Devon Funds Monthly Investor Report - August 2025

Monday 8th September 2025

Reporting Season: Winners and Whiplash Across NZ and Australia

August’s reporting season drove pronounced share price swings across New Zealand and Australia. In Australia in particular, the reporting season was the most volatile on record, with a standard deviation of result day relative returns of 8.3%. Both the NZX and ASX faced conflicting macro signals: softer global growth prospects, ongoing trade skirmishes, and rising hopes of rate cuts as inflation prints continued to support a more dovish stance from central banks. Despite these macro risks, reporting season refocused attention on company fundamentals: company performance, guidance, and management credibility.

Despite the volatility in Australia, the ASX 200 rose 3.1% in August, with the year-to-date performance now at 12.3%. Resources provided the necessary support for the market to reset records, with the sector returning a whopping 10.1% in the month.

CSL, one of Australia’s largest companies and once a market darling, reported full-year 2025 results that included a 5% increase in revenue to US$15.6 billion and a 17% increase in net profit after tax to US$3 billion. Despite these headline growth figures, market reaction was negative as gross profit and margins underperformed, especially in the flagship CSL Behring segment, the company's main plasma therapeutics business. This caused a massive share price reaction, a -16.89% move on result day.

James Hardie, a leading global manufacturer of fibre cement products, also disappointed in its latest results. This was primarily due to a significant decline in North America sales volumes, weak guidance, margin pressures linked to inventory destocking and rising debt from its recent AZEK acquisition. All roads led to a steep share price drop, down 27.83% on the day.

Also in August, the Reserve Bank of Australia delivered a widely anticipated 0.25% interest rate cut and a set of forecasts which we believe signalled they would be comfortable delivering at least two additional rate cuts in November 2025 and February 2026. This is good news for Australian mortgage holders.

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