10 Aug 2015

Earnings tipped to be solid

11:51 am on 10 August 2015

The earnings season will start to pick up from this week, with analysts expecting solid results on the whole.

Most domestic-orientated companies should have thrived due to the growing economy in the last year, while the high New Zealand dollar and sluggish foreign markets made it harder for exporters and those with operations overseas.

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Photo: 123RF

Most analysts expect a cautious tone from corporates, but AMP Capital's head of investment strategy Keith Poore said he still expected reasonable earnings growth.

"We think the economy can support earnings growth of around 5 percent over the next 12 months to two years, because I think the economy is growing from a nominal perspective - or will grow around about those levels."

"Credit growth has grown around about 5 to 6 percent. Nominal GDP has declined from 8.5 to 2 percent but we think that's going to pick up going forward, real GDP should remain around about 2, 2.5 percent."

Mr Poore said they think producer prices should also rise and that will support underlying earnings growth across the economy, which will allow companies to raise or at least maintain dividends, and that will support the market from a divident yield perspective.

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