Coles ramps up food price cuts

Coles has ramped up how much money it pours into lowering food and grocery prices as it sacrifices profits in a bid to lure customers from Woolworths and Aldi.


Wesfarmers shares were a drag on the ASX on Wednesday after the owner of Coles supermarkets flagged an increase in its investment in lower prices – a move expected to hit its profit margins.

The company also warned that its hardware business in the UK and Ireland was likely to make a loss in the second half of 2017 and into the first half of 2018.

Shares in Wesfarmers closed 2.9 per cent lower at $40.23.

Coles managing director John Durkan told investors that the majority of Coles’ $64 million decline in earnings during the first-half of 2017 was due to investment in lowering prices.

And the rate of investment has increased notably in the third and fourth quarters, he said.

“It’s a high level of investment but cost savings will come out over time,” Mr Durkan said.

Coles’s focus on lower prices comes after a significant slowdown its third-quarter sales growth – 0.3 per cent compared to 4.9 per cent growth in the same period a year ago – in a sign it has lost customers and market share to Woolworths and Aldi.

Woolworths has spent more than $1 billion over 12 months on lowering prices while Aldi has been aggressively expanding beyond the east coast.

Mr Durkan said supermarket prices in Australia were high compared to overseas and Coles had room to go lower by expanding its private label range.

“It’s already an overpriced grocery market in my view and I’ve been saying that for nine years,” he said.

“I still look at products here that are made overseas and they are crazy prices.”

Mr Durkan’s comments come in the wake of consumer magazine CHOICE’s latest supermarket price survey which found consumers can save nearly $80 a shop by switching from leading brands to a basket of Aldi budget products.

Mr Durkan unveiled plans to expand Coles’s fresh bread offering, with moves underway to convert an additional 180 stores to include in-house bakeries.

The ultimate plan is for all of Coles’s 780-plus stores to have freshly baked bread.

Mr Durkan said Coles was focused on increasing its fresh produce and reducing the range of some products to make shopping simpler for customers.

Sales had risen after Coles recently shrank some product ranges, he said.

“We have moved eight lines out of our garbage bag category, which was 20 per cent of the items in that category, and in response, sales have increased by five per cent,” he said.

There was a similar lift in pasta sauce sales after Coles narrowed its range by about 17 per cent, Mr Durkan said.

Hurdles ahead for Vocus takeover

Tough questions remain for Vocus Group following the conditional $3.


3 billion takeover proposal from a US private equity firm, as analysts consider the sprawling telco’s potential to be broken up.

Kohlberg Kravis Roberts’ $3.50 cash per share proposal for the telecommunications provider on Wednesday is preliminary and non-binding, with KKR assuming Vocus’ $1.1 billion debt.

According to Citi, the offer remains subject to shareholder and regulatory approval, including a visit to the Foreign Investment Review Board; due diligence and a unanimous Board recommendation.

Vocus, meanwhile, must also meet its full-year guidance for earnings to be above $365 million.

While the junior telco’s share price gained almost 22 per cent on Wednesday as the market digested the offer, Vocus has taken a pummelling since August 2016, shedding almost 70 per cent of its value.

Management has grappled with a rush to expand that began in December, 2014 with the $1.2 billion Amcom merger, a $3.8 billion merger with M2 Group and October’s $807 million acquisition of Nextgen.

Through its Commander, Dodo and iPrimus brands, Vocus provides telco, data, cloud and energy services to consumers and businesses in Australia.

According to Citi analyst David Kaynes, hard questions remain for both parties considering current valuations and the conditional nature of the preliminary offer.

“In our view the key risk to this bid is the assumption around the earnings performance and debt levels,” Mr Kaynes said in a note to clients.

Mr Kaynes said the current numbers were drawn from Vocus’s latest guidance.

Given the magnitude of its last downgrade and the uncertainty caused by falling revenue, rising costs and limited financial data, Citi considers current these estimates not to be without some risk.

“Given the highly conditional nature of the preliminary offer, we think this is unlikely to be sufficient for Vocus to grant due diligence,” Mr Kaynes said.

Mr Kaynes said a bidder could see potential to break up the company, separating out the New Zealand and Australian consumer businesses, which account for 20 per cent and 47 per cent of revenue respectively.

