An index of corporate financial performance
The KPMG FPI distils a range of market and financial performance indicators into a single index covering nearly 40,000 public companies around the world. The index scores companies on a scale of zero to 100, with zero indicating serious distress and 100 being best-performing.
Since many companies tend to perform well for most of their lifespans, there is a natural survivorship bias towards a higher quartile score. As such, around 80 percent of the companies in our index score between 85 and 99. As the KPMG FPI is a logit model, a drop below the average can very quickly lead to an index score of zero. Please refer to Appendix 1 for details on FPI computation methodology.
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Key highlights
The average KPMG FPI for companies headquartered in New Zealand has decreased (i.e. a decrease in financial corporate health) from 93.41 in 1Q24 to 92.56 in 2Q24 which is reflective of the impact of sustained restrictive monetary policy and difficult global economic conditions.
Amongst other indicators, excess labour supply and cautious hiring in the labour market, as well as restrictive consumer spending indicate economic activity is likely to remain subdued in the immediate future with some relief offered by rate cuts.
Sector movers
The FPI for the Energy sector increased the most followed by the Food & Beverage sector in 2Q24.
Financial Services sector declined the most followed by Consumer Markets in 2Q24. The Financial Services decline reflects the concentration of companies with portfolios weighted towards consumer lending.
High borrowing rates are impacting consumer demand, and the general economic conditions are resulting in higher credit losses and non-performing loans which are impacting margins in this sector. The consumer market decline reflects the pressure on discretionary spending from consumers, driven by the current borrowing rates and high cost of living.
We have observed a decline in the number of global zombie companies (companies scoring 0 on the KPMG FPI for three or more consecutive quarters) from 1Q24 (1,061) to 2Q24 (992).
Global comparison
The global KPMG FPI score in 2Q24 was 88.09, a decrease from 88.32 in 1Q24. This followed a decrease in the global FPI average from 4Q23 to 1Q24.
The New Zealand average FPI score has been above the global average for these periods and has continued to be in 2Q24.
Want to see your company’s score?
To understand your company’s current index score, or to uncover deeper insights about specific markets or segments, contact your local KPMG member firm. KPMG’s global network of KPMG professionals have the data, sector and geographic expertise to help you understand your score and tie it back to your business needs. Whether it is benchmarking, identifying targets, comparing sectors or looking for trends over time, KPMG professionals can connect you right to the information you need to capitalize on your opportunities. That’s our business. Please contact us at in-fmkpmgfpi@kpmg.com, or get in touch with the team below, to find out more.
