South Island Firms Enjoy Modest Gains

February 16, 2012

South Island Firms Enjoy Modest Gains

Deloitte South Island Index yet to recover from previous fall, with a gain of less than 1% in final calendar quarter of 2011

South Island listed companies have yet to recover from a terrible third quarter in 2011, according to the latest Deloitte South Island Index.

The 16th edition of the Deloitte South Island Index, for the quarter to 31 December 2011, was up by $23 million or 0.5% in market capitalisation on a very poor third calendar quarter of 2011 which saw it fall by 10.4%. The total market capitalisation for the index now stands at $4.58 billion – 3.4% lower than a year ago.

Paul Munro, a corporate finance partner in Deloitte’s Christchurch office, says issues associated with the protracted European sovereign debt crisis continue to depress investor confidence. The current perception of New Zealand shares as high risk coupled with a poor quarter for the retail sector due to weaker than expected consumer spending compounded the market’s problems.

The performance of the Deloitte South Island Index during the December quarter was similar to two of the other indices it is benchmarked against, Mr Munro says, with the ASX All Ordinaries up by 1% and the NZX 50 down a further 2.1%. The Dow Jones bucked this trend, however, with a stellar performance (up by 12%).

“The performance of the index in this quarter continues to show that our markets are impacted by global events, despite the obvious geographical distance,” Mr Munro says.

“Our view remains that in the longer term the prospects for South Island companies are positive, with all the signs that the predicted economic upturn from construction activity associated with the Christchurch earthquake recovery will start to flow through in the year ahead.”

The index’s top performer, Ryman Healthcare, had an encouraging quarter by gaining $80 million in market capitalisation or 6.3% on the back of strong half year results. High red meat prices ensured Silver Fern Farms also had a pleasing quarter, gaining $23.7 million or 38.5%.

Kathmandu had the weakest performance this quarter, losing $92 million in market capitalisation (or 20.9%) following poor December trading figures and an announcement that half year earnings to January 2012 would likely be down on projections.

On an industry basis, the Property industry had the best quarter, gaining $82.5 million or 6.1%, largely driven by Ryman’s good performance, and the Manufacturing & Distribution industry fared well on the back of good results for Skellerup Holdings. It was a tough quarter for retail, which fell 19% on weaker than expected consumer spending.

To see the full Deloitte South Island Index quarterly report, go to www.deloitte.com/nz/southislandindex.

About the Deloitte South Island Index
The Deloitte South Island Index measures movements in market capitalisation, tracking the performance of 30 listed companies with a registered office and/or a substantial portion of their operations in the South Island.

About Deloitte in New Zealand
Deloitte New Zealand brings together more than 800 specialist professionals providing audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. Our people are based in Auckland, Hamilton, Wellington, Christchurch and Dunedin, serving clients that range from New Zealand’s largest companies and public sector organisations to smaller businesses with ambition to grow.

Deloitte’s local experts draw on best practice and innovative methodologies from around the world as part of Deloitte Touche Tohmatsu. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s approximately 182,000 professionals are committed to becoming the standard of excellence. For more information about Deloitte in New Zealand, go to our website www.deloitte.co.nz

About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/nz/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

ENDS

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