New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Thematic (Sector/Industry)

<ul><li>The backdrop for the sector conference, Downstream 2025, was the ongoing political and regulatory fallout from record-high winter 2024 prices and current worryingly low hydro lake levels.</li><li>The general conference consensus was that limited gas supply—which has not yet been fully replaced by new generation—is the main cause of the current challenges.</li><li>Nevertheless, political and regulatory risk is currently heightened, and the conference underlined that there will be changes to the market coming. </li></ul>

The backdrop for the sector conference, Downstream 2025, was the ongoing political and regulatory fallout from record-high winter 2024 prices and current worryingly low hydro lake levels.The general conference consensus was that limited gas supply—which has not yet been fully replaced by new generation—is the main cause of the current challenges.Nevertheless, political and regulatory risk is currently heightened, and the conference underlined that there will be changes to the market coming. 

Electricity Sector - Upstream Problematic Downstream

Equity Bottom-Up

Warehouse Group Limited / Equity Bottom-Up

The Warehouse Group Limited operates general merchandise and stationery supply retail stores throughout New Zealand.

<ul><li>The Warehouse Group (WHS) reported a less-worse-than-expected 1H25 result.</li><li>While sales declines moderated in 2Q25, heightened promotional activity and aged inventory resulted in c.-170 bps of group gross margin contraction and a -7% decline in gross profit versus 1H24.</li><li>WHS guided to a 2H25 pre-IFRS 16 EBIT (‘Operating Profit’) loss of -NZ$14m, in line with 2H24. We think there is downside to 2H25 guidance, given: (1) heightened promotional pressure and gross margin exit run-rates in 2Q25; and (2) our expectation that domestic consumer spending remains subdued over the next six months. </li></ul>

The Warehouse Group (WHS) reported a less-worse-than-expected 1H25 result.While sales declines moderated in 2Q25, heightened promotional activity and aged inventory resulted in c.-170 bps of group gross margin contraction and a -7% decline in gross profit versus 1H24.WHS guided to a 2H25 pre-IFRS 16 EBIT (‘Operating Profit’) loss of -NZ$14m, in line with 2H24. We think there is downside to 2H25 guidance, given: (1) heightened promotional pressure and gross margin exit run-rates in 2Q25; and (2) our expectation that domestic consumer spending remains subdued over the next six months. 

The Warehouse Group - 1H25 Result—Tough Going

Fonterra Shareholders Fund / Equity Bottom-Up

Fonterra Cooperative Group Ltd is a New Zealand multinational dairy co-operative and its farmer shareholders are the suppliers of milk to Fonterra in New Zealand. The Company operates Fonterra Shareholders' Fund, which provides additional financial flexibility for farmer shareholders who would have the opportunity to sell economic rights of shares to the fund.

<ul><li>Fonterra's 1H25 result was strong with normalised earnings ahead of the robust prior comparable period. </li><li>Key highlights include (1) Ingredients with stronger margins despite narrower price relativities versus the prior period (stream returns contributed ~NZ4cps of its total ~NZ44cps EPS), and (2) resilient Consumer margins despite elevated milk prices. </li><li>Reflecting confidence in the outlook and its balance sheet strength, Fonterra declared an interim dividend of NZ22cps (fully imputed) — a record high for an interim period. </li></ul>

Fonterra's 1H25 result was strong with normalised earnings ahead of the robust prior comparable period. Key highlights include (1) Ingredients with stronger margins despite narrower price relativities versus the prior period (stream returns contributed ~NZ4cps of its total ~NZ44cps EPS), and (2) resilient Consumer margins despite elevated milk prices. Reflecting confidence in the outlook and its balance sheet strength, Fonterra declared an interim dividend of NZ22cps (fully imputed) — a record high for an interim period. 

Fonterra - 1H25 Result — More of the Same

Ryman Healthcare Limited provides private health care services through its development, management and operation of retirement villages, nursing homes and geriatric hospitals.  The Company's facilities are located in Christchurch, Dunedin, Invercargill and Wellington.

<ul><li>Ryman Healthcare (RYM), under new management, has stuck to its three main focuses: (1) to deliver IFRS profits before tax and fair value (FV) movements, (2) cash flow from existing operations, and (3) cash flow from development.</li><li>One of the key reasons given for the capital raise was to give RYM room to focus on maximising its cash generation.</li><li>This focus is understandable given RYM's recent history of poor cash generation. It reduces the risks in RYM but also limits the upside. </li></ul>

Ryman Healthcare (RYM), under new management, has stuck to its three main focuses: (1) to deliver IFRS profits before tax and fair value (FV) movements, (2) cash flow from existing operations, and (3) cash flow from development.One of the key reasons given for the capital raise was to give RYM room to focus on maximising its cash generation.This focus is understandable given RYM's recent history of poor cash generation. It reduces the risks in RYM but also limits the upside. 

Ryman Healthcare - Running Ryman for Cash

<ul><li>Transport, like many sectors, is currently in a state of flux.</li><li>The anticipated cyclical recovery in demand from declining interest rates is being tested by President Trump led tariffs and unfolding trade wars.</li><li>Freight transport is inevitably getting caught up in the crossfire, while passenger transport, particularly air, could be harmed by falling consumer sentiment, especially in North America. </li></ul>

Transport, like many sectors, is currently in a state of flux.The anticipated cyclical recovery in demand from declining interest rates is being tested by President Trump led tariffs and unfolding trade wars.Freight transport is inevitably getting caught up in the crossfire, while passenger transport, particularly air, could be harmed by falling consumer sentiment, especially in North America. 

Transport Trends - Transport to Be Trumped by Tariffs?

Forsyth Barr
New Zealand Professional Investment Services Firm

Electricity Sector - Upstream Problematic Downstream

The backdrop for the sector conference, Downstream 2025, was the ongoing political and regulatory fallout from record-high winter 2024 prices and...

Forsyth Barr

The Warehouse Group - 1H25 Result—Tough Going

While sales declines moderated in 2Q25, heightened promotional activity and aged inventory resulted in c.-170 bps of group gross margin contraction...

Forsyth Barr

Fonterra - 1H25 Result — More of the Same

Key highlights include (1) Ingredients with stronger margins despite narrower price relativities versus the prior period (stream returns...

Forsyth Barr

Ryman Healthcare - Running Ryman for Cash

We value RYM using our annuity earnings including resale gains and a dividend discount model (DDM). We reinstate our rating at NEUTRAL.

Forsyth Barr

Transport Trends - Transport to Be Trumped by Tariffs?

The anticipated cyclical recovery in demand from declining interest rates is being tested by President Trump led tariffs and unfolding trade wars.

Forsyth Barr