No company is likely to see a stronger result than our national carrier Air New Zealand, which was all but decimated during Covid.
“Analysts are expecting it’s going to be the biggest turnaround in corporate history,” says Parker.
“It made something like a half-billion-dollar loss in its last financial year, and that’s expected to turn around to a $400 million profit. That’s a billion-dollar turnaround in just a year, which is unbelievable really. It’s not something that you see very often.”
That success also leads to what Parker describes as a “conundrum” for these businesses, which are seeing huge success at the same time as people are struggling with the cost of living.
The one disclaimer hanging over these financial results is that they really only offer a snapshot of where businesses have come from, rather than where they’re headed.
The forecasts offered by our listed companies will perhaps offer a better gauge of the coming economic pain.
With disposable cash being gobbled up by high-interest rates, consumers will ultimately have less money available to spend on what businesses are selling.
“For the analysts, they largely know what the profits are going to be because a lot of companies do a pre-guidance on this. There might be some slight variation on the day, but what they’ll be looking at is any forecast down the track. They’re also interested in what margins are doing, particularly at the moment with inflation such a huge factor. They’ll be looking to see where the margins have been squeezed.”
Parker says that analysts will likely also be keeping a close eye on what the company bosses have to say.
“A lot of it will be in the tone of the CEO’s speech. There may not be exact numbers, but it’s a case of reading the room.”
Listen to the full episode of Stock Takes to hear the full story.
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