Expectations were high going into the latest reporting season but overall results, for the period ended June, ultimately disappointed. Photo: RNZ / Angus Dreaver
The corporate reporting season has produced some mixed results, with a difficult outlook for most companies exposed to the domestic economy.
Expectations were high going into the latest reporting season but overall results, for the period ended June, ultimately disappointed - leaving the NZX Top 50 Index little changed.
The biggest highlight over the past month was the Reserve Bank's 25-basis-point cut to the official cash rate, which was followed by a strong rebound in business confidence.
"Even though we've had some good news in terms of that rate cut, there's still clearly parts of the economy which are still hurting, and that's evident in some of the outlook statements," Devon Funds head of retail Greg Smith said.
"And, you know, the immediate outlook is not particularly rosy. And I think you saw that in a lot of the outlook statements, that there was still uncertainty abounding, and that's going to be relevant going into the next earning season."
Nikko Asset Management head of equities Michael Sherrock said the interest rate cut lifted sentiment, but the economic conditions pointed to a weak outlook.
"I think the next three to six months are still going to be very tough. And I think from some of the statements, it was more about hope - hope that further rate cuts would stimulate the economy, but at this stage, we're not really seeing any sort of green shoots."
However, he said there were some strong results with positive outlooks. Sherrock said the best of the some 50 company reports was Chorus, with an improved dividend and outlook, Channel Infrastructure with plans for expansion, and Sky TV, with an improved dividend outlook and a credible result given the economic backdrop.
Smith said Freightways, Auckland Airport and Ebos reported strong results, alongside some weak reports by Vulcan Steel and Tourism Holdings, and others most exposed to the domestic economy, such as Spark.
"And then we had a whole bunch of companies delivering fairly middling results," he said referring to A2 Milk and Port of Tauranga.
"Overall you would have to say the misses outnumbered the beats at both the top and bottom lines."
However he said there were a few positive surprises on the dividend front, such as the telecommunications lines company, Chorus, which delivered a standout result.
In addition, he said market updates from non-reporting companies Fisher & Paykel Healthcare and Fonterra also helped lift overall sentiment.