Vocus has an investor day on the 14th of June.

UAE bans sympathy for Qatar

The UAE, along with several other powerful Arab states, severed diplomatic ties with fellow Gulf state Qatar on Monday over its alleged support for Islamist groups and Iran.


Qatar denies the accusations.

US President Donald Trump took sides in the deep rift in the Arab world on Tuesday, praising Middle East countries’ actions against Qatar, but later spoke by phone with Saudi King Salman and stressed the need for Gulf unity.

So good to see the Saudi Arabia visit with the King and 50 countries already paying off. They said they would take a hard line on funding…

— Donald J. Trump (@realDonaldTrump) 6 June,2017…extremism, and all reference was pointing to Qatar. Perhaps this will be the beginning of the end to the horror of terrorism!

— Donald J. Trump (@realDonaldTrump) 6June,2017

“Strict and firm action will be taken against anyone who shows sympathy or any form of bias towards Qatar, or against anyone who objects to the position of the United Arab Emirates, whether it be through the means of social media, or any type of written, visual or verbal form,” Gulf News quoted UAE Attorney-General Hamad Saif al-Shamsi as saying.

On top of a possible jail term, offenders would also be hit with a fine of at least 500,000 dirhams ($AU180,000), the newspaper said, citing a statement to Arabic-language media.

Since the diplomatic row erupted, slogans against and in support of Qatar have been among the top topics discussed on Twitter in Arabic, which is a hugely popular medium of expression in the Arab world, particularly in Saudi Arabia.

Newspapers and television channels in the region have also been engaged in a war of words over Qatar’s role.

Watch: UAE, Egypt, Saudi cut ties with Qatar

0:00 Share

Related reading

Report seeks bridge over gender pay gap

A new report has called for a national target to close the gender pay gap and for gender pay equity to be enshrined in workplace laws.


A Senate inquiry report, tabled in parliament on Wednesday, made nine recommendations – most of which were rejected by government members of the committee.

Committee chair, Labor senator Jenny McAllister, said it was time to do more than just measure the gender pay gap.

“It is time to take action,” she said.

The report found a woman working in a female-dominated industry would, on average, earn almost $40,000 less at total remuneration than the average full-time total remuneration of a man in a male-dominated industry.

“The problem is particularly acute in occupations involving caring, such as childcare, in-home disability, aged care and education, where the nature of the work demands ’emotional labour’,” the report said.

“Whilst these are essential skills for workers in the care economy, they are undervalued in the labour market.”

The report called for the Department of Prime Minister and Cabinet’s office of women to start work on a national policy to achieve gender pay equity.

It should set a target date and roadmap to achieve equity.

As well, the Fair Work Act should be amended to include gender pay equity as an overall object of the Act and the Fair Work Commission provided with guidance on making and applying orders of equal remuneration.

Government senators on the committee gave in-principle support to the idea of reviewing science, technology, engineering and maths programs in schools to improve the number of girls studying in these fields.

They also backed improvements to career guidance for girls.

However they said changing workplace laws were “not only unnecessary, but they are likely to impose additional constraints and burdens on employers, particularly larger employers who already have effective strategies and initiatives in place to promote gender neutral employment practices and greater diversity in their workplaces”.

‘No miscarriage of justice in Obeid trial’

Disgraced former NSW minister Eddie Obeid wasn’t the victim of a miscarriage of justice at his trial for misconduct in public office, says the barrister who prosecuted the case.


Peter Neil SC told five Appeal Court judges that the experienced defence legal team made tactical decisions, including “not to put Mr Obeid’s neck in a noose” by bringing up the parliamentary code of conduct at his 2016 trial.

Obeid, 73, was jailed for at least three years in December after being found guilty of lobbying a senior public servant in 2007 over lucrative Circular Quay leases without revealing his family’s stake in the outlets.

The former ALP powerbroker has challenged his conviction and sentence in the NSW Court of Criminal Appeal, which reserved its decision on Wednesday after a three-day hearing.

Obeid’s new barrister, Guy Reynolds SC, put forward 13 appeal grounds including that the trial judge made legal errors in his directions to the jury.

He described as “dumbfounding” a failure to have the MPs’ code of conduct put before the jury, saying the code did not outlaw Obeid’s behaviour.

