August is traditionally the busiest period of the year for domestic fund managers, as many NZX and ASX-listed companies release their June 30 year-end results. This is when large corporates provide a detailed account – for better or worse – of their financial performance, outline their challenges and achievements and set earnings expectations for the year ahead.

This reporting season carried added significance. While the economy has been dragging itself along the bottom for what has felt like an age, recent data has offered tentative signs of improvement. Retail card spending, housing clearance rates, and inventory levels all moved in a positive direction, suggesting that the Reserve Bank’s 250 basis points of monetary easing may be starting to take effect. Importantly, the RBNZ’s August Monetary Policy Committee meeting indicated that further easing is likely. And while unemployment has risen to multi-year highs, it is typically the last indicator to weaken, and the boffins on the Terrace in Wellington suggest it’s near the peak.

The central questions, then, are what insights can be drawn from this reporting season? What are New Zealand corporates saying—and doing—in response to current conditions? How has the market interpreted these signals about the state of the economy and business confidence? And finally, who emerged as the clear winners and losers during this reporting period?

Caution: Green Shoots Ahead

The construction industry has been hammered (pun intended) by interest rate swings, falling consents, high material costs, migration shifts, and weak sentiment over the past two-to-three years. The industry’s largest listed player, Fletcher Building (FBU) has felt the wrath of disgruntled shareholders for several years and their well-flagged result ahead of time was as ugly as expected. But because expectations were already on the floor, investors weren’t shocked. The real focus was on whether Fletcher’s management could see a light at the end of the tunnel. Their answer: maybe. They warned volumes would stay soft through FY26 but better than compared with the end of FY25. 

Industry peers Vulcan Steel (VSL) and Steel & Tube (STU) struck a similar note. Both said volumes should improve modestly over the next 12 months. Hardly a boom, but after several years of relentless decline, “modest improvement” counts as some progress.

Another interesting signal came from Freightways (FRW), which acts as something of a bellwether for consumer and business activity. For the first time in years, same-customer parcel volumes ticked into positive territory. That’s small, but meaningful—it suggests consumers and businesses are shipping more goods, a basic sign of demand returning.

On the consumer side, Restaurant Brands (RBD) is looking forward to stronger sales, while Sky TV (SKT) is still bracing for tough conditions despite locking up New Zealand Rugby’s broadcasting rights. 

Air New Zealand (AIR) and SkyCity (SKC) weren’t giving anyone reason to get excited either. Air NZ continues to face demand challenges, while SkyCity’s heavily discounted rights issue to repair its balance sheet was slammed by investors. Both companies may be deliberately setting expectations low, leaving themselves room to surprise later.

My take: after this reporting season, I’m officially on the “green shoots” side. The evidence isn’t overwhelming, but it’s there.

Pulling the Cost Lever

If there’s a single theme running across most results, it’s cost-cutting. With revenue growth hard to come by, companies are turning inward—finding efficiencies, trimming fat, and doing more with less.

Spark (SPK) has become the poster child for this trend. The telco has always relied on strict cost control to drive earnings. After a string of downgrades, management realised they needed to do even more. Spark told the market it had already achieved $85 million in cost savings, with a goal of $110–140 million by 2027. Hitting that number is essential to support near term earnings growth.
The company faces plenty of headwinds—declining voice revenue, soft spending from government and enterprise clients, and fierce competition in broadband and mobile. But Spark has been proactive. It’s reset its dividend policy to a more sustainable level, aligning payouts with free cash flow. It also sold 75% of its data centre business, shoring up the balance sheet. These moves don’t make Spark a growth stock, but they do mean the worst might be behind it. Now it’s all about execution.

A Lesson in Expectations & Sentiment

Another lesson from reporting season is a reminder that expectations matter just as much as the numbers.

Take Ebos Group (EBO). For years, it’s been a safe, defensive choice—steady growth, international exposure, reliable management. Investors went into August confident. The company had tailwinds from higher Pharmaceutical Benefit Scheme spending in Australia, and speculation about ASX200 inclusion was bringing new investors onto the register. Arguably expectations were too high. When guidance suggested slower growth, investors – especially those new Australian investors who are more inclined to ‘shoot first, ask questions later’ – punished the stock. Shares dropped 8% in New Zealand trading, and nearly 15% once the Australian market opened. That’s a brutal reaction for what, on paper, was a reasonably solid result.

Now compare that with Heartland Bank (HGH). Earlier this year, HGH admitted to around $50 million in impairments and a nasty cost blowout. The stock tanked, falling to as low as $0.70. By the time reporting season rolled around, expectations were dirt low. The company delivered a soft result, but crucially it was in line with those beaten-down expectations. Guidance for FY26 was only a touch better than consensus, but that was enough. Investors pushed the stock up 10% in two days.

The lesson? Market sentiment and expectations drive share prices as much as actual earnings.

Pot of Liquid Gold

While construction, telcos, and banks have been wrestling with slow growth, agriculture continues to be New Zealand’s reliable engine. Dairy prices are strong, global demand is steady, and the sector remains a bright spot in an otherwise patchy economy.

The standout news was Fonterra’s decision to sell its consumer business to French giant Lactalis for $4.22 billion. The deal price was especially well received. Some people were disappointed not to see a massive domestic IPO or upset about iconic Kiwi brands ending up in foreign hands but from a shareholder perspective, the sale makes sense. The board’s job is to maximise value, and this deal delivers. Farmers are set to receive a $2 per share tax-free capital return once approvals are in place.

What Does it All Mean

This column is not and should not be considered investment advice, however, we do believe that after unpacking the results from a number of NZX50 companies there was a lot to like. Given stretched valuations in other markets and the various points in the cycle that global markets are, we believe the NZX offers attractive risk-adjusted returns potential. While sentiment across corporate New Zealand remains mixed, the green shoots are evident and the full extent of the RBNZ easing cycle is still working its way through the economy.

Markets are by their nature forward-looking and by the time commentary turns fully positive, and earnings with it, the metaphorical horse will already have bolted. This time, these green shoots feel real rather than yet more false hope. Let's hope we’re right.

Jonty Nattrass is an Equity Analyst at Octagon Asset Management.

Disclaimer: This article has been prepared in good faith based on information obtained from sources believed to be reliable and accurate. This article does not contain financial advice. Some of the Octagon portfolios own securities issued by companies mentioned in this article.

Octagon Asset Management is the investment manager for Octagon Investment Funds and the Summer KiwiSaver scheme.