Now that the reporting season for most NZX-listed stocks with June 30 balance dates is past, companies with an export focus can expect to feel the benefit of a sharp decline in the New Zealand dollar while those with a purely domestic focus might not be so lucky, said Harbour Asset Management analyst Craig Stent.
"The Christchurch rebuild is past its peak, and dairy is having an effect on the broader economy," Stent said. "It's not all doom and gloom, but growth is not going to be as strong as it has been in the past."
The main theme to emerge from the season was a favourable one for those investors who derive income from dividends.
Spark caught the market off balance with its capital management plans, and the company's stock lifted as a result, closing at $3.31 yesterday.
The company, formerly Telecom, raised its dividend to 20c from 17c, and said it anticipated paying an annual dividend of 22c per share and a special dividend of 3c per share.
The capital management plans of the big power generator-retailers were also seen as a positive for the so-called yield stocks.
Australasian construction and building materials firm Fletcher Building enjoyed a $69 million boost in its annual earnings but faced a more subdued earnings outlook.
In New Zealand, Fletcher Building said residential construction activity was expected to continue at above average levels, but growth in consents was likely to moderate.
In Australia, it said residential activity was likely to slow and that non-residential construction was expected to remain quiet.
The results season showed there were hotspots in the economy. Apple grower, exporter and logistics group Scales reported a 59 per cent lift in its first-half profit to $33.2 million, reflecting a very strong performance of its apple business.
Matt Goodson, managing director at Salt Funds Management, said individual companies had their "own quirks, opportunities and issues".
"If you look at the forward indicators for the economy they are slowing ... the latest ANZ confidence survey would suggest that it will lead to slightly lower earnings growth," Goodson said.
"In our market there are a lot of divergent forces," he said.
"The results season was okay, but it did not feature a plethora of earnings upgrades."
Across all results covered by brokers Forsyth Barr, median sales were up by 4.5 per cent.
It said earnings before interest and tax were up 3.2 per cent and net profits after tax gained 2.7 per cent. Dividends gained 4.3 per cent.
Rob Mercer, head of private wealth research at Forsyth Barr, said the season showed corporates were doing moderately well.
"But firms are increasingly more nervous on the underlying strength of the New Zealand economy over the next year."
Of the 48 companies covered by the brokerage, 17 results came in higher than expected, while 16 were below its expectations.
"However, with respect to the outlook for the full-year 2016, we made 23 downgrades to earnings and only 14 upgrades," Mercer said.
"Investors need to be careful not to stray too far from the quality end of the market, given earnings risk has clearly moved south for the New Zealand market."
2014/15 reporting season
• Median sales up by 4.5 per cent.
• Earnings before interest and tax up 3.2 per cent.
• Net profit up 2.7 per cent.
• Dividends up 4.3 per cent.
• 17 results came in higher than expected, 16 below.
[Source Forsyth Barr]