But Mr Neil said the code “was such a danger” to Obeid that “it would come very close on its own to guaranteeing a conviction”.

“If you are going to do that, the Crown submits, you may as well plead guilty,” he said.

“There was no conceivable miscarriage of justice arising out of the fact the code was not introduced.”

Complaints about the trial judge’s directions were “matters of semantics”, he added.

Mr Neil also rejected a claim the issues in Obeid’s case were within the “exclusive cognisance” of the NSW parliament and should not have been determined in the Supreme Court.

Murdered Vic man will go home "in a box"

Kai Hao’s parents moved to Melbourne to live with him but now they have to take him back to China in a box.


Gunman Yacqub Khayre shot and killed Chinese-born Mr Hao, held an escort hostage and injured three officers before dying in a hail of bullets in suburban Brighton on Monday night.

Mr Hao’s distraught mother said the 36-year-old was her only son and they were relying on him to provide for them when they were old.

“I feel like my world has ended and I can’t describe how sad I feel right now,” she told reporters through an interpreter on Wednesday.

“When I sent my son to Australia I was happy to see him go to a new country and now I have to take him back to China in a box.”

The distressed and tearful woman said she hated the man who killed her son.

“I have to say I hate that terrorist who has tore my family apart,” she said.

“Now, I send him off to work one day and he never came back and I don’t know what’s going to happen.”

The hotel receptionist arrived in Australia in 2002 and had studied at Monash University.

Mr Hao leaves behind a wife and child.

Somali-born Khayre was on a terror watch list and in a deradicalisation program when he shot Mr Hao dead in a Brighton apartment building and barricaded himself inside a room on Monday afternoon.

At 6pm, he left the building and fired at police, wounding three of them before they gunned him down.

Victoria Police is treating the attack as a terrorist incident.

It is understood Khayre was listed as a participant in the “community integrated support program” – a deradicalisation program run by the Islamic Council of Victoria and funded to take up to 22 people each year.

One Special Operations Group officer has shotgun pellets in his face and will need surgery, while another has had surgery for a serious injury to his hand.

The hostage, a 36-year-old woman, was tied up at one point during the siege, before she was rescued from the ground floor apartment.

Khayre once spent 16 months on remand before being acquitted of a 2009 terror plot to attack the Holsworthy army barracks in Sydney.

He was later jailed in 2012 over a violent home invasion and released in December.

Victoria’s parole board chair, Judge Peter Couzens, said the board was not told Khayre was on any terror watch list or that he was any danger to the community or “it would have acted”.

“We were not told anything along those lines either at the time of making the order or subsequently,” Mr Couzens told 3AW on Wednesday.

Mr Couzens said such information should “absolutely” be shared with the parole board and Corrections Victoria.

Victorian Premier Daniel Andrews now wants spy agencies to make submissions to parole boards about inmates on terror watch lists.

Qld terror victim’s close calls with death

Australian nanny Sara Zelenak narrowly avoided two deadly terrorist attacks in the months before she was killed on London Bridge at the weekend.


Friends and family are mourning the loss of Ms Zelenak, the latest victim of the London terror attacks to be identified.

The 21-year-old from Brisbane became separated from friends during the attack on London Bridge and the nearby Borough Market late on Saturday night.

Her mother Julie Wallace confirmed her death in a Facebook post on Wednesday.

Still hopeful of finding her daughter alive on Tuesday, Ms Wallace had told Brisbane radio station 97.3FM she was fortunate to evade two prior terror attacks

Ms Zelenak had a ticket but didn’t go to the Ariana Grande concert in Manchester, the site of last month’s suicide bombing, and she was also at Westminster Bridge a day before that deadly rampage in March.

Ms Wallace had said they were looking forward to a French holiday later this month.

Friends and her former Moreton Bay College school community were notified on Wednesday afternoon Ms Zelenak, who had been working in London as an au pair, was among the seven killed.

Her stepfather, Mark Wallace, posted a simple tribute to Facebook.

“I really miss that funny little laugh,” he wrote alongside a video of a giggling Ms Zelenak feeding an elephant.

Her aunt, Tara, said Ms Wallace broke down when she learnt the news during her travels to the UK.

“Even though there was limbo for days, there was still a bit of hope,” she said via Facebook.

