Paul McBeth is the editor of The Bottom Line and Curious News, having worked at BusinessDesk for 15 years, two of which were under NZME ownership. He's owned shares of NZX and Bremworth since January 2024.
It was always going to be a tough ask, but the big end of town has managed to disappoint us even when the expectations were already so low.
It’s impossible to sit idly by and watch Spark New Zealand shed almost a fifth of its value – $1.01 billion! – in a single day without pondering whether you’re actually in an alternate reality.
Because those things really shouldn’t happen.
Spark might not be used to falling short of expectations, even if 2024 gave it plenty of practice, but you have to ask yourself how its leadership came to the conclusion that waiting until Friday the 21st was a good day to come clean on the fact that their best endeavours to steady the ship weren’t up to scratch.
Sure, the telco’s management can blame the economy for the tight conditions that have seen households scrimp and save, and corporates and government push out budgets until those fabled green shoots emerge.
But they also had every opportunity to ‘fess up before their formal result came a-knocking.
You can only blame the economy so many times before people start looking for the common denominator.
Every now and then I fall apart
Fletcher Building knows all about that.
Having gone through a couple of cleanouts over the past eight years or so, the building materials firm’s new leadership made sure everyone knew this result was going to be awash with red ink.
Fletcher has a way to go in getting the investment community onside with its new direction – wherever that may go – but at least it didn’t discover yet another rat for its shareholders to swallow.
Similarly, no surprises that Sky Network Television’s satellite woes – thanks Optus – were compounded by some tight discretionary spending among households and undid some of the good work that’s been going on at the pay-TV operator as seen by the return to a more normal customer churn rate.
Sluggish tourism and grounded planes didn’t do Auckland International Airport or Air New Zealand any favours, and their war of words over who’s to blame for the sector’s woes didn’t help either. Pity poor SkyCity Entertainment Group which is still waiting for those visitors to return.
And Heartland Group Holdings’ warning on bad debts wasn’t a great portent, especially with the big four Australian banks lifting their provisioning for bad debts across the Tasman.
Ultimately, we all knew this was going to be a rugged reporting season.
Turn around bright eyes
New Zealand’s economy was in the grips of recession in the September quarter and only slowly pulling itself out in the last three months of 2024 on the faint hope that rate cuts from the Reserve Bank would magically breathe life into all and sundry.
The thing is, monetary policy takes a while to flow through into the real economy and the Reserve Bank acknowledged the need to accelerate the shift to a lower official cash rate when it sliced another half-percentage point from the benchmark to 3.75% on Wednesday.
And that’s also not to say there haven’t been bright spots.
The favoured economic bellwether of the NZX, courier and information management group Freightways, delivered a solid result in trying times and had already pared back optimism about the pace of the economic recovery on this side of the Tasman to something of a 2026 story.
The power companies had to book the cost of last year’s winter energy crunch, which wasn’t too bad for Genesis Energy but not so great for Contact Energy.
But at least the electricity generator-retailers are showing plenty of appetite to develop new projects since the go-slow lifted when the Lake Onslow pumped hydro plan of the Labour administration was put out to pasture.
Living in a powder keg
Cue Meridian Energy, which will report next week, as it lobbed in a bid for minnow windfarm developer NZ Windfarms. And in other M&A musings, carpetmaker Bremworth has attracted some potential suitors since it became flush with insurance cash and plans to shop itself around.
Meanwhile, dairy is trying to re-establish itself as white gold, with The a2 Milk Co discovering renewed appetite among Chinese consumers for its infant formula, and Fonterra Cooperative Group expects to pay a hefty farmgate price to its farmer-shareholders plus deliver earnings at the top end of its range.
Stock market operator NZX turned out an impressive result as the global shift to less tight monetary policy revived interest in capital markets the world over, and healthcare and animal products maker Ebos produced robust earnings, even if investors weren’t so enamoured by the departure of chief executive John Cullity.
But if there was anything to take from the latest week in earnings season, it came out of cycle with Turners Automotive Group – which has a March financial year – upgrading its earnings guidance, which goes to show that a well-run company can generally be the master of its own destiny.
All in all, the first big week of earnings season seemed to find too many scapegoats and not enough champions.
Image from Curious News.
