Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Retail and services sectors lead return on capital

24 June 2014

MEDIA RELEASE

Retail and services sectors lead return on capital of New Zealand companies

Investment Bank and Asset Manager, Armillary Private Capital, has released its annual 2013 New Zealand Return on Capital Employed (ROCE) Report.

The review examined 2013 financial year statements from 200 organisations including: crown entities, those listed on NZX and NZAX, Unlisted issuers, and a sample of privately owned companies. Each organisation’s ROCE is a function of its profitability and how efficiently it utilises its asset bases by comparing earnings before interest and tax (EBIT) to capital employed.

Key points from the 2013 review are:

• Median performance of all companies has continued to fall since 2011 with median ROCE at 5% for 2013. This is less than standard estimates of the market weighted average cost of capital for NZX listed companies of between 8-9%.

• The top performers for 2013 were again dominated by retailers, technology and service companies, all of which have high levels of asset activity. For the past three years, the services sector recorded the best median ROCE at 9.1%, while the manufacturing sector is the worst performing sector at 2.0%.

• Companies listed on the NZX recorded a median ROCE of 6.3% while privately held companies achieved 10.3%. Companies listed on the NZAX were the worst performers with a median ROCE of -10.2%, while for Unlisted issuers median ROCE was 4.4%.

• Crown entities recorded a small decrease in median ROCE from 2.5% to 2.3%. This is despite seven of the nine crown entities improving their ROCE in 2013.

• NZX50 listed companies recorded a median ROCE of 7.7% for 2013. In international markets, companies listed in the Australian ASX 200 recorded median ROCE of 8.5% while those in the US S&P 500 achieved a median ROCE of 14.3%.

Commentary

While Fronde Systems Group and Diligent Board Member Services were again the best performing companies, New Zealand’s retail and service sectors continued to outperform other sectors in the economy overall as they have the previous three years.

In particular, the more established retail and service companies like Briscoes Group, Restaurant Brands, and Hallenstein Glasson Holdings all recorded strong ROCE performances for 2013 as they have in previous years. With low levels of investment in capital plant and equipment, these large Fast Moving Consumer Goods companies turn over the equivalent value of their asset base numerous times per year through price discounting and are able to leverage their scale to do so.

Crown entities ROCE performance remained below those of publicly listed companies. Most showed improvement reflecting improving EBIT margins, however have shown little growth activity. Airways Corporation was the standout crown entity for 2013 with ROCE of 32.7%, more than double that for 2012 and ranked 7th in the top 10 performers overall.

Overall however, the performance of New Zealand companies slipped back again from 2012. This appears to reflect no growth in activity, thereby continuing the lock up of capital on balance sheets in general with little margin expansion across the board.

The full report, including detailed results for all 200 companies, can be found at http://www.armillary.co.nz/news-publications/

Ends


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news