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South Island firms achieving meteoric growth

Deloitte South Island Index sets another all-time high posting largest quarterly growth percentage since its inception

South Island listed companies have posted a meteoric 22.7% growth in the latest quarter according to the Deloitte South Island Index released today.  This is the largest quarterly growth percentage since the inception of the Index.

The 23rd edition of the Deloitte South Island Index, for the quarter to 30 September 2013, saw the index rocket upwards by $1.6 billion (22.7%) in market capitalisation, continuing the trend of the previous four quarters. The latest quarter’s results see the Index up $3.02 billion (53.6%) during the year to 30 September 2013 with total market capitalisation now standing at $8.66 billion, yet another new high since its inception in 2007.

The South Island Index’ 22.7% growth led the way against benchmark indices during the September quarter. Over the same period, the ASX All Ords achieved respectable growth of 9.3% while the NZX 50 Index and Dow Jones achieved more modest to low growth of 6.7% and 1.5% respectively. 

Paul Munro, a corporate finance partner in Deloitte’s Christchurch office, says the performance of the Index over the last quarter has been nothing less than remarkable.

“In particular, the significant growth from EBOS Group after their strategic Australian acquisition clearly demonstrates that South Island companies can successfully expand into overseas markets and compete in the current global economic environment,” says Mr Munro.

“The quarter also saw the re-emergence of the Primary sector back into positive territory, a pleasing result given the importance of this sector to the South Island economy. The principal architects of this revival were the dairy duo of Synlait Farms and Synlait Milk, as investors scrambled to grab a share in the New Zealand dairy industry, with a helping hand from PGG Wrightson’s recovery, seemly unfazed by the recent adverse weather conditions and Fonterra’s botulism scare.”

The Index’s top performer for the quarter was EBOS Group, gaining a phenomenal $854.5 million in market capitalisation or 135.8%.  This follows the issuance of just over 81 million shares after finalising the acquisition of the Symbion Group in July.  On the day of the share issue, the market capitalisation of EBOS Group grew by $770.9 million – more than doubling its size. This dramatic move by EBOS Group cements its position in second place on the Deloitte South Island Index.  EBOS Group’s share price also contributed to its growth over the quarter to 30 September 2013, increasing by $0.52 (5.4%) per share.  

Ryman Healthcare’s share price continued its climb, increasing another $0.58 (9.1%) during the quarter, growing its market capitalisation by $290 million in the quarter to 30 September 2013.  Kathmandu Holdings and newcomer to the Index Synlait Milk both had strong quarters, gaining $154.2 million (30.4%) and $146.3 million (45.4%) in market capitalisation respectively.  

The biggest decline in the quarter came from Lyttelton Port, which lost $35.7 million in market capitalisation, a decline of 12.3%, after having a stellar second quarter of the year.  During the quarter the company announced its annual results which noted the continual challenges that it faces regarding its earthquake insurance claims, now three years old.  Pacific Edge and Moa Group also lost ground shrinking by $15.9 million (9.7%) and $10.2 million (29.7%) respectively in the quarter to 30 September 2013.

Six of the eight industry sectors posted positive movements in the quarter to 30 September 2013, led by the Manufacturing & Distribution and Primary sectors which gained $912.5 million (92.1%) and $235 million (31.8%) respectively.  Manufacturing & Distribution sector growth was primarily on the back of EBOS Group’s more than doubling in size, although Skellerup Holdings also had a positive result in the quarter to 30 September 2013, gaining $61.7 million (24.2%) in market capitalisation.

The two sectors undergoing declines during the quarter were the Port and Biotechnology sectors, decreasing 7.1% and 8.0% respectively.

To see the full Deloitte South Island Index quarterly report, go to www.deloitte.com/nz/southislandindex.

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