vba big winner as local currency soars, page-2

For those that did not read the AFR today there was an article which talked about the rising dollar and impact on FY10 profit. Research from GSJBW shows that for every 5c increase in the AUD relative to the USD, VBAs FY10 profit increases by 21.1%. The article notes that the AUD's rallied from US75c on 30th June 09 (although other data I looked at suggested the AUD was US81c) to US92.22 (hit US93c today). Either way its a huge increase in VBA's expected FY10 profit - I'll let you do the numbers.

So what impact could this analysis by GSJBW have on other broker Pre-tax profit estimates for FY10?

JPM: 30th Sep estimates PT profit FY10 of $12 million. Since the report the Aussie has appreciated by approximately 4.88c - thats a possible 20.5% increase in their estimate PT profit FY10.

Commsec: 3 Sep estimates PT profit FY10 of $22.3m. The Aussie has since appreciated by approximately 9.28c. Thus thats a possible 39% increase in their estimate PT profit FY10.

Obviously I've assumed all other factors have remained constant, given that where not told what oil price GSJBW assumes in their model. As we all know oils increased. However, we know that at least 55% of VBA's fuel needs is hedged (using option strategies). VBA has also told us that they would increase that hedge to at least 80%. So while we don't exactly know what impact oil is having on costs it would certainly not be enough to offset the 21.1% increase. The VBA story just keeps getting better and I wouldn't be surprised if we see some broker upgrades based on the movement in the Aussie.