Capital Markets: New Zealand companies face uncertainty amid US tariffs and global slowdown
Its economic forecast for New Zealand saw a reduction in real GDP growth in 2025 to 1.4%, down 0.5 percentage points. Growth for the Asia Pacific region – seen as strongly exposed to tariff shock – is expected to slow to around 3.9% and 4% in 2025 and 2026, respectively, down from 4.6% in 2024 and 4.4% in 2025, the IMF said.
The uncertainty made forecasting difficult during the most recent reporting season, although company outlook statements did come in positive overall, according to Forsyth Barr's quantitative scorecard of the results.
'Trump tariffs and a major capital raise clouded the December earnings season, making it feel worse than it actually was,' Forsyth Barr analysts Aaron Ibbotson and Matthew Leach said in their research note.
'Our overall scorecard yielded a net negative result, but only modestly so. Cost-out programmes, demand as weak as expected and a surprising net positive outlook are our main takeaways.
'Earnings are still being downgraded as the recovery is pushed out at least another six months, but the pace of downgrades has slowed meaningfully,' they said.
The February 2025 reporting season, dominated by the property and aged care sectors, showed earnings per share (EPS) growth was below expectations – weighed down by the likes of Fletcher Building and Meridian Energy reporting large losses compared with the previous corresponding period.
Overall revenue growth was slightly better than expected though.
Of the 31 NZX-listed companies that reported results, 11 reported ahead of Forsyth Barr's EPS expectations, four were in line and 16 were below.
'Downgrades continue to feature with net negative revisions across the board from revenue to the bottom line for both FY26 and FY27,' the analysts noted.
The bright spot was the a2 Milk Company, which increased its first-half net profit by 7.6% to $91.7 million and recorded an 18.8% post result one-day share price gain.
The biggest miss came from Spark NZ, which reported a 78% decrease in first-half net profit and a 17.8% post-result one-day share price decline.
Forsyth Barr noted that both companies have a limited read across the New Zealand economy, whereas Fletcher was more hitched.
'We upgraded our estimates for cyclical bellwether Fletcher Building for the first time in over two years. It felt bleak but was in line with our low expectations.'
One company result to look out for later this month is Mainfreight, a major logistics and transport company that is also seen as an economic bellwether.
The company reports its first-half results on May 29.
Earlier this month, Mainfreight said it expected its profit before tax and sales revenues for the March 2025 year to be above market consensus expectations of $375m and $5.1 billion, respectively.
'However, we are seeing a reduction in forward sea freight bookings for May on the Transpacific trade route, China to US,' the company noted.
The stock staged a decent recovery in the aftermath of the update. Geoff Zame of Craigs Investment Partners said in a daily newsletter that Mainfreight's update calmed market concerns about a tariff-induced slowdown in global growth impacting that company's earnings.
At the macro level, uncertainty around tariffs remains a theme, Milford Asset Management portfolio manager Mark Riggall said in a recent note to clients.
'Just three short months ago, investor expectations were of ongoing US outperformance, both economically and from the stock market. Now, expectations are rapidly changing as fading US growth, policy headwinds (partly from tariffs), AI [artificial intelligence] fatigue and stronger stimulus impulses overseas (notably the German fiscal package) have upended the outlook for various asset markets.
'Looking ahead, uncertainty around tariffs and other government policy in the US lowers our conviction levels. But a policy-induced slowdown can also be mitigated by a policy reversal, an outcome that is likely at some point in the future.'
