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NZX CLOSE: NZ shares gain; Westpac lifts on earnings growth, SKC advances

Tuesday 16th February 2010

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New Zealand shares rose, led by Westpac after the second-largest Australian bank reported a jump in earnings on demand for loans and fewer defaults. Sky City Entertainment Group advanced after posting a gain in first-half profit.

The NZX 50 Index climbed 28.07, or 0.9%, to 3087.607. Within the index, 26 stocks rose, 17 fell and seven were unchanged. Turnover was $65.7 million.

Westpac’s NZX-listed shares (NZX: WBC ) rose 6.3% to $31.45 after chief executive Gail Kelly said the worst of the financial crisis is now in the past, reflected in a “significant” fall in impairment charges. First-quarter cash earnings jumped 33% to A$1.6 billion.

NZ Farming Systems Uruguay (NZX: NZS ) sank 4.8% to 40 cents, returning to the low it last plumbed on August 27. The developer of dairy farms in South America today reported a first-half loss of just under US$7 million and forecast a full-year loss of US$10 million, down from almost US$46 million a year ago.

"The market hasn't really got going this year - volumes are typically lighter during reporting season as people are more focused on results rather than trading," said Steve Walker, head of asset management, Goldman Sachs JBWere. "I get the feeling smaller companies are doing it harder than the larger ones."

Sky City (NZX: SKY ) gained 1.9% to $3.19. New Zealand’s biggest casino company boosted first-half profit 30% to $71 million after slashing interest costs by buying back US debt with a favourable exchange rate. Interest costs fell 29%.

“It’s a very solid result and modestly positive after a weak start to earnings season,” said Paul Robertshawe, who oversees $250 million at Tower Asset Management. “It’s a defensive stock that’s proven to be so – it’s done exactly what it should do.” 

Guinness Peat Group (NZX: GPG ), the investment group which has Ron Brierley as chairman, rose 1.2% to 84 cents after announcing it has increased its offer to shareholders of Tandou Ltd., the listed Australian farmer it aims to break up to extract greater returns from its water rights. GPG is offering 33 Australian cents a share for the 80% of Tandou it doesn’t already own, a 4.5% premium to its last trading price.

NZX (NZX: NZX ) rose 5.5% to $2.10, clawing back some of yesterday’s decline when it said a drop in participation in carbon trading forced it to reduce the carrying value of its shares in Markit, which it got for selling its TZ1 registry, by $19.9 million.

Pyne Gould Corp (NZX: PGC ) rose 4.7% to 45 cents and Fisher & Paykel Appliances (NZX: FPA ) rose 3.3% to 63 cents.

New Zealand Refining (NZX: NZR ) fell 0.6% to $3.55 after the nation’s only oil refinery said shrinking refining margins drove a sharp drop in profit for last year, with only a slight improvement in margins expected in the near future. The Northland-based oil refining and distribution company saw refining margins slashed from US$12 per barrel to around US$1, and tax-paid profit in the year to December 31 plummeted to NZ$23.6 million from NZ$125 million a year earlier.

"The numbers were fairly well signalled to the market so there were no surprises there," Walker said.

Pan Pacific Petroleum (NZX: PPP ) declined 2.5% to 39 cents and Port of Tauranga shed 1.9% to 7.06. Outdoor equipment retailer Kathmandu Holdings rose 3% to $2.06.

Fletcher Building (NZX: FBU ) rose 2.4% to $7.64. The company reports its first-half results tomorrow. Rob Mercer, an analyst at Forsyth Barr, expects the company will post a decline in profit of about 23%, reflecting lower volumes of steel, cement and aggregates.

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