Friday 2nd March 2001 |
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Disastrous results from some of our largest corporates eclipsed a generally solid performance from second-liners in the December 31 reporting season.
Of the 39 companies who have posted results 16 lost ground over the December year or half-year but only four - Sky TV, Tranz Rail, Fletcher Forests and Fletcher Building - reported losses.
Even so, some observers are taking a gloomy view. In a report issued on February 23 sharebroker Credit Suisse First Boston said it had downgraded profit forecasts for 15 of the 48 companies it researches, warning slowing economic growth would cut corporate earnings.
Most of the downgrades, however, were due to company-specific issues such as higher fuel costs or sharper competition.
The sharemarket also seems to be discounting any strong near-term earnings growth. The NZSE-40 capital index is 1.5% below its level at this time last year.
That disguises some optimism about the prospects for medium-sized firms - the NZSE Mid-Cap index is up around 6.3%. Smaller companies appear to be out of favour. The Small-Cap index shed 6.4%.
Economists are picking slowing growth this year in tandem with overseas economies, notably the US and Australia.
Longer term, things look brighter.
Deutsche Bank expects gross domestic product growth to be 2.5% in the year to March, picking up to 2.9% in the March 2002 year and 3.1% in 2003.
Among the major stocks there were few surprises - not even Air New Zealand, which took a hit from its Ansett acquisition and made less money than Reid Farmers.
Telecom's earnings were hit by the costs of its Australian expansion strategy and investors remained divided on its likely success.
Carter Holt Harvey, which has a March balance date, reported a slump in December third-quarter earnings, blaming the slowdown of the Australian housebuilding market.
Sky Network Television's loss widened sharply, a reflection of its success in signing on subscribers, but, like Telecom, its share price suffered from the advent of competition from TelstraSaturn and TVNZ.
The loss had a knock-on effect on Sky's 49% owner Independent Newspapers' profit.
The low New Zealand dollar helped exporters such as Frucor and Montana and tourism-related companies such as Shotover Jet and Sky City.
But it did not help Tourism Holdings, which confessed it was not positioned to clip the ticket on high growth into New Zealand and Australia.
A rampant rural economy boosted dairy farmer Tasman Agriculture and rural services firm Reid Farmers but Wrightson failed to capture the opportunity as losses in Australia overshadowed strong New Zealand earnings.
Big ports - Auckland and Tauranga - did well but Bluff's South Port and Lyttelton Port gave up ground.
Other solid performers were power and gas companies Natural Gas Corporation and United Networks and market favourites Auckland International Airport and Baycorp.
Aluminium smelter Comalco saw a profit resurgence as international prices recovered and New Zealand Refining recovered from a margin squeeze.
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