Duncan Bridgeman is managing editor of NZME Business, including the Business Herald and BusinessDesk.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
19 hours ago
- RNZ News
Public Broadcasting Service sues Trump to reverse funding cuts
By Jonathan Stempel , Reuters US President Donald Trump takes questions outside the West Wing of White House in Washington, DC, on 8 May 2025. File photo. Photo: JIM WATSON Public Broadcasting Service has sued Donald Trump over the US president's executive order to cut its federal funding , calling it an unconstitutional attack that would "upend public television". In a complaint filed on Friday (local time) in the Washington, DC federal court, PBS and a public TV station in Minnesota said Trump's order violated the US Constitution's First Amendment by making the president the "arbiter" of programming content, including by attempting to defund PBS. The 1 May order "makes no attempt to hide the fact that it is cutting off the flow of funds to PBS, because of the content of PBS programming and out of a desire to alter the content of speech", PBS said. "That is blatant viewpoint discrimination." Its programming has included Sesame Street , Mister Rogers' Neighborhood , Frontline and several Ken Burns documentaries, including The Civil War . Member stations also broadcast public affairs shows, like Washington Week. Trump's order demanded that the taxpayer-backed Corporation for Public Broadcasting cut federal funding to PBS and NPR, short for National Public Radio. All three entities are nonprofits. PBS said the Corporation for Public Broadcasting provides 16 percent of its US$373.4 million annual budget. It also said the funding ban would apply to local member stations, which provide 61 percent of its budget through dues, including millions of dollars in federal funds. White House spokesperson Harrison Fields said the Corporation for Public Broadcasting was "creating media to support a particular political party on the taxpayers' dime. Therefore, the President is exercising his lawful authority to limit funding to NPR and PBS". NPR filed its own lawsuit on 27 May to block Trump's order. Formed in 1969, PBS has 336 member stations, including the plaintiff Lakeland PBS, which serves about 490,000 people in northern and central Minnesota. The executive order was part of Trump's effort to sanction entities he believed were opposed to his political agenda. Trump said that, by funding PBS and NPR, the Corporation for Public Broadcasting ignored Americans' right to expect that taxpayer dollars going to public broadcasting "fund only fair, accurate, unbiased and nonpartisan news coverage". The White House separately accused PBS and NPR of using taxpayer money to spread "radical, woke propaganda disguised as 'news'". In its complaint, PBS said Trump's order "smacks of retaliation for, among other things, perceived political slights in news coverage". The Corporation for Public Broadcasting receives funding from Congress two years in advance to shield it from political interference. It sued Trump last month, after he sought to fire three of its five board members. The case is Public Broadcasting Service et al v Trump et al, US District Court, District of Columbia, No. 25-01722. - Reuters
Otago Daily Times
a day ago
- Otago Daily Times
Defence Minister Judith Collins endorses Trump's Golden Dome
By Phil Pennington of RNZ US President Donald Trump's Golden Dome missile defence project has won endorsement from New Zealand. The vision is of a vast shield of sensors, missiles and even laser beams designed to take out conventional and nuclear missiles. Critics of the proposed system say it may fuel an arms race in space, and China and Russia have condemned it. But Defence Minister Judith Collins told a security summit in Singapore it was justified. "It's a defence mechanism," she said during a panel on cyber, space and undersea challenges. "I don't see it as an attack mechanism. It's a defence mechanism. "And if people did not feel they needed to defend themselves, they wouldn't waste the money on it." The chorus of major defence contractors signalling their readiness to work on the Golden Dome has been growing, joined recently by New Zealand-founded and California-based company Rocket Lab. Rocket Lab used a $460 million acquisition of the parent company of Arizona firm Geost, to state how the deal