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Performance down but feeling slightly better!

25 July 2005
IMMEDIATE RELEASE

Performance down but feeling slightly better!

The latest Canterbury Manufacturers’ Association Survey of Manufacturers completed during July 2005, shows total sales in June 2005 were down 11%, with export sales down by over 19% on June 2004 and domestic sales down about 3.6%.

The Canterbury Manufacturers’ Association survey sample this month reported around NZ$590m in annualised sales, with an export content of 43%.

“Sales are well down year on year, profitability continues to bounce along the bottom, however respondents are feeling a bit better than they were last month” said John Walley, Chief Executive of the Canterbury Manufacturers’ Association. “The NZ dollar loosing ground gives some exporters cause for a little optimism.”

“Confidence improved, returning to the level we saw in February this year, but still well down on this time last year.”

“Staff numbers continue to increase and some companies continue to report strong sales”.

“Some sectors, for example furniture, are finding the world a real struggle as the playing field tips against them.”

“There are indications that only a few export companies are profitable right now. Those that have the money are investing in equipment to lower costs – a sort of defensive investment with little optimism behind it. Will those that can’t survive? Time will tell.”

The current performance index (a combination of profitability and cash flow) stands at 97 up from 95 last month, the change index (capacity utilisation, staff levels, orders, and inventories) sits at 99 down from 100 last month, the forecast index (investment, sales, profitability and staff) is at 100 up from 99 last month.

“The politically determined ‘must do’ approach to trade agreements with low cost countries continues to worry manufacturers. Tariff matching, the absence of standards or enforcement of standards (should they exist) and anti-dumping rules; coupled with accessible and effective dispute resolution processes sit at the centre of those worries.”

“Hopefully the negotiators are getting the message that manufacturing matters to the economic health of New Zealand and is worth some robust negotiating effort.”

Constraints focused on staff 18% and markets 76% and capacity 6%. Staff numbers reported an increase in the month of just under 7%.
Net sentiment reported in this survey stood at –13, better than -33 last month. The year on year change stood close to a record at -63.

ENDS

CANTERBURY MANUFACTURERS' ASSOCIATION
Survey of Business Conditions – June 2004 compared with June 2005

SAMPLE SIZE: The Survey respondents represent elaborate transformed manufacturers with annual sales of approximately $589 million.

CHANGE OVER 12 MONTH PERIOD
(The table below represents the above returns expressed as percentages)
June May
TOTAL TURNOVER: Export /Domestic ratio 43/57 43/57
% Change in Total Turnover DECREASED -11 -1.7

DOMESTIC TURNOVER: % of respondents reporting a rise 44 61
% of respondents reporting a fall 37 31
% of respondents reporting no change 19 8
% Change in Ave Domestic Turnover DECREASED -3.57 -1.07

EXPORT TURNOVER: % of exporters reporting a rise 40 25
% of exporters reporting a fall 60 62
% of exporters reporting no change 0 12
% Change in Average Export Turnover DECREASED -19.42 -2.51

STAFF NUMBERS: % of respondents reporting a rise 69 64
% of respondents reporting a fall 19 21
% of respondents reporting no change 12.5 14
% Change in Average Staff Numbers INCREASED 6.78 4.39

CHANGE OVER 12 MONTH PERIOD
(The table below represents the above returns expressed as percentages. Last month in brackets.)

Large Fall
(Over 15%) Modest Fall
(2.5%-15%) No Change
(Within 2.5%) Modest Rise
(2.5%-15%) Large Rise
(Over 15%)
June May June May June May June May June May
Profitability (YoY) 24 25 6 19 41 25 24 31 6 0
Cashflow (YoY) 12 13 12 13 65 56 6 19 6 0
Exchange Rate (YoY) 12 13 24 19 47 38 12 31 6 0
Investment Forecast 12 19 0 19 47 38 24 25 18 0
Sales Forecast 12 6 29 31 18 19 41 44 0 0
Profit Forecast 12 13 29 19 12 19 41 50 6 0
Staffing Forecast 6 6 29 19 35 38 29 38 0 0
Confidence Very Negative Negative Neutral Positive Very Positive
6 7 38 40 25 40 31 13 0 0
Constraint Production Skilled Staff Capital Market
6 0 18 25 0 0 76 75

Net Confidence Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
2003 +21 -6 +12 -11 -5 +12 -6 0 +11 +40 +29 +33
2004 +5 +19 +41 +41 +36 +50 +12 +20 +7 0 -7 +5
2005 +13 -13 -6 -25 -33 -13

Index (base =100) Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Performance 105 100 99 95 95 97
Forecast 103 98 104 102 99 100
Change 104 99 101 103 100 99

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