11 Feb 2013

Mixed results expected from half-year earnings

7:10 am on 11 February 2013

The half-year earnings season for listed companies is underway and a handful are expected to show double digit growth rates, while some are still expected to show squeezed margins due to the high exchange rate.

First NZ Capital strategy and economics director Chris Green said he expects earnings in the half-year to be supportive.

However, he is anticipating a weaker Australian economy to have had a knock-on effect on some firms.

"We are looking for around 10 companies to actually show double digit growth rates and on that side you've got a backdrop of, as I say, a growing economy."

Mr Green expects that as long as there continues to be a supportive interest rate environment there will be further gains in the year ahead.

He said January has been a robust month with nearly 5% gains and the New Zealand equity market on an annual basis, it's up around 29%.

Mr Green said there has been a strong run over the last year, but he would not anticipate gains of that magnitude, and for the full year gains of around 7 - 8% would be consistent with earnings growth at that level.

He said the prospects for the New Zealand market will be determined by the global situation, supportive interest rate settings and a moderate recovery rate for the New Zealand economy.


Mr Green said companies expected to have reasonably good earnings are Diligent, Summerset, Port of Tauranga and Freightway.

He said Air New Zealand is benefiting from the currency but on the negative side of the ledger some companies will show stress from the high New Zealand dollar.

Mr Green said the softening in the Australian economy is feeding through to New Zealand companies which have some exposure there.