5 Aug 2013

Positive growth for investors tipped

7:14 am on 5 August 2013

The earnings season is underway and an analyst is expecting positive growth for investors, but nothing too outstanding.

Many companies will be releasing their full year 2013 results over the coming weeks and Forsyth Barr is forecasting revenue growth of 3.6% and earnings per share growth of 4.8%, at an overall aggregated level.

Forsyth Barr head of private wealth research Rob Mercer said he expects a solid reporting season, but reflecting reasonably subdued revenue and profit growth.

Mr Mercer expects the agriculture sector to have negative growth, and says this is partly down to an issue of timing.

He said Fonterra and PGG Wrightson are expected to be down on the previous period reflecting the drought and other issues specific to the agricultural sector.

Mr Mercer said both these companies have a good outlook over the next couple of years, but they are struggling in this June half.

However, Mr Mercer expects positive growth in the retail sector despite the long warm summer which had an impact on the start of winter season lines for some brands.

He said the weather will have differing impacts on clothing retailers such as Kathmandu, Pumpkin Patch and Hallensteins.

Mr Mercer said the retail sector has performed very well over the last two or three years and although there have been some recent downgrades to some retailers such as Pumpkin Patch, The Warehouse and Kathmandu, typically they are still performing relatively well.