A favourable New Zealand dollar has seen revenues hold up for the SME export sector, but operators are sounding a note of caution for the year ahead, according to the latest nationwide MYOB Business Monitor survey of business owners and operators from around the country.
Thirty-one per cent of exporters have seen their revenue improve over the 12 months to August – on par with the SME average – while 28 per cent are reporting declining revenues.
However, exporters are forecasting that their performance will be more finely balanced in the year ahead, with thirty per cent expecting their revenue to fall, well over the 21 per cent SME average.
The performance expectations in the sector are flowing through to exporter’s assessment of the wider economy, with 60 per cent expecting financial conditions to decline over the next year, while just 21 per cent think they will improve.
MYOB New Zealand General Manager, James Scollay says the export sector is right to be cautious about conditions over the next 12 months.
“Although, after a long period of an extremely high dollar, the exchange rate is currently more favourable, conditions in our key markets, most notably Australia and China, have softened,” says James Scollay.
“That being said, our export sector has proved itself to be incredibly resilient over the last decade, and SMEs selling goods and services overseas have shown themselves to be particularly adept at shifting focus and innovating to deal with international fluctuations.”
Despite being more conservative about revenue forecasts for the coming year, local exporters are looking at expansion. Nearly double the number of businesses intend to take on more full time employees (17 per cent) than the SME average (9 per cent). A further 14 per cent will increase the number of part time staff they employ and 26 per cent plan to increase wages and salaries (20 per cent SME average).
Although the NZ dollar is a long way off recent highs, exporters are keeping a weather eye on currency shifts, with 41 per cent citing the exchange rate as their key pressure in the year ahead, compared to just 15 per cent of all SMEs. Cashflow (30 per cent) and attracting new customers (25 per cent) are also key concerns for the sector.
“In order to offset the factors they are unable to influence, such as the exchange rate, the slowdown in key trading partners and international instability, local SME exporters can be taking a number of steps now to ensure they are prepared for any change in conditions,” says James Scollay.
“In particular, they should be focusing on the fundamentals, like good systems, terms of trade and levels of debt and credit. There’s also a great deal of expert help to be had, both from agencies like ExportNZ and their own financial advisors.”
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About the MYOB Business Monitor
The MYOB Business Monitor is a national survey of 1,000+ New Zealand small and medium business owners and managers, from sole traders to mid-sized companies, representing the major industry sectors. It has run since 2009, commissioned to independent market research firm Colmar Brunton. This most recent survey ran in July/August 2015. The Monitor researches business performance and attitudes in areas such as profitability, cash flow, pipeline, technology usage and the government. The weighting of respondents by both geographical location and sector is based on overall market proportions as established by Statistics New Zealand and is drawn from an independent survey group, which includes both MYOB clients and non-clients.