“We are all so distraught to have lost our little Sara.

“She is the most beautiful, happy, positive young lady with so much to live for.

“Her heart and spirit will live on in all of us.”

In a statement, Moreton Bay College expressed “deep sadness” at news of the popular former student’s passing.

“This is the first time our college community has been touched by an act of terrorism and our hearts are broken by the loss of Sara,” a statement said.

“Sara was a positive, popular student who always had a smile on her face. She embodied the values of Moreton Bay College and was adored by her peers and staff.

“This is how she will be forever remembered.”

Students and staff will gather on Thursday to honour the young woman’s life.

It follows confirmation South Australian nurse Kirsty Boden, 28, also died in the attack.

Ms Zelenak is the fifth victim to be identified.

Maloney’s upgrade not Flanagan’s priority

Cronulla coach Shane Flanagan will prioritise finalising the club’s 2018 NRL roster before considering any possible contract upgrades for five-eighth James Maloney.


But he agrees with the two-time premiership winner’s claim that he deserves more than his current deal – believed to be $600,000-a-year at the most.

Flanagan takes a hands-on approach to the club’s recruitment, and has seven members of the squad named to take on Melbourne on Thursday night still off contract for next year.

Maloney is reportedly unhappy with his current deal at the Sharks – which expires in 2018 – and has been linked to a number of clubs including South Sydney.

But the Sharks coach said that wasn’t his top priority right now.

“We’re just trying to secure our roster for 2018 and then we will concentrate if players need an upgrade,” he said.

“There are probably a lot of players in my club who would like an upgrade on the back of being in a grand final.”

Maloney’s deal, signed in 2014, is well below the current market rate for dominant halves.

In comparison, Ben Hunt and Shaun Johnson are understood to have signed deals worth on or above the million-dollar mark this year.

Regardless, Flanagan doesn’t believe Maloney will be playing elsewhere in 2018.

“The way he is playing at the moment, he has got a good reason to ask (for an upgrade),” Flanagan said.

“Jimmy signed a contract a couple of years ago. If he was on the open market there is no doubt he would earn more money.

“But for me he is contracted to the club. I would like to think he is going to be here next year.”

Cronulla’s battle to re-sign a host of premiership-winning stars this year has been further complicated by uncertainty over next year’s salary cap.

Flanagan said on Wednesday the club had been working towards the lower end of projections for 2018, despite the fact they had still managed to sign St George Illawarra star Josh Dugan.

They have also re-signed the likes of Wade Graham, Valentine Holmes, Matt Prior and Chad Townsend.

Meanwhile 35-year-old Paul Gallen joined veteran Luke Lewis last month when he said he wanted to play on with the Sharks in 2018.

“We don’t check their passport when they run out on the field,” Flanagan said when asked of Gallen.

“His performances are staying up there and they are quality.

“If he’s playing good football I can’t see why he can’t run around again if he’s wanting to.”

House prices largest single risk: OECD

Australian economic growth will reach a rate of almost three per cent by the end of 2018 and an improving environment will prompt the Reserve Bank to start raising interest rates later this year.


The Organisation for Economic Cooperation and Development uses its latest Economic Outlook to paint this rosy picture of higher wages and employment growth as business investment gathers pace outside the mining sector, which will boost consumer spending.

The report comes after the Australian Bureau of Statistics figures showed the economy grew by 0.3 per cent in the March quarter, for an annual rate of 1.7 per cent.

However, the OECD warns the possibility of a large fall in house prices is the largest single risk facing the economy, which could reduce household wealth and spending and damage the construction sector, leading to significant job losses.

“Higher interest rates will relieve some of the pressure on the booming housing market,” the OECD said on Wednesday.

It will also help counter the build-up of other financial distortions that can accompany a sustained low-interest-rate environment.

Australian commodities linked to the Chinese economy remain an important source of income and growth, but also bring “uncertainty and risk”.

The Paris-based institution said poor weather has disrupted commodity exports and the rebound in commodity prices appears to have ended.

On the federal budget, it believes the government’s approach to deficit repair is “broadly appropriate” given the projected economic growth outlook.

However, it again urged the government to undertake further tax reform that makes greater use of efficient taxes, like the GST and land tax.

It also notes the country’s visa programs for migrant workers and citizenship conditions are being tightened.

