"This is below historic average growth rates and the previous March 2007 reporting season but ahead of our expectations of 5% ebit [earnings before interest and tax] growth."
However, the March and September reporting seasons were heavily weighted towards property stocks which would be a stabilising factor, he said.
Ebit growth fell short of revenue growth by 4.7%, a further reminder of the cost pressures that were increasingly affecting company profits.
Profit before abnormals, the best measure of company performance as it included funding costs for acquisitions and new developments, was down 1% on last year's median, Mr Lister said.
Revenue growth of 10% was up on last season for the group of companies.
Eight of the 20 companies reported revenue growth of more than 10% for the six months versus the previous corresponding period, although in all but two cases that was due to acquisitions or, in the case of property companies like Ryman, new developments.
In the case of the remaining two companies - TrustPower and Sanford - the increase was due to higher prices for electricity and fish, Mr Lister said.
Earnings revisions were again net negative.
Overall, for the companies that reported, Forsyth Barr made eight downgrades and only three upgrades.
Two of the upgrades were for property companies.
"This is the fourth consecutive quarter in which we have made more downgrades than upgrades.
"Rising fuel prices and the high New Zealand dollar continue to be a factor in the downgrades and there were a number of management comments on the difficult operating environment," Mr Lister said.
The market continued to trade at a deep discount to Forsyth Barr's estimated fair value.
Taking into account the long-run average discount to valuations of (minus) -7.2%, the market was now about 15% cheaper on a median basis.
Recommendation changes
NZ reporting season provides flat profits
Hallenstein Glasson - downgrade
Briscoe Group- downgrade
Telecom - downgrade
Tower - downgrade
Contact - upgrade
Hellaby - upgrade
Skellerup - upgrade
ING - upgrade
Sanford - upgrade
TrustPower- upgrade
