Photo from ODT files.
Close scrutiny continues this week of the stock
exchange's second full week of the company reporting season,
with bellwether companies providing a snapshot of the economy.
There has been a burst of positive New Zealand economic data
in recent weeks, including the manufacturing, exports,
housing and service sectors.
However, gains in housing in New Zealand and construction in
Canterbury are at times being undermined by similar but soft
sectors in Australia, while companies with Australian
exposure are taking hits in foreign exchange transactions
because of the ongoing strength of the New Zealand dollar.
Comments by analysts and chief executives last week on the
half-year results included ''disappointing, flat or below
expectations'', with several highlighting lacklustre
Australian operations or the kiwi's strength undermining
Companies due to report this week include Freightways,
Chorus, Summerset Group, SLI Systems, Air New Zealand,
Hellaby Holdings, PGG Wrightson, Cavalier Corp, Metlifecare
and Mighty River Power.
Craigs Investment Partners broker Peter McIntyre said the
highlight for this week would be
Freightways, as an economic barometer and for its anticipated
forward guidance, while Chorus would be the low-light,
because of uncertainty over its network and pressures on its
Forsyth Barr broker Haley Van Leeuwen highlighted Wynyard
Group and SLI reporting this week, to see how they are both
faring compared to their respective prospectuses after having
initial public offerings last year.
She said Mighty River Power's result, towards the end of the
week, would be keenly anticipated by investors and also the
Forsyth Barr broker Suzanne Kinnaird said one of the key
issues for Chorus was fibre costs, both per household passed
and per household connected. Chorus was expected to start
providing some view on the long-run costs to connect homes.
''While the focus has been on the regulatory issues facing
Chorus, the fibre-build programme has continued,'' she said.
She predicted Chorus sales revenue would be up 1%, from $525
million a year ago to $532 million, while after-tax profit
would decline 4%, from $84 million to $80 million.
She was hoping for a Chorus update on plans to reduce
operating costs longer term, to partially mitigate any future
changes to the unbundled bit-stream access price.
Craigs Investment Partners broker Chris Timms was similarly
looking for updates from Chorus, especially on progress on
various work streams and whether an equity raising was
required at present.
''The market will be looking for Chorus to update on
potential changes to the business plan and strategy ... and
some outlook for liquidity and approach to capital
structure,'' he said.
Freightways, a bellwether company reflecting other
businesses' activity, is expected to reflect its earnings
momentum within its first-half report, Mr Timms said.
''At the divisional level, trading conditions are generally
positive for the express package business, although the
retail environment remains competitive, due to the rapid
growth of online sales.''
Sky TV was expected to report an underlying after-tax profit
gain of 10% to $75 million, mainly driven by a reduction in
depreciation expenses, Ms Kinnaird said.
Sky had forecast subscriber growth at 10,000 for the full
year, for standard service, but there was ''no major hero
events'' to drive this, she said.
''We believe the boost in subscriber numbers will require a
significant event, such as the launch of improved
internet-delivered services,'' she said.
Mr Timms said carpet manufacturer Cavalier Corp had a
slower-than-expected start to its full-year trading, due to
stock clearance, plus an impact from restructuring in
Following a stellar previous year for aged-care stocks Ryman
Healthcare, Summerset and Metlifecare, investors will be
eager for their guidance outlooks.
Ms Van Leeuwen said she expected Summerset to report an
underlying profit gain of more than than 40%, up to $21.8
million, when realising gains on new sales and resales across
its expanding portfolio.
Some key issues for investors in the half-year report will be
the level of development activity and profit margin gains,
and Summerset's earnings outlook statements, but also the
cost pressures it is facing.