6 Mar 2014

Growth boosts company profits

9:23 am on 6 March 2014

New Zealand's rapidly growing economy has resulted in a big boost in corporate profits.

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First NZ Capital found 60 percent of listed corporates had profit growth of more than 3 percent in the latest earnings season, and of those, nearly threequarters reported double-digit increases.

The head of strategy at the bank, Chris Green, says optimism about the coming year has also prompted two-thirds of corporates to lift their dividend payout to investors.

"We saw that in the previous earnings season, but I guess the characteristic here was that they have got the uplift in earnings to support that rise in the dividend payments, so I guess that's another reflection, we think, of a little bit more confidence."

Official figures show average pay increases are the lowest in more than 13 years, however, and unions argue workers should be getting a fairer share of the profit rises.

Council of Trade Unions economist Bill Rosenberg says median household disposable income has slipped, falling 1.8 percent in real terms between 2009 and 2012, and firms must be more generous in pay settlements.

"Working people are long overdue for an increase to recognise that there has in fact been growth and increased productivity in the economy which hasn't shown through in wages."

Employers say skilled workers should be getting heftier pay packets, but unskilled workers could continue to miss out.