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The Wildfire Crisis Is Starting to Hurt Australian Companies

Jackie Edwards

(Bloomberg) -- Australia’s biggest companies are beginning to offer a glimpse of the potential financial impact from the nation’s ongoing wildfire crisis.

The past few months have seen fires sweep across the world’s driest inhabited continent, destroying more than 2,000 homes and charring over 10 million hectares (25 million acres) of bush, with the two most populous states of New South Wales and Victoria the hardest hit. The California wildfires of 2018 destroyed about 1.7 million acres.

Though a clearer picture of the extent of the economic impact won’t emerge for weeks or months, some businesses have detailed disruptions to supply chains, operations and earnings ahead of the February reporting season.

Here’s a look at the companies that have been affected by the wildfires so far:

Retail

Weekly consumer confidence data tumbled to its lowest level in more than four years on Tuesday as the fires sat “front of mind” for Australians, according to a note from Ryan Felsman, a senior economist at the securities unit of Commonwealth Bank of Australia.

They also crippled a key shopping season. Several of the country’s largest retailers saw soft traffic on Boxing Day as shoppers were reluctant to seek out post-holiday bargains, according to Jefferies Group LLC analysts.

“The catastrophic bushfires dampened sentiment with consumers understandably not in the mood to shop even if they were not directly affected,” analysts led by Michael Simotas wrote in a note on Wednesday.

Agriculture

Bega Cheese Ltd. said that while the fires have impacted farmers and employees, it sees minimal effects on the overall company, according to a statement from the dairy producer on Thursday.

Agricultural goods and services provider Elders Ltd. expects lower livestock agency commissions and farm supply sales, but sees any near-term losses to be offset by increased demand once rebuilding efforts start.

Tourism and Travel

Ingenia Communities Group, which offers camping, caravan and cabin accommodation up and down Australia’s east coast, as well as operating retirement living and lifestyle housing across the nation, expects its full-year results at the lower end of guidance, based on the expectation that sales at one of its communities on the New South Wales south coast will be affected.

Qantas Airways Ltd., the nation’s largest airline, hasn’t outlined any business impact from the fires, even as shares slid to a near two-month low last Monday after it canceled several flights to Canberra, the nation’s capital, due to smoke from nearby wildfires. Air travelers might face further issues as above-average temperatures persist.

Resources

Fires in Victoria’s East Gippsland have delayed work on Cooper Energy Ltd.’s Sole Gas Project, the company said last week.

In Western Australia, wildfires have closed highways used to access Independence Group NL’s Nova mine. The closures stymied deliveries and concentrate haulage, although the gold and nickel miner said Wednesday it doesn’t see a material impact to third quarter results.

To contact the reporter on this story: Jackie Edwards in Sydney at jedwards160@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Tim Smith, Edward Johnson

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