Mini-earnings season to offer economic health check

A mini-earnings season gets underway on Tuesday, with eyes on profits as economic indicators.

About 20 companies are set to report over the next two weeks, offering an insight into how firms coped in a high interest rate and inflationary environment.

Among those reporting are big names such as Fisher & Paykel Healthcare, Mainfreight and Ryman Healthcare.

Devon Funds head of retail Greg Smith said it would offer a broad health check on the economy, with focus on companies' outlooks.

"Whilst there's a lot of caution, expectations are also relatively low. So it helps that there has been talk of tighter conditions and over the second half of the year the word recession was regularly used.

"You could argue that there's more the prospect of some upside surprises."

He said investor caution was already factored into share prices.

Smith said one sector to keep an eye on will be property, with the market facing pressure from rising interest rates while also enjoying strong rents.

The results for Fisher & Paykel Healthcare and Mainfreight would offer an insight into how the companies were responding to the global risks, he said.

"With Mainfreight, the interesting one will be that freight rates have come down from their peak levels during Covid and to what extent is that affecting Mainfreight's air and ocean business."

As with all the other firms, the outlook would be key, Smith said.

"And it's similar for Fisher & Paykel Healthcare. Covid obviously is in the rear view mirror with the initial spurt there of China's reopening.

"The story there will be more about, what does the post-Covid world look like, I suppose a year after those big tailwinds that we saw."

He said the reporting period would also include the impact of Cyclone Gabrielle and the Auckland floods.

"In many cases companies have already updated on the impact there... it will also be interesting to see how that period and how those weather events impacted the cold hard numbers."