KEY POINTS:
While the tumult on financial markets continues unabated, company results released over the week showed New Zealand's corporate profitability is in good shape.
Michael Hill International on Friday reported a 33.2 per cent rise in annual net profit after tax to $21 million. This was after strong trading in the first three quarters of the year.
The final quarter was more challenging for the company, and sales growth was more modest than expected, but chairman Michael Hill said a focus on margin management during the year had helped offset that weakness.
Pay television company Sky TV reported a 29 per cent rise in its June year net profit on better subscriber numbers and higher revenue. The Rupert Murdoch-controlled company's net profit rose to $77.8m from $60.1m.
Earlier in the week, ASB Bank posted an annual net profit after tax of $480m, which was up nine per cent on the previous years.
Infratil reported a first-quarter net profit of $45.9m compared with $7.7m for the same period a year ago. The result was inflated in part by the consolidation of Trustpower's earnings.
Auckland power company Vector said its June year net profit rose 126 per cent to $101.7m, the result being boosted by a $40m one-off payment from the dropping of a deferred tax liability.
Overall, the reduction in corporate tax has been another small positive for corporate earnings.
UBS broker Campbell Stuart said that while the mood on world financial markets had turned ugly, corporate results had generally been positive.
"As we have seen from the reporting season, the underlying companies are in reasonably good heart," he said. Stuart said volatility on the local market might see price earnings multiples change but he expected them to smooth out over time.
"They [results] have been a little bit better than I was expecting, but that does not make you immune from what is happening globally," he said.
"But I also think that this pull-back that we have had in the currency is also extremely good for the manufacturers and producers in the economy."
Despite the generally favourable earnings outcomes, the NZX 50 index fell 1.61 per cent on Friday to close at 3894.34, which was its lowest point since mid- December, and down 5.2 per cent on the week.
Stuart said the current nervousness on the share market would create opportunities for medium-term investors, but he advocated caution. "As long as you pick good companies, and they continue to deliver good results over time generally, share prices will go up," he said.
