Air NZ result expected to be highlight of week

Damian Foster
Damian Foster
It  will be quiet on the New Zealand economic front this week but the financial reporting season remains in full swing.

This week, financial results are expected from Mercury, Meridian Energy, Metlifecare, Vector, Ebos and Air New Zealand.

Fisher & Paykel Healthcare will hold its annual meeting.

In Australia, Wesfarmers, Amcor and Woolworths are among some of the companies to report.

Craigs Investment Partners broker Chris Timms said 2017 earnings expectations were so far little changed. The median NZX50 earnings per share growth had slipped from 9.3% to 9%.

The biggest 2017 consensus earnings upgrades had included Vital Healthcare (up 8.2%), Summerset (5%), and Heartland Bank (3.8%). The biggest downgrades had been for the likes of Freightways (-6.1%), Contact Energy (-4%) and Sky City Entertainment (-3.4%).

Air New Zealand is expected to provide the highlight of the week with a profit helped by the tourism boom New Zealand is experiencing. Results for the year ended June are expected on Friday.

Lower fuel prices and holding costs throughout the business are also helping the airline.

Forsyth Barr broker Damian Foster was forecasting an operating profit for the June year of $1.54billion, up 32% on the previous corresponding period. The reported profit was forecast to be $606million, up 77% on the pcp.

``The disposal of most of Air NZ's stake in Virgin Australia provides potential for a cash return to shareholders in addition to the final ordinary dividend.''

Returning the full proceeds would amount to 25c per share, although the board was likely to be more prudent given increasing competition. There was scope for a special dividend of 10cps to 15cps, he said.

Overseas, the Federal Reserve chairwoman is likely to strike a tone more welcoming to an interest rate increase later this year.

Dr Yellen will speak on Friday at Jackson Hole, Wyoming, as part of a global meeting of central bankers.

Last week, influential New York Fed president William Dudley seemed to blaze the trail for Dr Yellen. Mr Dudley said the Fed could lift rates as soon as next month in comments that sent the Standard & Poor's 500 down, led by sharp drops in telecoms and utilities.

Mr Timms said both sectors, still up more than 15% in the year to date, had risen in part due to investor appetite for their high dividend yields amid historically low returns in fixed income.

They were seen as the most vulnerable to sell-offs if interest rates started to rise.

ASB expects a New Zealand trade deficit of $300million in July, breaking the run of six trade surpluses in a row when Statistics New Zealand releases the data tomorrow.

Chief economist Nick Tuffley said New Zealand normally recorded a July deficit as agricultural exports fell over winter.

``However, we expect this July's deficit is likely to be less than half of last July's.''

The main strength in export values continued to lie in sectors such as fruit, wine and forestry, he said. At the same time, import prices remained constrained by low global inflation.

The annual goods trade deficit was likely to narrow to $2.9billion.

 

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