ANALYSTS expect lacklustre numbers from companies this reporting season, with many tipping that the slowing economy will have an impact on bottom lines.
Profit increases could be less common than a year ago, and what rises there are will be muted at best, according to forecasts.
Sias Research chief executive Roger Tan told The Straits Times: 'We expect fourth- quarter earnings to be unexciting, with a subdued growth rate, probably with a growth of around 5 per cent year-on-year.
'Economic conditions became more challenging in the second half of last year. I believe companies became more cautious in their expenditure after observing negative developments in Europe and weak growth in the United States.'
Some companies, including several real estate investment trusts, have reported their earnings, with mixed results in terms of meeting expectations. Investors will get more clarity on the situation when other companies unveil their scorecards in the weeks to come. 'This quarter will be a gauge of how corporations perform during uncertain times and how vulnerable they are to market volatility,' he said.
Banks will be in the spotlight, with OCBC Investment Research analyst Carey Wong noting that they are the leading indicators for economic trends. Mr Tan expects flat growth for banks owing to slack loan growth rates and declining non-interest income.
Analysts are mixed on the banks. Consensus estimates compiled by Bloomberg say OCBC Bank could exceed fourth-quarter earnings from a year ago, while profits are expected to be flat at DBS Group Holdings and to slide at United Overseas Bank.
According to announcements made to the Singapore Exchange, DBS will report on Feb 10 and OCBC on Feb 20. UOB's website said it will announce its results on Feb 24, though it added the date is indicative and may be changed.
Property counters could be hit by government measures to cool the sector, including one round introduced last month.
Mr Wong said the impact of the latest measure may not show up a lot in results for the fourth quarter as they took effect only in the last month of the quarter. 'People will be looking more at their outlook,' he added.
Keppel Land has already released its results, and for the quarter profits rose 47 per cent after it sold its interest in Ocean Financial Centre to K-Reit Asia and also saw a fair value gain on investment properties.
Electronics and technology stocks could turn in muted results.
Kim Eng Research said the tech industry faced extremely challenging times last year given global economic uncertainties.
'The situation was also made worse with the sector suffering two major disruptions to its supply chain - first, by the Japan earthquake in March, and then by Thailand's flood in October,' it noted.
'The lacklustre performances of several Singapore Exchange-listed tech companies have largely reflected the gloomy outlook with low expectations for the upcoming fourth quarter results.'
Forex volatility and rising cost pressures such as wages and raw materials have also caused pain by squeezing margins, added Kim Eng. Rigbuilders are expected to report lower profits for the quarter, but analysts tip them to be supported by the strong price of oil and bulging order books.
A Bloomberg poll of six analysts forecasts a fourth-quarter net profit of $196 million for Sembcorp Marine, short of the $239.4 million made a year earlier.
DNB Markets expects a quarterly profit of $175 million at Sembcorp Marine, adding that this is below consensus estimates as it is forecasting lower margins than other analysts. But it said that earnings should be supported by Sembcorp Marine's $5.8 billion order book.
Bloomberg's poll of eight analysts shows they expect rigbuilder Keppel Corp to make a $354.4 million profit in the fourth quarter. That will be down from the $403 million it made in the same period in 2010, the highest quarterly profit in the company's history.
Sembcorp Marine's results are due on Feb 23 and Keppel Corp tomorrow. Investors and analysts will be looking at the outlook provided by the companies' managements.
'(The outlook) will set the tone going forward,' said OCBC's Mr Wong. 'Historical numbers should theoretically be reflected in the share price, unless there's a surprise.'
He noted that market players will want to have a sense of what is happening on the ground, including whether orders are coming through and how customers are reacting to a possible slowdown.