Cautious consumers and persistent cost pressures are set to challenge operating margins at Australia’s biggest companies over the next twelve months.
That’s the view of ratings agency S&P Global – which says that corporate office real estate investment trusts are most at risk.
Wholesale property funds are feeling the pressure the most due to devaluations, rising vacancies, higher debt costs, and structural challenges.
S&P say the pinch is also being felt within the supermarket chains, with customers at Coles and Woolworths trading down to cheaper items which have lower profit margins.
S&P concludes by saying companies with pricing power, strong brands, low-cost structures and balance sheet capacity remain well positioned for this environment and may use the opportunity to take market share from weaker competitors.