13 Aug 2012

Two big corporates about to report earnings

10:15 am on 13 August 2012

Some of the country's bigger corporates are under the microscope this week, with the earnings season expected to provide an indication of the health of listed firms amid a subdued economic recovery and slowing global growth.

Contact Energy reports its full-year results on Tuesday and Sky City Entertainment Group releases on Wednesday.

An average of analysts' predictions has Contact's profit rising 14% to $172 million for the year to June, while Sky City's will rise 8% to $142 million.

Morningstar senior analyst Nachi Moghe says Contact has benefited from lower hydro lake levels, which have pushed up wholesale prices, though its retail margins have narrowed because it has offered lower prices in trying to stem a loss of customers to rivals.

Mr Moghe says the result will still be well below the peak period of 2007-08 because prices are still much lower than they were then.

Sky City issued a profit warning in May, saying it expects a full-year profit in the low $140 millions, due to weaker trading in Australia and higher unemployment in New Zealand hitting discretionary spending.

Mr Moghe says it's literally a tale of two halves for the casino operator.

He says there will be some growth coming through because of a good first half-year performance, but in the second half there have been some pressures and performance has tapered off.