While the ASX results are expected to be relatively upbeat, Forsyth Barr broker Suzanne Kinnaird is expecting single-digit earnings per share growth in New Zealand, and the larger capitalised companies to reduce the aggregated growth to negative levels.
‘‘This is the first season since June 2011 where estimates for aggregated growth are negative,’’ Mrs Kinnaird said.
There will be 43 New Zealand companies reporting mainly their second half 2017 results, starting next week and ending in late September, making it the largest of the quarterly reporting seasons.
Scheduled to report this week are PGG Wrightson, Property for Industry, Sky City and Vital Healthcare, followed by 10 companies next week.
Mrs Kinnaird said of the 43 companies reporting, 28 were forecast to have positive earnings per share growth against 14 with negative growth forecasts.
‘‘We forecast single-digit earnings per share growth at the median level, with the large cap companies reducing aggregated growth to negative levels,’’ Mrs Kinnaird said.
Those with negative risks include include Contact Energy, Fonterra, Meridian Energy and Genesis Energy, most of which Mrs Kinnaird said had had a tough finish to their full-year 2017.
‘‘Contact has a tough finish, with weak hydro conditions impacting on earnings,’’ she said.
There was a possibility Contact’s capital management policy may be revised, with the potential for higher dividends, albeit not imputed, she said.
Mrs Kinnaird was targeting the lower end of Fonterra’s earnings per share guidance, because of rising input costs and uncertainty in South American markets, which were likely to offset positives in the strengthening margins of consumer and food service volumes.
She expected Genesis Energy’s earnings before interest, tax, depreciation, amortisation and financial instruments to come in at the top of $320 million to $330 million guidance.
‘‘Guidance for full year 2018 will be of interest given it is the first full year contribution from its acquired Kupe [share] and Nova LPG business,’’ she said.
Meridian Energy had also had low generation volumes in New Zealand and Australia and its full year 2018 commentary ‘‘could be muted’’ with those conditions persisting
Expectations in Australia are upbeat and analysts expect a reasonably good set of results from Australia’s listed companies when earnings reports start rolling in, AAP reported.
The consensus estimate of overall earnings growth in 2016-17 is 13%, with the strongest results in the resources sector.
Citi analysts Tony Brennan and Mark Tomlins say results will be varied but balanced. As many sectors are likely to have experienced improved business conditions over the past financial year as those that have experienced deteriorating conditions, AAP reported.
Although consumer spending has been subdued and housing activity may be slowing, the fall in mining investment is levelling off and infrastructure spending has increased.
Fewer companies have issued profit warnings than is usual in the so-called ‘‘confession season’’ that precedes each reporting season and downgrades have been mostly limited to consumer stocks and small-cap companies.
‘‘FY17 appears to have been stronger than usual for market earnings growth, underpinned by the recovery in resources earnings, and modest growth in industrial earnings,’’ the Citi analysts said in a research note.
The resources sector has benefited from a recovery in commodity prices, and energy utilities have benefited from higher power prices.
High levels of residential housing construction and more infrastructure projects are expected to boost the profits of companies supplying building materials.
Infrastructure projects are also expected to have benefited engineering firms.
Also, firmer premium rates have been positive for insurance companies.
But retailers and companies in the leisure and gambling sectors are likely to have been impacted by subdued consumer spending. — Additional reporting AAP.
