Southern listed companies have clawed back almost $300 million in market capitalisation for the quarter to June, but the 32 companies' overall $3.14 billion value remains 28% down on the $4.3 billion at the same time last year.
The Deloitte South Island Index released yesterday revealed the companies recovered some of the ground lost during the past year, increasing their market capitalisation 10.5%, or $299 million, in the second quarter to June, to reach a combined value of $3.14 billion.
The index tracks the performance of 32 listed companies with a registered office and/or a substantial portion of their operations in the South Island.
Deloitte's corporate finance partner at Deloitte in Christchurch, Paul Munro, said 19 of the 32 companies either held or increased in value, while 13 declined during the quarter.
In a statement, he said the glimmer of optimism which flickered for the South Island in the March quarter continued to shine into April and May, but a 4% index decline in June "went some way to dulling the optimism".
"To put that glimmer in perspective, the overall value of the companies on the index remains more than $1.2 billion behind where it was tracking in June 2008," Mr Munro said.
Ryman Healthcare remained the largest South Island index company, with its market capitalisation up 13.5%, or $95 million, to $800 million for the quarter.
West Coast specialist coking coal mine developer Pike River Coal was the outstanding performer, gaining 58% or $150.3 million in value, while the largest decline was by New Zealand Farming Systems Uruguay, with a decline of almost 40% in value, by $70.8 million. Its share price was down more than 70% during the past 12 months.
While the southern index outperformed the broader NZX50, with respective gains of 10.5% and 7.9% for the quarter, the Australian ASX and US Dow Jones enjoyed higher growth than the index.
Mr Munro said many companies would be paying more attention to streamlining infrastructure, adjusting service delivery and even redesigning their business models.
"Companies should be pulling all the cost levers they have at their disposal," Mr Munro said.
Making changes to structural cost improvements helped protect margins, capture market share and and put businesses in a position to capitalise on opportunities.
Mr Munro predicted there would be consolidation across several industries in the next 12 to 18 months as companies with strong balance sheets and cash reserves would be looking to acquire assets complementary to their operations.
