By Michael Sherrock
Originally published on The Post on March 09, 2026. Information may have updated since.
Michael Sherrock is Amova head of New Zealand equities.
ANALYSIS: A largely positive but as expected February reporting season wrapped with the majority of companies meeting or exceeding expectations and, perhaps more importantly, retaining guidance.
With A2 Milk and Freightways kicking off the first week proper, the positive mood was set from the start.
Against a challenging backdrop, A2 Milk’s half year results captured what has been a stunning period of performance, both operationally and financially, for the company. Now the fourth largest infant formula brand in China on the back of record market share gains, a 14% year-on-year growth in revenue has helped put company earnings ahead of market forecasts. However, while the result definitively bucked a declining trend of the last few years, the long-term outlook for the overall market size still remains a cause for concern, with China’s birthrate down 17% last year to the lowest annual total since the founding of the PRC in 1949.
Given that its earnings come largely from domestic courier and freight activity, the Freightways result is often regarded as a bellwether for New Zealand’s overall economic health. Therefore, the fact that management noted some green shoots will have been well-received by others. Nevertheless, as my colleague Michael De Cesare pointed out, the result was built on disciplined management and cost control in a tough freight environment – and therefore should be seen as solid rather than spectacular.
“While customer volumes were up, these reflect a slow and steady recovery and therefore the result may have disappointed those looking for a potentially stronger signal for the NZ economy,” was his observation.
Week one also saw two companies familiar to most Kiwis that have struggled of late report on contrasting fortunes.
Amova’s Head of New Zealand Equities Michael Sherrock
Anyone hoping to see the prospect of an immediate change of fortunes
for Fletcher Building will have been left disappointed as the company reiterated that it’s still not expecting any meaningful improvement until next year and refrained from providing guidance for the full year.
Meanwhile, following a series of misses and disappointments through its previous results, the fact that Spark delivered a result in line with expectations and reaffirmed its full-year earnings guidance was received with relief by the market. This was a pivotal result for the company, reflecting improved productivity from a now leaner organisation.
It's also been a positive time for the gentailer sector. Elevated hydro lake levels have driven a strong recovery in earnings year-on-year, while between them
Contact and Genesis Energy raised close to $1B to fund their growing renewable generation development pipelines.
“This should allow the phasing out of baseload thermal generation while also meeting the expected growth in electricity demand over the medium term as the economy becomes increasing electrified,” he said.
While the gentailer results were good, Scales Corporation’s was arguably great and although not a surprise, having updated its guidance the week before, a definite standout for the second week.
Our analyst Mei Zi Ho said that the full year result, which ended up 64% above its original “underlying post-tax profit attributable to shareholders” guidance, “reflected the strength of its diversified agribusiness model and investments it had made in its Global Protein business during the year.” Even with the key management change of long-standing CFO Steve Kennelly stepping down, the company remains well positioned to continue its growth trajectory.
Other results to keep the market happy in week two included: Sky TV, retaining its dividend of at least 30cps; Summerset, which delivered growth in revenue and underlying profit; and Channel Infrastructure, with a result as reassuringly, boringly unsurprising as you would want to see from an infrastructure stock.
With a headline-grabbing $59m pre-tax loss, Air New Zealand stood out as the earnings miss this reporting season. Digging beneath the headline though, our analyst Tim O’Loan’s big takeaway is that the major constraint to earnings is a higher cost base rather than a collapse in demand for travel.
“Different segments tend to perform better than others through the economic cycle, and that’s what we’re seeing playout here. International premium demand is strong, as is inbound tourism, while a softening in demand in both domestic and business travel looks to be confidence driven and should improve with an improving economy,” he says.
The other headline grabber from the result was new CEO Nikhil Ravishankar announcing a full strategic review. Tim says finding a solution to a higher cost base driven by dynamics broadly beyond management’s control will be one of the major conundrums for him and his team to solve.
So how does this leave us feeling about the year ahead? With earnings in the main not going backwards and showing early signs of growth, alongside the RBNZ indicating no immediate desire to pull back stimulatory monetary policy settings, I’d say cautiously optimistic. Yes, the Middle East conflict poses inflationary risk in the near-term, and we can expect the election to create uncertainty later in the year, but the economic conditions for both consumers and businesses here continue to improve, and I’d expect to see this reflected in the next set of earnings results later in the year.
