1 Feb 2013

South Island listed companies continue to perform

6:59 am on 1 February 2013

South Island listed companies are continuing to perform strongly, despite the subdued economic recovery.

Deloitte's quarterly South Island Index grew 8% in the three months to the end of December, pushing total market capitalisation of the 30 firms to $5.7 billion, the highest level since the index started in 2007.

But performances varied widely, with Ryman Healthcare, Pacific Edge Biotechnology and PGG Wrightson performing strongly, while a third of firms lost value, including meat processor Silver Fern Farms.

Deloitte corporate finance partner Paul Munro is confident of another strong year in 2013, saying it will be underpinned by the rebuilding of Christchurch which started last year, but he expects a lot more economic activity flowing directly from it in 2013.

Mr Munro said for example that Lyttelton Port Company will benefit as a greater volume of product is brought into the South Island to rebuild Christchurch.

He said indirectly some of that economic activity will flow right through so retailers will benefit as there is more money in the system and more confidence for consumers to spend that money.

Mr Munro said the agricultural sector is important for the health of the South Island economy, and the meat processing industry requires restructuring to return it to profitability.

He said there are some challenges in the primary sector, such as the exchange rate which continues to be at a very high level and the need for restructuring in that sector.

Mr Munro said Silver Fern Farms has had some challenges and needs to be part of that restructuring.

"Ultimately there needs to be a solution there for the industry, for the good of the South Island economy really, because it's a back bone of our economy and we need it to be profitable in creating value."