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Results season: The best-performing companies, and the biggest flops

Results season is over for most of New Zealand's publicly listed companies.

They have fronted up to hard-eyed shareholders, laying bare their performance for the six months to December 31.

A few have dazzled the crowds, a few have flopped, and many more have not moved the needle at all.

The NZX is a small part of the broader economy, but the fortunes of our listed corporates provide another clue into how the country is faring.

While tourism is a shining light, the picture looks considerably gloomier for agriculture and commodities.

Here are the highlights and lowlights of this year's earnings season.

STAR PERFORMERS

Dairy prices are in the doldrums, but the a2 Milk Company isn't part of the herd.

The company's stock has soared on strong infant formula sales, with its market value now in the same league as some of the NZX's heavyweights.

Harbour Asset Management managing director Andrew Bascand​ says a2 has upgraded its earnings three times in as many months.

"It is rare to see analyst upgrades to [earnings a share] this strong."

Hamilton Hindin Greene investment adviser Grant Davies also likes a2, but he sees Ebos Group "as the pick of a fairly solid bunch".

Ebos had double-digit earnings growth across its animal care and healthcare divisions, and its share price has since jumped 16 per cent to all time highs.

MOST DISAPPOINTING

Bascand was not impressed with Sky TV, which made another small downgrade to its earning guidance.

"The result itself also had less disclosure around subscriber revenue."

Davies says Contact Energy's result was not great either, with underlying profit down 4 per cent.

"The disappointing result was well forecast, coming on the back of a poor retail performance from the company, with Contact losing 10,000 customers during the period."

STRONG SECTORS

Tourism is one of the bright spots in the New Zealand economy, recently surpassing dairy as our biggest export.

"Obviously visitor arrivals were very strong, and this supported Auckland Airport - a nominee for best result - and other stocks in the sector," says Bascand.

Davies says Air New Zealand also produced the goods, but the cyclical nature of the industry means the market remains cautious of the stock.

He reckons healthcare deserves a nod too, given the stellar result from Ebos and a good update from Metlifecare.

STRUGGLE STREET

The agriculture, commodity and electricity sectors have not fared so well.

PGG Wrightson's profit fell, and Skellerup struggled with selling rubberware and gumboots to local farmers.

Given the tough market conditions, the disappointing result was not that surprising, says Bascand.

He says the electricity sector generally had weak metrics too, as retail competition and hydrology weighed on results.

With oil prices falling through the floor, Davies adds commodity stocks like NZ Oil and Gas to the residents of Struggle Street.

BIGGEST SURPRISE

Davies points out earnings-related surprises are few and far between, given the NZX's disclosure rules.

Nuplex and Diligent managed to drop a few jaws for another reason.

Both companies announced takeover offers on the same day, sending their share prices soaring.

ATTRACTIVE DIVVIES

Chorus announced a higher than expected dividend, putting investors back in the money, and Spark announced a special payout.

"Generally speaking, earnings were a bit disappointing, but dividends positively surprised," says Bascand.

Davies says the ramp-up in dividends from most companies should continue to attract investors, given the low-interest rate environment.

LOOKING AHEAD

Bascand expects things to carry on in a similar fashion for the rest of the financial year.

"The New Zealand economy is still slowing a little, with recent business surveys showing a slight deterioration. However, the tourism sector, and housing and building sectors are still holding up very well."

With few companies forecasting falls in full-year profit, Davies says things look fairly positive.

But he also says volatility in global markets will continue.

With uncertainty about Chinese growth, the United States election, and ongoing issues in Europe, investors could be in for a rocky ride yet.

Written by: RICHARD MEADOWS

www.stuff.co.nz

Filed under General \ Grant Davies

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