Companies beat profit forecasts in March quarter but pain still to come as coronavirus takes its toll

Company profits rose by just 1.1 per cent in the March quarter as restrictions imposed to slow the spread of the coronavirus began hampering trade.

Economists had expected an increase of 0.5 per cent.

Financial and insurance services recorded a surge of 48.9 per cent in company gross operating profits, according to seasonally adjusted data from the Australian Bureau of Statistics.

Mining profits gained 2.9 per cent, while manufacturing profits were 6.1 per cent higher.

Eight of the 15 industries reported increased profits.

CommSec chief economist Craig James noted the results were from a time of bushfires, drought and the onset of the coronavirus pandemic.

He said the data showed the economy was structurally sound before the full impact of the virus.

The Federal Government imposed gradual travel restrictions on visitors entering Australia from February 1 following the coronavirus outbreak in mainland China.

The Government later barred foreigners entering from other parts of the world and imposed social distancing measures on regular activities in Australia in late March.

Australian companies’ inventories fell 1.2 per cent in the three months to March 31.

Mr James said businesses let stock levels drop to meet demand from rising sales.

The inventories data helps the bureau determine its estimate of economic growth or gross domestic product, which it will publish on Wednesday.

Mr James said this decline in inventories would slice about 0.5 percentage points from quarterly economic growth.

He expected a 0.3 per cent drop in GDP.

The bureau reported no change to wages and salaries figures for the March quarter.

Sales in the manufacturing sector were 2.2 per cent higher, while they rose 1.6 per cent in wholesale trade.

AAP