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MARKET CLOSE: NZ shares edge up amid gloomy opening to earnings season

Friday 12th February 2010

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New Zealand shares edged up today as Telecom reported a soft second quarter result despite some heavy cost-cutting measures, giving the earnings season a gloomy hue after Steel & Tube Holdings’ weak earnings yesterday.

The NZX 50 Index rose 15.2, or 0.5%, to 3080.47. Within the index 22 stocks gain, 12 were unchanged, and 17 declined.

Turnover was $76.1 million.  Shares in Telecom (NZX: TEL ) fell 0.4% to $2.30 after it reported a 24% slump in earnings, excluding one-off adjustments in 2008, as it failed to grow its revenue while slashing its costs.  

“It’s certainly credible to cut costs, but you’ve got to grow revenue too,” said Alan Moore, who helps manage $400 million at Milford Asset Management.  Fellow phone company Telstra  fell 2.9% to $4.05 after it posted a flat result yesterday, and new mobile entrant 2degrees announced it had secured more than 200,000 customers on its network.  

Kathmandu Holdings (NZX: KMD ) led the index higher, gaining 4.2% to $1.98 after the value and volume of retail sales grew 1% in the three months through December.  

Whiteware manufacturer Fisher & Paykel Appliances (NZX: FPA ) gained 1.6% to 63 cents as appliance retailing experienced the largest volume growth in the period.  

Still, clothes retailer Hallenstein Glasson (NZX: HLG ) sank 1.1% to $3.59, and Moore said the market was very much in a waiting pattern as investors look for guidance as to how earnings season will pan out after some weak results early on.  

“There are signs that we are coming out of the recession coming through in some profit announcements, but we got mixed figures in retailing,” he said.  

Food ingredients manufacturer Goodman Fielder (NZX: GFF ) gained 3.6% to $2.02, while Pike River Coal (NZX: PRC ) rose 3.4% to 92 cents.

Goodman Property Trust (NZX: GPT ) gained 3% to $1.03 and APN News & Media, which operates the Radio Network and New Zealand Herald newspaper, increased 2.8% to $2.97.  

Steel & Tube (NZX: STL ) was the weakest performer, falling 3.6% to $2.60 after its first-half profit sank to $3.2 million from $20.8 million a year earlier.  

Pan Pacific Petroleum (NZX: PPP ) dropped 2.4% to 40 cents, while financial services provider AMP (NZX: AMP ) declined 1.9% to $7.80. ANZ Banking Group (NAX:ANZ) slipped 1% to $26.

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