquarie Goodman Group, has forecast 6 per cent earnings growth in FY17 as it continues to slim its balance sheet by selling assets and focusing on core markets in global cities.
The company has $3.4 billion tied up across 81 development projects in 14 countries. These projects are already 68 per cent pre-committed and 74 per cent pre-sold to third parties or managed partnerships.
Of note, New-York listed Blackstone Group has bought Goodman's logistics assets in Australia for more than $650 million in an off-market deal. This is a further example of the company's strategy to divest and recycle assets. Goodman Group has $34.2 billion in assets under management.
15. Origin Energy
Market cap: $10.43b
CEO: Frank Calabria
FY16 profit: $354m
FY16 revenue: $1.696b
IT'S been a tough year for Origin Energy, marked by weaker oil prices and a second consecutive year of big losses.
The company's latest loss has been impacted by writedowns in the value of its oil reserves, putting pressure on the company's share price.
Debt reduction has been a major focus for the group, leading to a suspension of dividend payments in the second half of FY16.
While Origin says its new Australia Pacific LNG joint venture had 'more than offset' the writedowns during the year, the energy company's underlying profit also weakened falling 46 per cent to $365 million. The energy business was the only segment to improve underlying earnings during the year.
The company says its immediate focus in the year ahead will be to cut debt further as its LNG joint venture comes to full production towards the end of the year.
The Australia Pacific LNG joint venture has signed a 20-year gas transportation deal with APA Group to build and operate a 50km gas pipeline from the Australia Pacific LNG plant to Wallumbilla Gas Supply Hub in Queensland.
Grant King, who retired as CEO in October, has described 2016 as a transitional year. He was replaced by Frank Calabria, the CEO of Origin's Energy Markets business.
Under King's stewardship, Origin's share price rose from $1 in 2000 to a peak of $15 in 2011 on record oil prices. The shares have retreated sharply since then.
Origin has announced plans to spin off its upstream oil and gas business in an IPO in 2017, creating a new company named NewCo.
Market cap: $10.13b
MD: Mark Steinert
FY16 profit: $889m
FY16 revenue: $2.3b
THE real estate boom pushed Stockland's sales revenue up 10 per cent to $2.3 billion in FY16, while net profit was down by 1.6 per cent to $889 million.
The company's residential business settled a record 6135 properties during the year, achieving operating profit growth of 38.8 per cent and lifting return on assets to 19.6 per cent on its core portfolio.
Stockland remains confident in both the Sydney and Melbourne residential markets and has been encouraged by a return of first-home buyers to south-east Queensland.
Managing director Mark Steinert (pictured) believes that low interest rates, strong unemployment figures and an undersupply of houses in the key capital cities will underpin continued growth in the residential market. Housing demand in NSW and Melbourne remains strong, thanks to population growth, he says.
Concerns over a rise in defaults on property settlements, particularly high rise apartments, do not directly affect Stockland, says Steinert. The group is a major developer of residential communities which Steinert says remain in undersupply across the eastern seaboard based on current fundamentals.
In the retail division, which is the biggest single contributor to profit, the Stockland portfolio experienced solid growth in the first quarter of FY17 with total sales up 2.4 per cent.
The company says sales from about a third of its retail portfolio are not included in this figure due to the redevelopment of some of its best retail centres, including Wetherill Park and Green Hills in NSW.
Stockland also reported high occupancy levels and positive leasing spreads on leases across its retail portfolio in FY16. The best performing categories in retail were communication and technology, retail, food catering and casual dining.
17. CIMIC Group
Market cap: $10.04b
CEO & MD: Marcelino Fernandez Verdes
1H16 profit: $265.2m
1H16 revenue: $4.95b
CIMIC Group, the construction giant formerly known as Leighton Holdings, had a rollercoaster year on the Australian Securities Exchange in 2016.
Its shares hit a high of $39.82 in May but retreated below $30 in July due to concerns over the quality of the company's interim profit result.
The company revealed weaker revenues in its key construction division due to LNG projects reaching completion, while the commercial and residential division had experienced a marked downturn in activity.
The poor earnings performance appears to have whet CIMIC's appetite for expansion with the company launching an unconditional $524 million takeover bid for ASX-listed construction and engineering rival UGL Ltd (ASX:UGL).
Prior to the takeover bid UGL suffered its own setback in June after cost blowouts at the company's Ichthys LNG joint venture in Darwin.
CIMIC says a takeover of UGL will bring competencies to its business and enhance it capabilities in new activities.
CIMIC also expanded into Canada in 2016 as its mining services division Thiess signed a joint-venture agreement with Canadian energy company KMC Mining as it moves into the oil sand sector.
