“These issues are expected to resolve by financial year 2027, so we view the downgrade as largely one-off,” the broker said.
“While this may have a short-term impact on new customer recruitment, current demand across its products remains strong,” it added.
The weaker earnings outlook reflected two shocks to a2 Milk’s supply chain that have extended its time to market and limited its ability to rebuild in-market inventory: (1) constrained freight capacity and higher freight costs, and (2) more stringent testing requirements (following competitor recalls in early 2026).
The broker said a2 Milk had de-rated to 29 times its 12-month forward price earnings ratio, slightly above its long-run average.
“A return to its recent elevated multiple is only likely once a2 Milk demonstrates these impacts are transitory,” it said.
Volatile interest rates
Across the Tasman, Westpac said that with the supply shock from the energy market disruption likely to lead to higher inflation and higher interest rates, an expected slowing in economic growth would create a challenging environment for some customers.
Commenting on its first-half result, due out on May 5, Westpac said its balance-sheet momentum was solid and its net interest margin was stable.
But geopolitical uncertainty and the associated increase in market volatility had created interest rate volatility.
The weaker Kiwi dollar would also be a factor as it brings back earnings from its New Zealand branch.
The foreign currency translation from the 6% depreciation in the New Zealand dollar average exchange rate impacted both revenue and costs in the half, it said.
In full flight
In a note titled “Airfare inflation in full flight”, Forsyth Barr said Air New Zealand’s response to the fuel price crisis had been to moderately reduce capacity – predominantly on domestic and short-haul international routes – and to lift prices.
“Our proprietary time series airfare data shows that quoted prices have increased materially in recent weeks, which will help soften the bottom-line impact from higher fuel costs, though will also dampen demand given elasticities,” Forsyth Barr said.
“The net impact will be deeper losses than those incurred in the first half, adding pressure to Air NZ’s balance sheet.”
Air NZ’s Australian competition – Qantas – said it would temporarily reduce domestic capacity by 5 percentage points in its fourth quarter.
Since the announcement of its first-half result in late February, Qantas said jet fuel prices had more than doubled and had remained highly volatile.
The group had hedged about 90% of its second-half exposure in crude oil but was largely exposed to movements in jet refining margins, which had increased from US$20 a barrel in February to a peak of US$120/barrel. As a result, the estimated fuel cost for the second half was now A$3.1-A$3.3 billion.
Village fallout?
The impact of the Iran conflict may play out in some seemingly unlikely sectors.
Retirement village company giant Ryman said the war and its associated economic effects have not had an impact on settled sales or on its broader business to date.
However, the company said it was closely monitoring potential flow-on impacts to cost inflation, interest rates and residential real estate markets.
Meanwhile, Ryman’s smaller competitor, Promisia, said it remained comfortable with its upgraded 2026 earnings guidance and underlying earnings before interest, tax, depreciation, amortisation and financial instruments (ebitdaf) for 2026 will be in the range of $6.4 million to $6.8m.
“Promisia also notes the recent disruption in global fuel markets, but direct exposure across the group is limited and no material operational disruption or impact on overall profitability is presently expected.”
Fletcher impact
Fletcher Building said the overall impact of the Middle East crisis on the group’s financial performance could not be ascertained at this time.
“It will be potentially impacted by a range of factors, including the duration of the crisis, changes to global supply chains, fuel and commodity availability and price volatility, recoveries of fuel-linked surcharges, emerging counter-party credit risk and changes in market volumes and customer behaviour and plans,” the company said.
Meanwhile, the US sharemarket continues to be unbowed by the war, with the S&P500 and the Nasdaq hitting new highs this week.
The technology-heavy Nasdaq has risen by more than 15% since late March, surpassing its previous record high, set in October.
New NZX futures contract
NZX said BNP Paribas has been accredited as a designated market-maker on the NZX Derivatives Market, before the S&P/NZX 20 Index Futures launch on April 28.
The contract would provide investors with a low-cost hedging tool to manage risk or gain exposure to New Zealand’s equity markets.
Index futures are exchange-traded contracts that lock in a price for exposure to the S&P/NZX 20 Index, with settlement on a set date in the future.
On expiry, the contract is cash-settled, based on the index level, so gains or losses reflect how the index has moved over the contract term.
This will allow investors, including KiwiSaver funds, to adjust their New Zealand equity exposure as markets change, while helping support trading activity and liquidity in NZX listed companies, the exchange said.
New Zealand has been an outlier among first-world economies in not having liquid index futures markets, especially when compared with other similar developed economies such as Poland, Portugal and Sweden.
NZX general manager cash and derivatives markets Nick Morris said the contract would provide investors with an efficient tool to manage risk or gain exposure to New Zealand equities.
The exchange plans to grow participation across the wider market ecosystem, with retail access expected to develop as brokers and trading platforms connect to the market.
The contract size has been set at $1 per index point to support retail participation.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.