NZ market flat after jam-packed earnings week

The biggest week of the earnings season is over, with company results pouring in from all sectors of the market, including telcos, property, energy and tourism.

Friday, August 26th 2022, 6:03PM

by BusinessDesk

The biggest week of the earnings season is over, with company results pouring in from all sectors of the market, including telcos, property, energy and tourism.

Harbour Asset Management portfolio manager Shane Solly said this earnings season could be summed up as being “not as bad as we thought”.

It had been a busy week of reporting – but it was “finally coming to a bitter end”.

“Companies have generally been okay and we're seeing better results than expected,” he said.

He said NZ’s market was flat today with low volume earlier in the day due to investors waiting to see what came out of the Jackson Hole Symposium in Kansas.

The event is currently in full swing and central bankers from around the world are currently gathered and waiting to hear if the Federal Reserve reveals any details about how they plan to reduce inflation.

Turnover

The S&P/NZX 50 index fell 18.8 points, or 0.16%, to 11,608.29. Turnover on the main board was very high at $361 million.

Today, campervan rental business Tourism Holdings was up 1.9% to $2.70 after it reported a $2m loss – but the company said it's preparing for a summer rush.

Total revenue was down 4% at $345.8m, as rental revenue was reduced by extended lockdowns. Earnings before interest and tax were $6.9m, turning around a loss of $8.3m.

Winemakers Delegat Group and Foley Wines both reported weaker profitability in the June year due to economic headwinds and global shipping delays continuing to bite.

Delegat posted an 11% decline in its operating profit – which strips out the impacts of grape harvest and revaluations – to $58.1m from $65.2m in the prior year. Net profit rose 2% to $63m.

Smaller producer Foley Wines reported an operating profit decline of 3% to $7.8m from $8m the year prior. Its net profit rose 60% to $6.2m due to an unrealised value gain on harvested grapes of $2.4m compared with last year’s loss of $1.7m.

The two wine companies – which both rely on export returns – commented on how congestion in global supply chains and covid-19 had impacted sales.

Delegat was down 1.6% to $12, and Foley Wines was up 0.7% to $1.45.

Dairy and freight

Fonterra told shareholders this morning that it had trimmed 25 cents per kilogram of milk solids from its forecast farmgate milk price following the recent downward trend in global dairy prices.

The dairy processor revised its forecast for the 2023 season to between $8.50/kgMS and $10.00/kgMS, down from a range of $8.75/kgMS to $10.25/kgMS.

Fonterra Shareholders' Fund Unit shares ended the day flat at $3.09.

Even though it was up against increased costs and ongoing supply chain issues, Port of Tauranga still managed to lift its annual profit.

It reported a net profit of $111.3m in the 12 months ended June 30, up 8.7% on the previous year. Revenue was up 10.9% to $375.3m.

The result was largely driven by the port itself, with a 16.2% decline in earnings from subsidiary companies and associated businesses such as its stakes in Northport, PrimePort and Coda, which contributed $15m to earnings.

Shares rose 2.2% to $6.90.

Healthcare

Index heavyweight retirement village developer Ryman Healthcare was down 1.7% to $9.19. Competitor Summerset Group also fell 1.8% to $11.

Healthcare manufacturer Fisher & Paykel shares were flat at $20.20 but the stock had the most volume traded today – $28.1m by the end of the day.

After Fisher & Paykel, the most volume traded was closely followed by telecommunications company Spark which was down 1.6% to $5.27.

Fibre provider Chorus was up 0.4% to $7.95.

Healthcare and animal products company Ebos Group which reported its annual earnings earlier in the week edged up by 0.6% to $30.82.

Ebos told the market on Wednesday that annual revenue had climbed above A$10 billion (NZ$11.15b) thanks to the pandemic increasing demand for pharmaceutical products.

Rural investment company NZ Rural Land Co today jumped 5.7% to $1.12. Another rural investment company, Allied Farmers, also rose 7.1% to 75 cents by the end of the day. Both firms released positive earnings today.

Gas

Auckland-based electricity and gas distributor Vector announced a 17.3% drop in net profit for the June 2022 financial year which it attributes to a $40.2m goodwill impairment of its LPG business.

The company’s shares were up 0.6% to $4.74.

Ahead of announcing its full year results after the ASX closes this evening, Hallenstein Glasson shares were down 3.8% to $5.51.

Today, the NZ dollar was sitting at 62.00 US cents at 3pm today, down from 62.05 US cents yesterday.

In an interview with Bloomberg TV at Jackson Hole, Reserve Bank governor Adrian Orr said he doesn't expect the NZ economy to go into recession – even though weaker retail sales data released yesterday showed that the monetary policy is working.

Retail sales volumes fell 2.3% in the June quarter while the market had been expecting a 1.7% increase.

Orr said it was a “good signal” that monetary policy was working as it meant the reserve bank was doing its job.

“Our current view is, no, we won’t see a technical recession,” he said.

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