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

 

Errors Found: Electricity Authority Dumps Transmission Pricing Modelling

The Electricity Authority is ditching the cost-benefit analysis at the heart of its controversial attempt to find a new way to divide up costs for the national grid after finding an expanding range of serious computational errors in the work by Australian consultancy Oakley Greenwood. More>>

ALSO:

New Record: Migrant Arrivals At 129,500 A Year

Annual net migration has been steadily increasing since 2012. "This was mainly due to the rising number of migrant arrivals to New Zealand," population statistics senior manager Peter Dolan said. "Fewer migrant departures also contributed to the increase in net migration." More>>

ALSO:

Launched: NASA's Super Pressure Balloon Takes Flight From NZ

NASA successfully launched its football-stadium-sized, heavy-lift super pressure balloon (SPB) from Wanaka, New Zealand, at10:50 a.m. Tuesday, April 25 (6:50 p.m. April 24 in U.S. Eastern Time), on a mission designed to run 100 or more days floating at 110,000 feet (33.5 km) about the globe in the southern hemisphere's mid-latitude band. More>>

ALSO:

Trade Agreements: TPP Minus US Starting To Gain Ground

The Japanese government is picking up the pace on reviving the Trans-Pacific Partnership trade and investment deal, with talks scheduled next month among the 11 countries left in the pact after the withdrawal by the US after the election of president Donald Trump. More>>

ALSO:

PACER:

Prices Up 2.2%: Annual Inflation Highest In Over Five Years

"Rising petrol prices along with the annual rise in cigarette and tobacco tax lifted inflation," prices senior manager Jason Attewell said. "Petrol prices in New Zealand are closely linked to global oil prices, and cigarettes and tobacco taxes rise in the March quarter each year". More>>

ALSO:

Undertaxed? NZ Income Tax Rate Second Lowest Among Developed Nations

New Zealand workers pay the second smallest portion of their income to the government among developed nations and less than half the average ratio of their Organisation for Economic Cooperation and Development peers. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news