More than 30 listed companies, including most of the market heavyweights, reported their six- or 12-month results over the past month. Photo: 123 RF
Companies exposed to the housing market and consumers' spending whims may be in for a tough few months amid slowing demand and high inflation.
More than 30 listed companies, including most of the market heavyweights, reported their six- or 12-month results over the past month.
Power companies Meridian, Contact, Genesis and Mercury reported a collective $2.7 billion in operating profits, however construction firm Fletcher Building's profit fell 46 percent on the back of significant costs and flat revenue growth.
Milford Asset investment analyst Michael Luke said how companies would perform in the second half depended where they fit into the economy.
"It's important for investors to remember that the stock market is forward-looking," he said.
"We know that business conditions are really tough right now; the big question is whether conditions will improve or worsen compared to current expectations.
"So as an example, if the housing market does continue to improve, then we would expect the retirement sector should do well and tourism is likely to remain strong."
Conditions in the retail sector were expected to remain soft for another few months, though tourism earnings, a bright spot of the season, may be more favourable, he said.
"There's a shortage of planes, rental campervans and cars, which means if you do have those vehicles, you can charge much higher prices.
"We saw a number of earnings upgrades over the past year, however, investors are looking through this and do know that as airlines return to New Zealand, airfares will come down.
"So the big question for those sectors is, where does pricing settle in a year or so, compared to pre-Covid?"
A lot of that would depend on changes in the competitive environment, and how fast airlines returned to New Zealand, Luke said.
