Around The Top 200 Sectors

COMMUNICATIONS & MEDIA
Companies in the communications and media sector had another tough year with six of the total 11 entrants in this year’s Top200 list returning losses after tax. Only Telecom, Vodafone, Sky Network Television, Fairfax and TVNZ ended up in the black.
Print-based media continued to feel the pressure from the ongoing migration to online communication. And advertisers remained cautious around spending. The Rugby World Cup provided bright spot for TV as audiences switched on for the games.
Revenues for the top five companies in this sector slipped by $39 million to $8.92 billion. But profits after tax suffered an even more serious blow, dropping back from $485 million to just below $398 million.

CONSTRUCTION & TRADE

Fortunes in this sector remained mixed with some operators having an extremely busy year and others appearing to be on the verge of closing down.
The need to rebuild after the Christchurch earthquakes has lifted demand in that region with operators reporting high volumes, strong forward workloads and what some have termed embarrassingly high margins.
Such companies are in growth mode and have hiked staff numbers in recent months.
Fletcher Building, the leading construction company in our list, lifted its revenue and profit after tax by 9.2 percent and 3.2 percent respectively.
Elsewhere, however, demand is patchy. Many smaller operators are cutting costs to win work and surviving on increasingly thin margins.
Revenues for our top five companies this year climbed from $10.83 billion to $11.79 billion while profits after tax rose by $36 million to $511 million.

FOOD & BEVERAGE

Food and beverage companies constitute an eighth of all the companies in this year’s total Top200 list, underscoring once more the significance of this sector to New Zealand’s economy.
A number of factors, including higher transport costs and consumers’ tighter collective grip on their wallets, delivered tough times for our food and beverage companies this year.
Nine of the 25 companies, including Cerebos Gregg’s, ANZCO Foods and Goodman Fielder, reported lower revenues. Twelve of the same group of companies turned in lower profits after tax.
Homing in on this year’s top five food and beverage companies, we see their combined turnover fall from $4.03 billion to $3.74 billion. Their after tax profits were slashed from $174.8 million to just $71.67 million.
The truism remains that we have to eat no matter what the economy does, but we don’t seem to have wanted to spend more than strictly necessary this time round.

MANUFACTURING

Manufacturing activity continued to inch upwards during the year reflecting, perhaps, certain resilience in the nation’s business confidence. The BNZ-BusinessNZ Performance of Manufacturing Index (PMI) has stayed on the positive side of its bellwether 50-point indicator since it dipped below the line in August 2010.
All five seasonally-adjusted indices which make up the overall PMI have flickered into expansion at times: all-important new orders, deliveries, employment, production and finished stocks.
Overall, however, conditions still appear challenging.
Of the 22 manufacturing companies in this year’s Top 200 list, eight revealed lower revenues: with Siemens NZ showing the largest revenue drop at 40 percent. Six of the 22 companies reported lower profits after tax.
Together, this year’s top five manufacturing companies shed $409 million from their combined turnovers but still managed to add another $100 million to their after-tax take.
The debate around New Zealand’s strength as manufacturing nation, and the specific areas in which we should focus, looks set to continue.

OIL, GAS, MINERALS, ELECTRICITY & WATER

With the recent grounding of the MV Rena on Astrolabe Reef off the Bay of Plenty coast, oil dominates the news for all the wrong reasons at the moment.
But, by and large, the 21 companies in the oil, gas, minerals and electricity sector provided bright spot among this year’s results. All but two of them – Genesis Power and Watercare Services – fronted up with profits after tax.
Unlike many other sectors, the top five companies in this one managed to lift both their combined revenue and their collective profits after tax this year.

PRIMARY PRODUCTION

The agricultural sector fuelled the New Zealand economy throughout 2011 with the meat, wool and dairy sectors all performing extremely well.
This time last year, when we reported on the top five companies in this group, they had lifted their collective revenue by $1 billion. Another 12 months on, the revenue hike comes in at stunning $2.5 billion. When it came to profits after tax, however, these companies collectively dropped $6.2 million from their books.
While industry giant, Fonterra, lifted its profit after tax, this was offset by lower returns from Silver Fern Farms and Zespri Group: both of which reported losses for their latest tax periods.
Clearly, strong commodity prices have provided an underlying boost to the agricultural sector’s results this year. But, as our judges commented during their sessions this year, smart management and strong governance are also increasingly playing their part.
This year’s figures will only add to much wider ongoing debate as to whether New Zealand should focus its energies in the primary production sector and its associated industries, as some would prefer, or look to carve out niche for itself in fast-growing non-associated technology areas, as others advocate.

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