Some of biggest firms' earnings expected to show tough results

Cargo is again expected to be the key driver of Air New Zealand's financial performance. Photo / 123rf

The floodgates of company earnings open this week, with close to 30 companies set to report, and some of the numbers from some of the biggest companies may be tough reading.

Air New Zealand is set to show a six-month loss of about $300 million, but the real interest is whether it says how much money it needs to raise for the future.

"Air New Zealand is targeting its planned equity raise in the first quarter of 2022, while the Crown's redeemable share package provides it with additional timing flexibility. We believe Air New Zealand will ultimately require new equity of $1 billion to $1.2bn," investment firm Forsyth Barr said in a note.

It said the key issues to look for included cash burn, with the airline anticipating drawing down $900m of the government's standby loan facility by the end of February.

Cargo is again expected to be the key driver of the airline's financial performance, while passenger revenue is set to take a hit as a result of border closures and the extended Auckland lockdown.

Auckland Airport and Tourism Holdings earnings will also show the effects of Covid-19 and closed borders.

Property is the stand out performer for the airport, with a further lift in rental income as a result of the completed Foodstuffs distribution centre, Forsyth Barr said.

Meanwhile, the Port of Tauranga profit should be solid with some benefit from port congestion.

"While Omicron poses a risk to port operations with potential for absenteeism among skilled workers, we anticipate that Port of Tauranga's risk mitigation measures will allow it to remain operational through the outbreak," Forsyth Barr said.

A2 Milk, once the darling of the New Zealand stock exchange, is also likely to reveal a challenging first-half result, with Forsyth Barr expecting the hangover of elevated inventory levels weighing on its performance.

"Our analysis suggests that industry growth will remain subdued in 2022, and we are unlikely to see a return to pre Covid levels of demand for the foreseeable future. While this may present industry consolidation opportunities we expect growth to be challenging near-term, with growth contingent on significant market share gains," Forsyth Barr analysts said.

On the flip side, retirement village operator Summerset is expected to outperform, continuing its strong growth over the past five years.

"We consider it the best in class aged care operator. [Summerset] has, in our view, the strongest and lowest risk pathway to growth over the next three to five years," the broking house said.