Business

Delay predicted in boost to company earnings

06:07 am on 19 July 2010

An analyst says the tepid economic recovery means an expected boost in company earnings, will be delayed for at least another year.

Forsyth Barr says the recovery has been muted compared to previous rebounds following recession, as households and companies curb spending and repay debt.

On a global basis, firms and financial markets have pared back expectations, as the pick up in demand has not been as robust as first thought.

The financial year for many listed firms ended in June and Forsyth Barr research head Rob Mercer says it may be 2012 before there's a genuine pick up in sales.

He says economic indicators are good with business and consumer confidence high, good export data and an improved dairy payout, all of which give the impression that revenue growth is imminent.

But Mr Mercer says data from corporate results shows there's still a debt constraint on the market and revenue growth is still languishing, or even drifting backwards.

He says people are not spending ahead of the cycle and are waiting until they have the cash.

Mr Mercer says he's still expecting modest earnings recovery in 2011, before getting a steeper recovery in 2012.