Euro debt chokes South Island company growth
The eurozone debt crisis has had a marked effect on the bottom line of South Island’s listed companies.
Deloitte’s latest South Island index shows the 30 companies included collectively posted a modest 0.6% gain in the first quarter of the financial year, to June.
The index is up by $28.4 million in market capitalisation – well down on the 7.1% gain seen in the first quarter of the calendar year.
Total market capitalisation now stands at $4.93 billion, 3.3% lower than a year ago.
Deloitte’s Christchurch corporate finance partner, Paul Munro, says the debt crisis in Europe continues to dominate the economic outlook which is holding back market confidence.
“The performance of the index in this quarter underscores the resilience of the region in the face of continuing tough global economic conditions."
Despite slower growth, the performance of the index during the June quarter fared well against Deloitte’s benchmark indices, with the Dow Jones down 2.5%, the NZX 50 down 3.1% and the ASX All Ords declining 6.4% in the quarter.
He believes the medium- to long-term outlook for the index remains positive.
“Stronger than expected first quarter GDP results for New Zealand have signalled the Christchurch earthquake recovery is gaining traction,” Mr Munro says.
Improved margins and a drop in costs in the third quarter saw Heartland New Zealand gaining $42.7 million in market capitalisation in the period, to take top spot on the index.
Ryman Healthcare also had a strong quarter gaining $40 million in market capitalisation or 2.6%.
The biggest decline in the quarter came from Bathurst Resources Ltd, which lost $110.3 million in market capitalisation, a decline of 16.8%, after announced changes to its escarpment plan for mining on the Denniston Plateau to appease one organisation.
Deloitte’s index tracks the performance of the 30 companies with a registered office or significant performance in the South Island.