New Zealand reporting season update

The first week of New Zealand’s reporting season is in the books.

Mohandeep Singh, Head of Private Wealth Equities, shares the highlights from last week, the key takeaways so far and the companies investors should be watching.

What has stood out from the first week?

The key driver of share prices has been company outlooks rather than the results themselves. While earnings have generally been okay, investors are focused on what companies expect over the next six to 12 months.

We’re also seeing some relief rallies, with companies such as EBOS, Spark and Fletcher Building showing signs that operations are stabilising.

At the same time, some more cyclical companies are showing weakness, particularly those exposed to the domestic economy. It will be important to see whether that continues or conditions begin to stabilise.

Which companies have surprised positively?

Vista upgraded its earnings, while Napier Port expects to reach the top end of its full-year guidance. Mercury Energy also provided a positive surprise through a higher-than-expected dividend forecast.

What about the misses?

a2 Milk had a challenging year, with investors now focused on whether it can regain market share as its supply position improves.

Freightways indicated that conditions are likely to remain softer, while Turners reported some weakness in used car sales. In both cases, high expectations meant the market reacted negatively despite continued expectations for profit growth.

What should investors watch next?

Next week brings results from Meridian Energy and Genesis Energy, as well as several property companies.

We will be watching Port of Tauranga, following a draft decision supporting wharf expansion, and Z Energy, given its exposure to energy prices and the ongoing Middle East conflict.

Looking further ahead, the Reserve Bank’s interest rate decision on 2 September will be a key driver of market sentiment.

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