Listed companies close to the Canterbury rebuild can expect increasing workloads as the $40 billion of work gains impetus. Pictured, work on a Victoria St office building in January. Photo by Geoff Sloan.
The forthcoming listed companies reporting season is expected
to reveal only modest growth, being weighed down by
lacklustre results from the utility sector, retail and
In coming weeks through to mid-April, 49 companies are
reporting financial results, dominated by those booking
first-half 2014 results.
For companies with exposure to earnings from foreign
exchange, such as Fletcher Building, Skycity Entertainment
and Kathmandu, all could be negatively impacted by the recent
strength of the New Zealand dollar.
Forsyth Barr broker Suzanne Kinnaird said the median
forecasts, compared to six months ago, was for a more than
3.6% gain in sales, earnings before interest and tax (Ebit)
up more than 8.5%, with normalised profit up more then 8.4%
''Dividend growth is forecast to be down less than 3.3% at
the aggregated level, but flat, 0%, at the median level,''
She expected 10 companies of the 49 would have more than 20%
growth in their earnings per share, citing Bathurst
Resources, Cavalier Corp, Fletcher Building, Hellaby
Holdings, Heartland New Zealand, Nuplex Industries, New
Zealand Oil & Gas, Oceana Gold, PGG Wrightson and
''Utilities in particular, retail and food, beverage and
agriculture sectors have negative growth expectations and are
depressing our overall aggregated market growth figures,'' Ms
Craigs Investment Partners broker Peter McIntyre said while
the strength of the New Zealand dollar was of concern, and
many companies would have hedging contracts in place, the
effects of foreign exchange would be on investors' minds.
Key for investors during this reporting season will be
whether companies can maintain, or improve dividends, which
will influence whether they stay with stocks or go elsewhere.
He expected growth in earnings per share of about 7%.
The reporting season gets fully under way today, with casino
and tourism operator SkyCity Entertainment releasing its
half-year result, along with Vital Healthcare and Genesis
Stocks in rest-home developers and operators were popular
last year, with Ms Kinnaird picking Summerset would deliver a
''strong result'', with growth in all operations and in
particular gains on new sales and resales across its
portfolio, which is expanding.
Similarly, she expected Metlifecare to be ahead of last
year's result, but with operating earnings flat on a year ago
because of lower levels of new sales, reflecting limited new
Mighty River Power's ''tough'' first quarter improved in the
second, with an ''OK'' result expected against last year,
''but nothing too spectacular'', she said.
Meridian Energy's result, its first as a listed company, was
expected to be better than that in its prospectus, based on
strong hydro flows and increasing retail demand, Ms Kinnaird
While Fletcher's Australian work accounted for more than 50%
of its earnings, and it was exposed to currency volatility,
Mr McIntyre said investors would be nonetheless carefully
observing its progress in the rebuilding of Christchurch,
where it is the lead contractor, amid the overall $40 billion
''That work is expected to peak over the next three to four
years. Fletcher could surprise on the upside,'' Mr McIntyre
said of its result, scheduled for a February 20 release.
Other companies expected to reflect a turnaround in New
Zealand's economy could be logistics businesses Mainfreight
and Freightways, while the Canterbury rebuild should be
positive for Cavalier and Steel & Tube.