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Exporters predict upturn

New Zealand Exporters Optimistic Despite Tough Times

Exporters predict upturn and remain committed to exporting, despite challenging external environment

Auckland, 20 May 2004

DHL, the world’s leading express and logistics company, today released the results of the inaugural DHL Export Barometer, revealing New Zealand exporters are showing resilience in the face of a challenging external environment and are confident about their prospects for the year ahead. “Despite the impact of the conflict in Iraq, a sluggish world economy and the fluctuating dollar, New Zealand exporters are gaining confidence, with the majority expecting that they will be better off in 12 months time,” said Phil Rountree, General Manager, DHL Express New Zealand.

Developed in consultation with New Zealand Trade and Enterprise (NZTE), the DHL Export Barometer is aimed at analysing export confidence in New Zealand and identifying export trends. The results are as follows:

The 12-month forecast is also strong, with 96 per cent of exporters nationally believing they will consolidate or better their position over the next 12 months – 63 per cent predicting an increase in orders and 33 per cent anticipating their sales orders will remain constant. This is compared to 83 per cent of exporters who reported they either consolidated or improved their position over the last 12 months.

Exchange Rate Impact The confidence of New Zealand exporters is also highlighted by feedback on the recent appreciation of the New Zealand dollar. While the exchange rate was nominated as the factor with the most potential to negatively impact sales performance, only 27 per cent of exporters thought the exchange rate would affect their output and only 28 per cent of exporters thought their future investment and business plans would be adversely affected.

Export Markets Australia remains the most important market for New Zealand exporters, with 75 per cent regularly exporting there. This is followed by North America (47 per cent) and the UK (42 per cent). Results also reveal 50 per cent of exporters deal in three or more regions.

Encouragingly, New Zealand exporters are reasonably optimistic about future growth across a range of international markets. Some 69 per cent anticipate export growth in Western Europe, closely followed by North America and the United Kingdom at 66 and 65 per cent respectively, with 61 per cent of those surveyed expecting export growth in Australia.

New Zealand exporters are slightly less optimistic about export prospects to some Asian markets. Despite this, increased orders are still anticipated over the next 12 months, with 45 per cent of exporters expecting increased growth in South East Asia, 47 per cent in Hong Kong and Taiwan respectively, 54 per cent in Japan and 43 per cent in South Asia.

Profitability Expectations Some 83 per cent of exporters revealed their decision to export has helped their profitability and there was also strong agreement that exporting has helped their sales, growth, competitiveness and ability to innovate and build brands.

Furthermore, New Zealand exporters are bullish about profits, with more than two-thirds (68 per cent) expecting an increase in profitability over the next 12 months. In addition, 39 per cent expect to increase the number of employees within their business and 79 per cent indicate wages will increase over the next year.

New Exporters The research shows New Zealand businesses begin exporting for one of three main reasons: for better growth/profit prospects (33 per cent), as a response to demand from overseas customers (27 per cent), and due to slow growth in the domestic market (25 per cent). This indicates that while only a third of New Zealand companies actively seek new opportunities in international markets, a high proportion either passively or reactively begin exporting.

Export Commitment The DHL Export Barometer reveals New Zealand businesses are experienced and firmly committed to international trade. Of those surveyed, 65 per cent were long-term exporters, having traded internationally for more than 10 years – and of those the highest proportion were from the South Island. Of the remaining one third, 17 per cent began exporting during the last five years and 6 per cent have two years or less exporting experience. Furthermore, New Zealand exporters are regular exporters, with 96 per cent exporting at least once each year.

Currency Attitudes & Hedging The US dollar is the most significant currency to New Zealand exporters (excluding the New Zealand dollar), with 56 per cent indicating it is the most important currency for their business. The Australian dollar was rated the most significant currency by 21 per cent of exporters.

The results also revealed that almost 30 per cent of New Zealand exporters currently engage in some kind of hedging activity to mitigate against fluctuations in exchange rates. Hedging amongst New Zealand exporters is most prevalent in larger companies, established exporters and industries with less flexible margins, such as manufacturing and agriculture. The degree of revenue gained from exporting activities also propels exporters to engage in hedging activities, with 36 per cent of exporters who earn more than 50 per cent of their revenue from exporting undertaking hedging.

ENDS

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