The local reporting season begins with hopes for a more optimistic tone despite past challenges.
Business confidence is at 10-year highs, and the Fonterra payout will be the highest ever.
Investors expect stronger trading conditions in 2025, with corporate earnings and dividends likely to rise.
The local reporting season ramps up this coming week, and I’ve got high hopes for a more optimistic tone.
To be fair, the bar is low.
It’s been a very difficult couple of years for most businesses.
The New Zealand economy has contracted for seven of thepast eight quarters on a per capita basis (with the one other quarter being flat, rather than up).
The Official Cash Rate has fallen from 5.50 to 4.25%, and by Wednesday afternoon it’ll start with a 3.
Business confidence has bounced to 10-year highs, and the Fonterra payout for this season will be the highest in history.
Those positives won’t be reflected in the earnings releases we see over the coming weeks, mind you, with most set to make for relatively sombre reading.
These results will cover the six months to the end of December, which was still a very challenging period for the economy.
Outlook commentaries should be better though, and I’m hopeful many businesses are seeing a pick-up in activity.
The sharemarket rebounded strongly over the second half of last year, with the NZX 50 index up 11.9%.
That was the strongest rise since 2020, and investors are expecting 2025 to be a more buoyant year.
Trading conditions should be stronger, pushing corporate earnings and dividends higher, while boosting investor optimism.
If that’s the case, another year of solid gains is on the cards.
There’ll be plenty to watch, with many of our largest listed corporates under the microscope and some of the heavyweights set to announce results in the coming days.
Fletcher Building, SkyCity and Spark are some up next week. They’ll be closely watched, after all three performed very poorly in 2024.
As traditionally useful barometers of activity, Freightways and Port of Tauranga will be in focus.
As traditionally useful barometers of activity, Freightways and Port of Tauranga will be in focus this reporting season, writes Mark Lister.
Quarterly releases from Westpac and ANZ Bank across the Tasman will offer additional insights into the state of the New Zealand economy.
The a2 Milk Company made some great progress last year, while the NZX itself was a quietly impressive performer with a 44.2% return in 2024.
Investors will be monitoring these and the other stars of 2024 to see if their momentum can be maintained, with the likes of Infratil and Summerset still highly favoured by the analyst community.
There will be many others to watch through February and into early March.
The listed property sector is potentially nearing an inflection point with interest rates falling and tenants in a stronger position.
The “big four” electricity companies, long-time favourites of income-seeking investors, are likely to deliver a mixed bag of results.
The dry winter of last year might have dented Meridian’s earnings, while Contact’s result will be overshadowed by the Commerce Commission decision over its Manawa acquisition.
The period this reporting season will cover is close to the maximum pain point for our economy, but there are plenty of bright spots emerging.
Investors should brace themselves for another batch of uninspiring results, while putting more emphasis on the encouraging comments we hope to hear about how this year is shaping up.
Mark Lister is investment director at Craigs Investment Partners. The information in this article is provided for information only, is intended to be general in nature, and does not take into account your financial situation, objectives, goals, or risk tolerance. Before making any investment decision Craigs Investment Partners recommends you contact an investment adviser.
