Solid growth reports expected

By Dene Mackenzie

The last reporting season of the year starts in earnest on Wednesday when Mainfreight, regarded as a key indicator of the strength of the economy, releases its financial results.

Forsyth Barr was expecting the season to provide solid growth at all levels.

Trustpower and its recently separated Tilt Renewables report today and Forsyth Barr broker Suzanne Kinnaird said her focus would be on the retail business. Electricity customer growth had fallen away, which should lead to good profit growth if marketing spending had diminished. If not, questions about the triple play strategy would arise. Trustpower is a generator and retailer and a provider of broadband.

Tilt would not formally report a first-half result but was expected to provide pro forma information.

Mainfreight was expected to produce a strong first-half performance driven predominantly by New Zealand operations. Management provided a reported profit guidance of between $41million and $43million at a recent investor day. Second-half profit growth would slow given challenging previous-year comparative figures, she said.

Today was the start of the smaller of the quarterly reporting seasons in which 24 companies will report.

The season is dominated by the property sector, with seven property companies reporting.Forsyth Barr analysts were forecasting total revenue growth of 10.8% at a median level and operating profit growth at 15.4%.

Normalised earnings per share (eps) growth was forecast to be 9.2% and dividend per share growth was estimated at 3.8%.

Given the small sample size, with large capitalisation companies skewing the aggregated growth figures, analysts chose to focus on the median growth figures for the reporting season, Ms Kinnaird said.

Seven listed property vehicles would report first-half results with the recently listed Investore reporting its maiden result.

Significant revenue growth was expected from the Goodman Property Group and the Kiwi Property Group on the back of acquisitions, as well as lease-termination fees from Argosy. However, caution should be exercised interpreting the results as "organic" growth, she said.

Despite the recent increase in wholesale funding rates, property vehicles continued to benefit from historic swap rates rolling off, benefiting interest costs and the reported profit.

For Z Energy, it was the first reporting period to include Caltex numbers. With loyalty scheme changes taking place during the half, margins were expected to be down on the strong first half. Profit growth was expected to come solely from Caltex, Ms Kinnaird said.

Z had indicated it would provide 2017 full-year guidance at the results announcement.