Businesses seem gloomy but health-sector companies are in good heart

The PM, Jacinda Ardern, received what her handlers would have perceived  as  unexpected  criticism  from the  media   after   she gave  a pre-budget speech to an Auckland business  audience.  One of those  in the  audience  was   said to  have   described   it  as  an   “ideological fairytale”;  others   apparently  were  disappointed   it had  “nothing for business”.   

Given   she  did list  as   two of the five priorities  in the budget as   being “creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy; and supporting a thriving nation in the digital age through innovation, social and economic opportunities”,  the criticism itself  could be  regarded as  a    bit  “ideological”.

Surely   business  doesn’t  expect   government hand-outs,  even if  it  is labeled  a  “well-being”  budget?

But  there   seems  little   doubt    that   the   mood of  business  is downhearted   these  days.

Or is it  really? 

A  report this  week  says:

Negative opinions about the state of NZ’s economic wellbeing have become further entrenched.   In 2018, 48% of business leaders thought the government was performing poorly at managing the economy. This has risen to 63% in the current survey. Only 13%  of business leaders believe the economy will grow at the same rate as in the previous year, down from 18% in 2018”.

The  accounting and business advisory firm Baker Tilly Staples Rodway’s survey of more than 500 business leaders asked participants to rate how well the government is managing the economy and predict the performance of a range of economic factors.

Asked whether respondents’ own businesses performed better in the last year, most said they had either stayed the same (43%) or improved (27%).  However, more than half the respondents (51%) believe the Budget will negatively impact their businesses.

Job security is also expected to worsen by more than half (51%) of respondents.

Business representatives were asked whether they believed national wellbeing would improve as a result of the Budget. Expectations are low.

The majority  is  sceptical there will be any improvement. Only slightly more than a quarter is forecasting any positive results, with more than a third of respondents believing things will stay the same. Another third think wellbeing will actually decline.

After all  that negativity, Point of  Order   found some  relief   in the  results of  two of  the  leading  listed   companies    on the  NZX.

Fisher & Paykel Healthcare reported a record full-year net profit  up 10% to  $209 million  from  revenue  which surpassed  the  $1bn mark for the  first time,  and projects   profit   to   rise even faster   in the current  year to the range of $240m-$250m.  Recent changes around research and development tax credits and a significant reduction in patent litigation costs and forecast currency benefits have been factored into the earnings guidance for 2020.

CEO   Lewis  Gradon  said  the record results were driven by  innovative products, the dedication of  teams around the world, a culture of continuous improvement and the value offered for clinicians and patients.

Last  week retirement  village operator Ryman Healthcare reported its full-year  underlying  profit rose  11.5%   to a   record  $227m. Ryman invested $552m in new and existing villages during the year, up from $478m last year. Net assets are now at $2.2bn, up from $1.9bn a year ago.

The growth in underlying profit was driven by strong development margins, particularly from Ryman’s second village in Melbourne.

Chairman Dr David Kerr said demand for Ryman’s unique villages and high-quality care remained strong.

Ryman’s NZ village teams achieved the best clinical audit results in the company’s history, with 81% of care centres achieving ‘gold standard’ four-year Ministry of Health certification.

Ryman was named the Most Trusted Brand in the aged care and retirement village sector in NZ for the fifth time,

“We are pleased to report it has been a solid year given the current trading environment which has included challenging market conditions.These have not put a dent in our plans to invest for the long term in our villages and in improving life for residents and staff,’’ Dr Kerr said.

So, as  Point of Order sees things, it’s  not  all gloom in the business sector.


2 thoughts on “Businesses seem gloomy but health-sector companies are in good heart

  1. “…creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy; and supporting a thriving nation in the digital age through innovation, social and economic opportunities….”, Really? It is statements like that that support businesses’ lack of empathy for the PM’s brand of fairy dust. That sentence is a litany of paradoxes dressed up as feel good phrases with little hope of being severally delivered. A sustainable, low emissions economy will not be “productive” in the way she said it if the measure is compared to today’s total productivity. The government’s own reports reveal billion dollar reductions in net economic output over the period 2020 – 2050 of between $5 and $12 Billion per year! That is not an improvement in productivity; right off the bat. I don’t think businesses were looking for handouts – rather; Government get the hell out of the way. So, yes there was little for business to cheer about.

    Liked by 2 people

  2. This government has made some disastrous and counterproductive decisions on the economy, such as the oil and gas exploration ban. The “well-being budget” will be all about buying the votes of beneficiaries and the waged poor. New Zealand is heading for a recession which will be greatly compounded by the coming global downturn. The abandonment of fiscal discipline through raising the debt ceiling is half-assed recognition of the impending crisis, as is the Reserve Bank’s cutting of interest rates.

    Liked by 2 people

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