Businesses are likely to be cautious in their upcoming earnings reports, an economic commentator says. Photo: Unsplash/ Simon Kadula
A mini company-earnings season is due to start soon - with big names reporting, including Fisher and Paykel Healthcare, Mainfreight, and Infratil.
Property and retirement village operators will also feature, with results expected to be weak, given that the housing market is struggling to build traction.
Senior analyst at investment firm Forsyth Barr, Aaron Ibbotson, said it was the seventh season in a row his firm had expected earnings to fall on an annual basis.
However, it was not all bad news, he said.
"Business confidence has improved quite a lot. We've had a decent sized interest rate cut, we might get another one. So, it's not all negative if you think about commentary and how management talk to what they're expecting for the next six to 12 months.
"But if you look at the results themselves, they're mostly likely going to continue to be quite weak."
Ibbotson said companies will likely word their financial outlooks cautiously to keep investor excitement at bay.
He said between March and September confidence improved, with interest rates falling and reports that the housing market was stabilising.
But the economy remained very weak, particularly in regard to business performance, and the market would carefully scrutinise any earnings commentary, Ibbotson said.
"If you take yourself back to February this year, there was a lot of talk about green shoots from quite a few companies, but that effectively turned to dust.
"So I think management directly - in the releases - will probably be quite guarded in the calls, but when talking to investors they may admit to some positive signs coming out more recently, sort of October, November."
He said Fisher and Paykel may be a standout performer because it is export focused.