secured "core capabilities" for achieving Pentagon goals in space, "like the proposed Golden Dome". Prime (major) contractor Lockheed Martin said on its website: "This next generation defence shield will identify incoming projectiles, calculate trajectory and deploy interceptor missiles to destroy them mid-flight, safeguarding the homeland and projecting American Strength [sic]." SpaceX, controversial software innovator Palantir and drone-maker Anduril also feature in media reports and speculation about the Dome. Trump has said it would be operational by the end of his term and over the next decade cost $300 billion, but many analysts doubt the timing, while the Congressional Budget Office has estimated it could cost as much as $1.4 trillion over two decades. Lockheed called it "a Manhattan Project-scale mission". Minister Collins told the Shangri-La Dialogue that taxpayers' money was hard-fought for. "Let me tell you, we are defence ministers, we know how that feels, we have to go in every day and try to get more money. "And we're not going to do it unless there's some reason to do it. So you know, don't be aggressive in space, we won't need Golden Dome or any other sort of dome." Collins told the summit New Zealand's proportion of defence spending on emerging technology would grow, noting that tech made in New Zealand was being used in the Ukraine war. "We are going to be using some of that," she said. Tauranga company Syos makes drones that have been used in Ukraine. 'Everyone wants a piece' China, Russia and North Korea have all condemned Trump's revival of a high-tech form of the Ronald-Reagan era Star Wars missile defence plan, 400 times larger than Israel's Iron Dome. Despite this and critics' fears, defence and high-tech military-linked contractors have begun jockeying for action. "Everyone Wants a Piece of Trump's 'Golden Dome' Defense Plan," a Wall Street Journal headline said. Reuters has reported that Elon Musk's SpaceX - the most prolific satellite launcher ever - was in partnership with two tech firms that had been muscling into the defence industry to become Golden Dome frontrunners. The Times of India asked if the Dome was a shield for the US "or just to make Elon Musk richer?" One of Musk's reported partners is Anduril, a supercharged start-up that has plans for a billion-dollar military drone factory, and the other is New Zealand citizen Peter Thiel's software firm Palantir. The US Army recently tested a Palantir system called Maven for rapid targeting, saying it allowed a 20-person unit to do more than a 2000-strong unit was able to target during the 2003 Iraq war. The track record with the US Army had boosted Palantir, market analysts said. Smart targeting is envisaged as part of Golden Dome, with the Pentagon saying that by 2029 it would deploy smart sensors in space that can distinguish missile threats from clutter. Canada's Globe and Mail reported a range of stocks were benefiting from Trump's talk of the Golden Dome, noting that Palantir was now worth more than Lockheed Martin. The SpaceX link-up with tech firms reported by Reuters, is a challenge to the entrenched defence industry players like Lockheed, Northrop Grumman, Boeing and RTX (Raytheon), though these "primes" do figure in an Act introduced in February to enable Golden Dome, alongside a Trump executive order. Rocket Lab said in its media release citing the Golden Dome it was "positioning itself as disruptive prime to US national security". The Street financial news site said the Geost deal put the company that launches out of both Mahia and Virginia, "firmly in the national security conversation". America's Defence Intelligence Agency in mid-May profiled the forecast missile threat across six categories, including two hypersonics and two types of nuclear ballistic missiles. The Chatham House thinktank said the Golden Dome might suck resources from regional missile defence and cyber resilience, to go into unproven shield technology. "The plan also has potentially dangerous strategic consequences," it said. "A system that aspires to make the US invulnerable to missile attack would almost certainly be seen by its adversaries as an attempt to undermine the logic of nuclear deterrence. If Washington is perceived to be developing a shield that could one day neutralise a retaliatory nuclear strike, it risks triggering a dangerous global arms race."
