As the third quarter earnings season for 2009-10 kicks off this week, there is renewed hope for much better earnings.
The first two quarters of the year had to bear the brunt of the near-depression conditions in global markets. Sales, revenue and earnings all took a hit. Now, the situation is much different. Brokerages that track companies are expecting profits to surge 13-23%.
Three factors are likely to be at work. One, a low base effect compared with the situation in the third quarter last fiscal. Two, the various stimulus packages and larger credit availability seem to have done the trick. Most importantly, it was the revival of consumer confidence that revved up product markets.
It might, however, be too early to count the year as a good one. Rising interest rates and inflation in commodities and raw materials may yet take the shine off the annual results.
How companies manage costs without passing them on to consumers will be a key factor in securing favourable results.