Key facts
- Companies in Australia and New Zealand are experiencing financial strain due to the Middle East conflict.
- Higher fuel prices, inflation, and supply chain disruptions are impacting corporate earnings and confidence.
- Several firms, including Air New Zealand, a2 Milk, and Qantas, have cut profit forecasts or raised prices.
- Banks like National Australia Bank and Westpac are increasing credit provisions due to emerging profit pressures.
- Logistics and waste management companies are also reporting earnings impacts and cost increases.
Companies in Australia and New Zealand are beginning to report the financial consequences of the conflict in the Middle East, with rising fuel prices contributing to inflation, reduced business and consumer confidence, and pressure on corporate earnings. Several firms have issued profit warnings, adjusted forecasts, or altered operational strategies in response to the escalating costs and supply chain disruptions.
Air New Zealand has forecast its largest pre-tax loss in four years, citing increased jet fuel prices as a primary driver, while Auckland International Airport noted a significant drop in passenger numbers on its Middle Eastern routes. The a2 Milk company has cut its profit outlook due to higher freight costs, and Cleanaway Waste Management has slashed its earnings forecast. Cochlear, an Australian hearing implants maker, has trimmed its profit forecast and highlighted risks such as order cancellations and delivery delays stemming from the conflict.
Fletcher Building anticipates passing on increased costs to customers, with potential price hikes of up to 36% on plastics. Flight Centre Travel has revised its profit forecast downwards, attributing the change to a negative impact on international leisure travel from the Gulf conflict. Fonterra, the dairy producer, is experiencing supply chain disruptions that could increase inventory and costs. National Australia Bank expects a substantial increase in credit impairment charges and a reduction in its capital ratio, while Westpac has also raised credit provisions due to energy market shocks and interest-rate volatility.
Packaging company Orora has lowered its earnings forecast for its French unit and halted production at its UAE facility due to shipping route closures. Qantas Airways has increased its fuel cost outlook significantly and paused its share buyback program, opting to raise fares and shift flight capacity. Logistics firm Qube Holdings and airline Virgin Australia have also flagged earnings impacts and increased fuel costs, respectively. Grocer Woolworths warned of uncertainty for customers and suppliers and announced a price freeze on 300 household staples. Engineering firm Worley has nearly doubled its projected earnings hit from the conflict due to project delays.