“Care should be taken to ensure that these policies do not compromise Australia’s access to the global talent pool,” it said.



2016 – 2.4 per cent (actual)

2017 – 2.5

2018 – 2.9


2016 – 1.3 per cent (actual)

2017 – 2.0

2018 – 2.0


2016 – 5.7 per cent (actual)

2017 – 5.6

2018 – 5.4

Winter arrives and, with it, flu and colds

A warm winter is predicted for Australia as it heads into the coldest month, but health analysts are still warning against the immediate and secondary risks of colds and influenza.


University of Sydney professor Robert Booy says, no matter the weather, people must stay aware of infections.

“Whether the prediction is that we’ll have a warm or a cold or a wet or a dry winter, it doesn’t matter. We’re going to have influenza during this winter. We’re also going to have a lot of other respiratory viruses.”

The Resident Medical Officer at Royal Brisbane and Women’s Hospital, Lorcan Ruane, says the public has little awareness of the risks of the common cold.

He says the risk of cardiovascular issues such as heart attacks increases significantly in the week and even month after an infection.

“In the week after an infection, a person’s risk of a heart attack is increased by up to 17 times. The risk was still significantly elevated even after typically mild common-cold symptoms. Importantly as well, the risk, although highest in one week after the infection, still persists for up to one month after the symptoms.”

Dr Ruane says the risk of heart attack is already significantly higher in people over age 50 and they will experience up to three common colds or infections each year.

He says they will spend more of the winter months with an increased risk of heart attack.

“So, for the average person, they will potentially spend many weeks of the year in a state of significantly elevated risk. And, because these infections are more common in the winter months, it can be expected that the increased risk is concentrated in these months. And this is exactly what has been observed in previous studies. There does appear to exist a peak of heart attacks in the winter months.”

The doctors reiterate the importance of vaccinating at the beginning of winter to protect against viruses throughout July, August and early September.

Professor Booy says the influenza vaccination protects against at least 60 per cent of the viruses.

“The key virus, really, to know about, is influenza, because there’s a routine vaccination available for that virus. Flu’s been with us for the last few months, at relatively low levels, but we are expecting it to rise as it does every winter during July and August and perhaps into September. What does the vaccine do? Well, it’s not too late to have it, that’s the first thing to say. Your GP* should still have some supply, and, if you get vaccinated now, you should get a good level of protection. By a good level, (that’s) somewhere around 60, maybe even 70, per cent protection. It’s not perfect, but it’s a vaccine that’s certainly worth having.”

However, the vaccine does not protect against all strains.

He recommends individuals take extra caution around others with influenza.

“Wash your hands regularly, not just before and after going to the bathroom but more regularly than that. Another is to avoid shaking hands with people who have symptoms. Avoid hugging or even kissing. Better to smile at people and to see them from a few metres away, rather than get close to someone who’s got the symptoms — the runny nose, the cough, the sore throat. And if you’re that person who has those symptoms, keep yourself away from other people, too, because, by doing that, you can prevent the spread of respiratory infections.”

The doctors say they are also concerned about the lack of insulation in homes.

Professor Adrian Barnett, of the Institute of Health and Biomedical Innovation, says people should worry less about beautiful homes and more about insulation.

He cites double-glazing as an example.

“We’ve got a wooden house, on stilts, lots of windows, and all these features are designed to make the house cooler in summer, which they do very nicely. Unfortunately, that also has the effect of making the house a lot colder in winter, because, if that air gets in … And so, really, when we’re looking at temperature, it’s the indoor temperature that really matters, and our housing design is all geared towards summer.”

Deaths increase because Australian homes are not built for winter, and Professor Barnett says it is ridiculous that people die over 10-degree weather.

Also, those looking to depend on vitamins this winter may want to think again.

Robert Booy warns there is little evidence of whether they are a good preventative or a cure.

“The evidence that vitamins, including vitamin C, will make a difference to your risk or to help you to improve more quickly is very scanty. Some people have looked into the use of zinc, a mineral, and there’s some more evidence there that it may be helpful as a preventative for infection. People who take regular zinc may be at lower risk of respiratory infection. But that’s about it.”

Lorcan Ruane says a healthy diet and good overall hygiene are simply the best prevention against colds or influenza this winter.