In a glum reporting season, agricultural companies hold up their end.
Listed companies in the primary sector provided highlights in a reporting season that was generally downbeat and economically depressing.
Equity analysts said results for the majority of the NZX50 companies were weak and the outlook statements underwhelming – but most rural companies bucked that trend.
Share market sentiment has swung in behind rural companies, the S&P/NZX Primary Sector Index having risen by 14% since the start of 2025.
For comparison, the S&P/NZXTop50 index fell 5% throughout January and February.
The a2 share price has since risen 35%, providing a big boost to the primary sector index.
Three horticultural companies reported bounce-backs from the two-year adverse effects of Cyclone Gabrielle in early 2023.
Scales and Seeka both had net profits of $30m in calendar 2024, compared with $5m for Scales in 2023 and a loss of $21m for Seeka.
T&G Global returned to $13m operational profitability compared with a loss of $45m in the previous corresponding period.
Rural servicing company PGG Wrightson had a net profit increase in their interim results of 25% to $16m and the company’s share price has risen 35% year to date.
Synlait Milk’s share price has doubled from 45c to 90c. It will report its half-year results on March 24.
Market leader Fonterra will report interim results on March 20 and it has already said that earnings will be in the upper half of the guidance range 40 to 60c a share.
“Fonterra’s earnings and the forecast farmgate milk price have both benefited from solid demand for our high value ingredients products, and our sales book is well contracted for the season,” chief executive Miles Hurrell said.
“Considering these factors, we expect to be in a position to pay a strong interim dividend.”
The dividend policy is to pay 60-80% of earnings, half of it as the interim dividend.
Forsyth Barr analyst Matt Montgomerie said that the a2 Milk result was the standout of the whole reporting season, agriculture and non-agriculture, for its profitability and positive outlook commentary.
“The dairy companies have been surprisingly upbeat and the cyclical commodity prices have been helped by the weaker NZ dollar.
“In previous peaks of dairy prices, other countries have responded with increased milk production but supply now looks flattish,” he said.
The current harvest season for apples and kiwifruit also looks to be very encouraging.
Forsyth Barr said the reporting season had been tough but not dramatically worse than expected.
Craigs investment director Mark Lister said a2 Milk had good results and outlook whereas non-ag heavyweights like Spark and Sky City were disappointing and investors very unforgiving.
“The economic downturn has hit all companies that rely on consumer spending and rising unemployment may prolong the economic pain.”
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