Resilience seen in firms’ reporting
AUCKLAND: Corporate New Zealand appears to be in good health, amid emerging signs the economy is slowing under the weight of high inflation and rising interest rates.
More than 30 listed companies have reported their interim and full year financial results over the past two weeks, including big names such as Air New Zealand, Spark, Auckland International Airport, Sky City and Ebos.
Fisher Funds portfolio manager Sam Dickie said it had been an interesting time for companies to show their report cards, given macroeconomic uncertainties associated with inflation, interest rates and growth.
‘‘On the face of it [there’s been] pretty good growth,’’ Mr Dickie said.
‘‘[There has been] around 10% revenue growth on average but what’s interesting is that costs are starting to bite, so profit growth was much slower at around 4%.’’
Relative to expectations, which had been low given global economic headwinds, more companies had beaten their targets rather than missing them, he said.
Harbour Asset Management managing director Andrew Bascand said many of the financial statements had been better than feared.
‘‘The results themselves are certainly reflecting a slower economy but by no means significant disappointment.’’
Economic uncertainty was a prevailing theme in many companies’ outlook statements, Mr Bascand said.
‘‘They were generally soft or perceived as conservative or actually didn’t even exist because companies faced the uncertainty we all face.’’
Recent surveys from the ANZ Bank showed consumer sentiment was at nearrecessionary levels, as households contended with a higher cost of living, rising mortgage rates and falling house prices.
The bank’s latest read of businesses told a similarly bleak story.
A feature of many of the reports was the difficulty firms faced when trying to attract staff, Mr Bascand said.
‘‘I think this is a key constraint on growth in the period ahead — not the cost structures, not the interest rates costs but the availability of labour and to me that’s a significant uncertainty for corporates.
‘‘I fear this may be more of a supplyside problem than one we can manage with high interest rates or other tools.’’
Mr Dickie said the balance sheets of corporate New Zealand ‘‘were in pretty good shape’’, putting them in a solid position to deal with any potential slowdown.
Trucking company Mainfreight and retirement village operator Summerset were his picks for standout performers over the earnings season.
Although Mainfreight did not reported its results, it did provide a market update at its annual meeting which showed trading across its transport, warehousing and air and ocean divisions over the past 16 weeks were up 51%, 22% and 136% respectively on the year earlier.
‘‘They’re taking market share, they’re growing, they’re becoming more efficient, they’re taking cost out,’’ Mr Dickie said.
Summerset’s bottomline profit for the six months ended June fell on reduced property value gains, but its underlying result, which strips out the oneoff gains, grew 9% to $82.5 million on the back of strong development margins and new sales demand.
The retirement village operator is also among Mr Bascand’s notable mentions, along with the healthcare and animal products firm Ebos, which reported double digit profit growth.
However, the most outstanding result came from newly listed steel products firm Vulcan Steel, he said.
‘‘At their IPO they forecast underlying net profit would rise from $61 million to $74 million and they delivered $142 million — unbelievable.
‘‘Alongside that [the firm] provided a pretty solid ESG [environmental, social and governance] or sustainability report which was great for the first time they had reported market.’’
There had been no shocking results, as most of the big losses had been signalled to the market well in advance, Mr Bascand said. — RNZ