New Zealand's latest — and longest — Covid-19 lockdown has made financial forecasting uncertain for some of NZ's biggest firms.
The majority of respondents to the Herald's CEOs survey — 74 per cent — are forecasting increased revenue in the next 12 months. For some there is a caveat: the impact from the latest Covid-19 lockdown.
While revenue forecasts are buoyant, profit growth expectations have clearly been impacted by rising costs.
Fletcher Building chair Bruce Hassall is among those unsure what the impact of the latest lockdown in New Zealand will be on the infrastructure company's revenue.
"Fletcher's entire New Zealand business was shutdown. And there was lower activity in Australia through the rolling lockdowns taking place there."
The Warehouse chair Joan Withers said Covid uncertainty makes assumptions around revenue growth impossible — similarly with profit projections. "Again with the uncertainty about lockdowns, impossible to forecast.
"After the 2020 lockdowns the sales momentum was enormous. Very unsure this time whether customers will be more concerned given how contagious the Delta variant is."
Says wine exporter, Erica Crawford, of Loveblock Wines, "it's very difficult to project. Demand is there at the moment, however supply reaches those markets on a very delayed and erratic 'schedule' due to shipping difficulties. If this unreliable supply pattern persists, buyers may head to other wine producing countries from which shipping and supply is more reliable."
For advisory firms the outlook is optimistic. Lawyers and accountants say there are a lot of mandates off the back of an increase in mergers and acquisitions. While offshore principals cannot easily get across the NZ border, digital due diligence is in vogue as they kick the tyres virtually.
Beca's Greg Lowe's says most of the firm's clients are "looking through" the impact of the pandemic and working on longer term strategies. "Challenges around sustainability, decarbonisation, energy transition and climate change are being addressed by our clients in all markets and all geographies that we work in, internationally as well as locally.
"We see growing demand for technical skills in these areas."
The adjoining table indicates gives an indication of how various sectors are faring. For instance, just 50 per cent of respondents in education say they are expecting an increase in revenue over the coming year, compared to 100 per cent in advertising and media.
The outlook is mixed when it comes to profits: for the food and beverage industry, respondents were split, with 40 per cent of respondents expecting a profit increase and 40 per cent expecting a profit decrease, with the remainder expecting profit to remain the same.
Half of all respondents in the construction and machinery sector expect a fall in profit over the coming year. Such firms cannot operate which under Alert Level 4.
Fulton Hogan CEO Cos Bruyn says the Covid lockdown in New Zealand and ongoing issues in Australia may constrain capital spend — dependent on the ongoing duration of business disruptions. "There is also the issue of international supply chain and shipping disruption that will impact on our ability to spend to consider."
"The removal of stimulus spend will impact in Australia, as well as a reduction in revenue on both sides of the Tasman due to Covid."
Another construction firm expects revenue to flatline.
"Growth is not anticipated due to coming off an exceptional 2020/21. Is it likely to be impacted by supply chain and labour constraints. If the Government keeps the same Covid strategy there is likely to be more lockdowns than last year given the Delta variant."
Z Energy's Mike Bennett is expecting growth — "a mixture of Covid recovery and new growth initiatives".
A major Auckland hotelier — who has a strong events business alongside accommodation — said the outlook was dependent on the opening of borders and the reduced amount of hard lockdowns; a view that was replicated by a food supplier to the hospitality sector. Aviation and airport businesses are also challenged by the pause on the transtasman bubble.
There's some optimism among industry organisations. "The impact of Covid will see many organisations lose some areas of revenue and replace that with new areas," says Auckland Business Chamber's Michael Barnett.
When it comes to the agribusiness the outlook is mixed.
Dairy chiefs say demand for dairy remains very buoyant in just about all markets.
Even with the enormous challenges around shipping they are forecasting growth. But increased revenue growth is being affected by significant cost increases in a number of areas — notably shipping.
Horticulture firms are projecting strong returns. Wood processing is another industry where revenue is being eaten up by energy costs. The fishing sector is finding it tough.
The real estate sector has had a very active market in the last 12 months. "It would be foolish to attempt to guess ahead, especially right now," says a real estate boss. "The supply of new housing stock to assist demand remains constrained."
Barfoot & Thompson's Peter Thompson, expects staff numbers to stay the same.
"Salespeople come and go.
"The difference today is that applicants are of a higher standard, many coming from other service industries.
"We all made staff cuts during the previous calendar year when Covid first hit New Zealand with our first level 4 lockdown," says a director, who pointed to a general reluctance to cut staff numbers again due to lockdowns.'
"If they continue and there is no insight of when international borders will reopen, I think more redundancies and mothballing of businesses will be inevitable."