Otago Daily Times
a day ago
- Otago Daily Times
Judith Collins endorses Trump's Golden Dome amid contract frenzy
By Phil Pennington of RNZ US President Donald Trump's Golden Dome missile defence project has won endorsement from New Zealand. The vision is of a vast shield of sensors, missiles and even laser beams designed to take out conventional and nuclear missiles. Critics of the proposed system say it may fuel an arms race in space, and China and Russia have condemned it. But Defence Minister Judith Collins told a security summit in Singapore it was justified. "It's a defence mechanism," she said during a panel on cyber, space and undersea challenges. "I don't see it as an attack mechanism. It's a defence mechanism. "And if people did not feel they needed to defend themselves, they wouldn't waste the money on it." The chorus of major defence contractors signalling their readiness to work on the Golden Dome has been growing, joined recently by New Zealand-founded and California-based company Rocket Lab. Rocket Lab used a $460 million acquisition of the parent company of Arizona firm Geost, to state how the deal secured "core capabilities" for achieving Pentagon goals in space, "like the proposed Golden Dome". Prime (major) contractor Lockheed Martin said on its website: "This next generation defence shield will identify incoming projectiles, calculate trajectory and deploy interceptor missiles to destroy them mid-flight, safeguarding the homeland and projecting American Strength [sic]." SpaceX, controversial software innovator Palantir and drone-maker Anduril also feature in media reports and speculation about the Dome. Trump has said it would be operational by the end of his term and over the next decade cost $300 billion, but many analysts doubt the timing, while the Congressional Budget Office has estimated it could cost as much as $1.4 trillion over two decades. Lockheed called it "a Manhattan Project-scale mission". Minister Collins told the Shangri-La Dialogue that taxpayers' money was hard-fought for. "Let me tell you, we are defence ministers, we know how that feels, we have to go in every day and try to get more money. "And we're not going to do it unless there's some reason to do it. So you know, don't be aggressive in space, we won't need Golden Dome or any other sort of dome." Collins told the summit New Zealand's proportion of defence spending on emerging technology would grow, noting that tech made in New Zealand was being used in the Ukraine war. "We are going to be using some of that," she said. Tauranga company Syos makes drones that have been used in Ukraine. 'Everyone wants a piece' China, Russia and North Korea have all condemned Trump's revival of a high-tech form of the Ronald-Reagan era Star Wars missile defence plan, 400 times larger than Israel's Iron Dome. Despite this and critics' fears, defence and high-tech military-linked contractors have begun jockeying for action. "Everyone Wants a Piece of Trump's 'Golden Dome' Defense Plan," a Wall Street Journal headline said. Reuters has reported that Elon Musk's SpaceX - the most prolific satellite launcher ever - was in partnership with two tech firms that had been muscling into the defence industry to become Golden Dome frontrunners. The Times of India asked if the Dome was a shield for the US "or just to make Elon Musk richer?" One of Musk's reported partners is Anduril, a supercharged start-up that has plans for a billion-dollar military drone factory, and the other is New Zealand citizen Peter Thiel's software firm Palantir. The US Army recently tested a Palantir system called Maven for rapid targeting, saying it allowed a 20-person unit to do more than a 2000-strong unit was able to target during the 2003 Iraq war. The track record with the US Army had boosted Palantir, market analysts said. Smart targeting is envisaged as part of Golden Dome, with the Pentagon saying that by 2029 it would deploy smart sensors in space that can distinguish missile threats from clutter. Canada's Globe and Mail reported a range of stocks were benefiting from Trump's talk of the Golden Dome, noting that Palantir was now worth more than Lockheed Martin. The SpaceX link-up with tech firms reported by Reuters, is a challenge to the entrenched defence industry players like Lockheed, Northrop Grumman, Boeing and RTX (Raytheon), though these "primes" do figure in an Act introduced in February to enable Golden Dome, alongside a Trump executive order. Rocket Lab said in its media release citing the Golden Dome it was "positioning itself as disruptive prime to US national security". The Street financial news site said the Geost deal put the company that launches out of both Mahia and Virginia, "firmly in the national security conversation". America's Defence Intelligence Agency in mid-May profiled the forecast missile threat across six categories, including two hypersonics and two types of nuclear ballistic missiles. The Chatham House thinktank said the Golden Dome might suck resources from regional missile defence and cyber resilience, to go into unproven shield technology. "The plan also has potentially dangerous strategic consequences," it said. "A system that aspires to make the US invulnerable to missile attack would almost certainly be seen by its adversaries as an attempt to undermine the logic of nuclear deterrence. If Washington is perceived to be developing a shield that could one day neutralise a retaliatory nuclear strike, it risks triggering a dangerous global arms race."