18. Aristocrat Leisure
Market cap: $9.44b
CEO & MD: Jamie Odell
1H16 profit: $183m
1H16 revenue: $1.0b
NEWS that Aristocrat Leisure's CEO Jamie Odell (pictured) plans to step down from the company's top job in 2017 led to an immediate sell-off in the company's shares.
Solid growth in shareholder value during Odell's tenure, to the tune of $9 billion, had given shareholders some level of comfort for its future prospects.
However, the share market rout that followed news of his departure could also be attributed to broader uncertainty surrounding the immediate fallout from the US election result. Aristocrat Leisure relies heavily on the US market.
Odell is being replaced by Trevor Croker, an existing Aristocrat executive who will assume the role in March 2017.
Aristocrat hit the jackpot in in the first half of calendar 2016 as profit surged 66 per cent to $183 million.
This was the 10th consecutive period of earnings growth for the company, which Odell believes is a hallmark of its sustainability and quality of strategy.
Of note, 50 per cent of Aristocrat's total revenue is recurring and analysts from UBS expect that proportion of recurring revenue to grow further. This gives the company and its investors much more certainty over future sales figures.
Profit in its digital platform climbed to $46 million from $17 million due to the continued success of its games on Facebook and a strong uptake of its games following their launch on Android.
However, a recent negative is a lawsuit against the slot giant from Shonica Guy, represented by lawyers Maurice Blackburn. Guy is suing the company for deceptive slot machines, which she claims disguise losses as wins. The potential financial ramifications of this lawsuit on Aristocrat are unclear.
19. ASX Limited
Market cap: $9.20b
MD & CEO: Dominic Stevens
FY16 profit: 426.2m
FY16 revenue: $746.3m
THE push for more competition in Australia's securities trading and settlements arena didn't appear to hurt ASX Ltd in FY16.
The Australian share market was abuzz with activity in the second half of the financial year due to Brexit as well as a rise in secondary capital raisings within the financial sector, helping ASX lift profit after tax by 5.7 per cent to $426.2 million.
The diversified nature of the ASX business model and high activity on the share markets produced growth across all its key business areas.
Chairman Rick Holliday-Smith says numerous initiatives are in progress to improve market efficiency and reduce risk and complexity for investors.
The ASX has allocated $50.2 million for capital investments, which will include the introduction of T+2 settlement allowing investors to receive their cash and shares faster and the development of a new futures trading platform.
The ASX's new online portal, which enables customers to more easily engage with ASX, has been well received. The company's focus on 24-hour service delivery as well as the introduction of a new ASX office in Hong Kong has lifted overseas customer engagement as well.
New guidelines for equities clearing and settlements recommended by the Council of Financial Regulators have been welcomed by ASX which has been under pressure to cut settlement costs. The new guidelines have long been considered a pathway to improved competition for equities clearing and settlements, particularly from ASX's main rival, Chi-X Australia.
ASX has been facing competition from the broker-owned Chi-X since 2011, but only across trading platforms. The new settlement framework is expected to open equities settlements, although timing of that competition remains unclear.
20. Sonic Healthcare
Market cap: $9.03b
CEO: Colin Goldschmidt
FY16 profit: $451.3m
FY16 revenue: $5.052b
SONIC Healthcare has labelled FY16 as a banner year for the company after cracking $5 billion in revenue, buoyed by the acquisition of Medisupport in Switzerland, KLD in Belgium and Adelaide Pathology Partners in Australia.
The company now earns more than half of its revenue, or 59 per cent, from international operations and the US and Europe proved strong contributors in FY16. In November, the company increased its stake in German company GLP Systems by 25 per cent to 80 per cent, further growing its international focus.
Sonic says it has become market leader for medical-diagnosis laboratory services in Australia, Germany, Switzerland and the UK where it says demand for services are on the rise due to growing and ageing populations and renewed focus on preventative medicine. It is also rated as a top five provider in the US.
Over the past five years, Sonic has invested in new laboratories in Brisbane, Perth, Canberra, London, New York, Memphis and Hawaii, and extended existing facilities in Austin, Berlin and Ingelheim in Germany.
The Australian market has proved more difficult for the company, largely due to the changes announced by the federal government to bulk billing of pathology services. Sonic says the negative effects of this policy appear to be diminishing with the announcement itself said to have affected business ahead of any cuts even being implemented.
Sonic says it has no immediate plans for further acquisitions offshore, although concedes it will look at opportunities should they arise.
Sonic's revenue rose 20 per cent in FY16, while net profit surged 30 per cent. In constant currency terms, net profit rose 23.6 per cent.
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